[Q&A] Is Visiting Hospitals Often Always a Loss? ... New Real Loss Insurance, Frequently Asked Questions

In July next year, the 4th generation indemnity health insurance with premiums up to 70% cheaper will be introduced. Comparison of premiums between the new indemnity insurance and the existing indemnity insurance (Source: Financial Services Commission)

[Asia Economy Reporter Oh Hyung-gil] Starting next July, the 4th generation indemnity health insurance with premiums up to 70% cheaper will be introduced. If you visit the hospital less, you can also receive a discount on the next year's premium. However, non-reimbursed treatments are separated into special contracts with higher out-of-pocket expenses.

Experts recommend considering switching if you use hospitals less and currently find the premiums burdensome. However, you should decide whether to switch by comprehensively comparing not only the premiums but also your health condition. The details are summarized in a Q&A format.

- How much cheaper are the premiums?

▲The monthly premium for the 4th generation indemnity insurance for a 40-year-old man is about 10,929 KRW. Before standardization in 2009, the indemnity premium was 36,679 KRW, and after standardization, it was 20,710 KRW, making the 4th generation premium 25,750 KRW and 9,781 KRW cheaper respectively. The 3rd generation new indemnity insurance launched in 2017 has a premium of 12,184 KRW, so the 4th generation indemnity is about 10% cheaper.

- Are coverage limits reduced?

▲Currently, indemnity insurance covers both reimbursed and non-reimbursed treatments under the main contract. The 4th generation indemnity separates reimbursed items under the main contract and non-reimbursed items under special contracts. If you subscribe to both, you can receive coverage for most disease and injury treatment costs as before. The annual coverage limit for hospitalization and outpatient care due to disease or injury is set at about 100 million KRW, similar to before.

- I heard premiums are discounted or surcharged based on hospital usage.

▲The next year's non-reimbursed premium is determined based on the 'non-reimbursed' insurance payments during the 12 months before premium renewal. The insurance payment history resets every year. However, this method will be applied only after three years from launch. From next July until 2024, no discounts or surcharges will be applied, so you can pay the basic rate premium.

- What benefits does the premium differentiation system bring to consumers?

▲Currently, indemnity insurance has serious fairness issues among subscribers. Costs caused by moral hazard such as excessive treatment and overuse of medical services are passed on to all subscribers as premium increases. With the premium differentiation system, users who overuse medical services can be encouraged to use medical care appropriately, and the overall premium increase rate borne by all subscribers can be alleviated. Considering that 65% of indemnity subscribers have no claims, most subscribers can benefit from premium discounts.

- Will the premium differentiation system apply to existing indemnity insurance subscribers?

▲It will not apply to existing products and will only apply to newly subscribed consumers. However, existing product subscribers can switch their contracts to the new product. Only limited cases requiring separate underwriting for contract switching will be listed, and other cases are being considered for switching without underwriting.

- Isn't it unreasonable to surcharge premiums just because someone visits the hospital frequently?

▲The premium differentiation system applies only to 'non-reimbursed' treatments, which are elective medical services, not to essential 'reimbursed' treatments. This considers that non-reimbursed items mainly consist of treatments with low medical necessity. Patients with severe diseases such as cancer, who are eligible for special calculation under the National Health Insurance Act, are excluded from the premium differentiation system.

- Is it advantageous for existing subscribers to switch to the new product?

▲Compared to existing products, the premiums are cheaper, which is an advantage in terms of price. However, there are differences in coverage and out-of-pocket expenses compared to existing products. You should consider your health condition and medical usage tendencies.

This content was produced with the assistance of AI translation services.