‘Tis the season to renew your health insurance
December is historically one of the busiest times for nearly every industry, health insurance included. One of the main reasons for this is not because of the impending Christmas/New Year break, but because many insurers conduct rate reviews at the beginning of each calendar year.
About increasing health insurance premiums
Like every business, insurers will conduct a year-end review in order to determine the strategy for the next year. One major component of this is how much they will increase premiums in the year to come. While there are many factors behind this decision, historically Pacific Prime has seen the majority of insurers we work with increase premiums each year. We have actually covered this in a recent report – the 2015 IPMI Inflation report – which found that International Private Medical Insurance plans in Hong Kong saw premiums increase by an average of 9.5% in 2015.
In the report, we not only cover the main drivers behind inflation, but also what we expect for premium inflation in 2016. In short, we expect premiums in Hong Kong to increase even more than the 9.5% average seen in 2015. This inevitability has generated quite a few questions in the past, especially from people who already have health insurance plans. To help, we talked with the renewals experts at our office in Hong Kong to help shed some light on the three most common questions asked by clients who have existing health insurance plans.
What impact does a premium increase have if I already have a health insurance plan?
Simply put, insurers who apply an increase to their premiums will subsequently raise the premium by the same amount when the person renews their plan. For example, if you purchase your plan in March and the insurer increases premiums by 5% in January of the following year, you will pay the new premium when you go to renew your plan in March.
Of course this does not take into account any announced discounts, adjustments to things like increased deductible or co-pay percentage, which can be taken on to combat rising premiums.
When is the best time to renew?
Generally speaking, increased premiums are unavoidable. While you can theoretically renew your plan at any date, you will still have to pay any increased premiums that happened after the date you started your plan. Using the example above, if the provider increases the premium for your plan the January after you started your plan, but you renewed your plan on December 30th, you will pay the increased premium the following year when you renew again.
Because you will inevitably be paying the increased rate, the question still stands: When is the best time to renew. Our best advice is to do it before the renewal date of your insurance plan (usually one year from the start date). Sure, many providers will offer a grace period for plan renewals, usually from two weeks up to one month, but the real issue arises when you need to submit any claims. Should you not pay your new premium on time and enter the grace period, any claims submitted will not be considered until you have paid.
This is an important thing to be aware of, especially if your renewal date falls at certain times (e.g,. cold and flu season), and you are trying to find a way to reduce premiums. Therefore, we strongly recommend starting the process at least 1-2 months before the actual renewal deadline. In fact, our renewals team will usually reach out to you with reminders, and can work with you to ensure the process goes as smoothly as possible.
That being said, if your plan is due to expire before the end of the year, then we highly recommend starting the process ASAP, as companies are historically quite busy before the Christmas break, and there could be delays.
What if I am considering switching providers?
If you are planning to stick with your health insurance plan over the next year, renewal at any time should be fine. If you are thinking of switching to another plan, we recommend doing so before the end of the year. This will ensure that you get this year’s rate.
While switching providers may seem like a good idea at first, especially if you find a provider offering lower premiums, this may not be the best idea for some. The reason being that if you have pre-existing conditions, or have developed an ongoing condition while you are covered under your current plan, it is highly likely that new providers will not cover you. Other providers may attach a waiting period on claims, which could very well erase any savings incurred by paying a lower premium if you need to see a doctor during this period as you will be required to cover the costs.
Our advice for anyone considering renewing their health insurance plan
Regardless of whether you are considering switching to a new plan, or sticking with an existing plan, it would be a good idea to talk with one of the Hong Kong-based renewals experts at Pacific Prime. Our team can help advise you on whether there are different plans available, or even things you can do to minimize the impact of increased premiums. Just be sure to start the process with plenty of time if you want to ensure continual coverage. Contact us today to see how we can help.