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

[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 receive a discount on your premium the following year. However, non-reimbursed treatments are separated into special contracts, increasing the out-of-pocket expenses.

Experts recommend considering switching if you use hospitals infrequently and currently find the premiums burdensome. However, the decision to switch should be made by comprehensively comparing not only 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 male is about 10,929 KRW. Before the 2009 standardization, indemnity premiums were 36,679 KRW, and after standardization, they were 20,710 KRW, making the 4th generation premiums 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 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 the previous level.

- Premium discounts or surcharges based on hospital usage?

▲ The non-reimbursed premium for the following year is determined based on the 'non-reimbursed' insurance payments made during the 12 months before premium renewal. The insurance payment history resets every year. However, this system will be applied starting three years after launch. From July next year until 2024, no discounts or surcharges will be applied, so premiums will be paid at the basic rate.

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

▲ Currently, there is a serious fairness issue among indemnity insurance subscribers. Costs caused by moral hazard such as excessive treatment and overuse of medical services are passed on to all subscribers through premium increases. Applying the premium differentiation system can encourage proper medical use among overusers and reduce the overall premium increase rate borne by all subscribers. 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 but only to new consumers subscribing. However, existing subscribers can switch their contracts to the new product. Only cases requiring separate underwriting will be limited, and other cases will be reviewed for no-underwriting conversion.

- Is it unreasonable to surcharge premiums just because someone visits the hospital frequently?

▲ The premium differentiation system applies only to 'non-reimbursed' items, which are elective medical services, not to essential 'reimbursed' treatments. 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 exempt from the premium differentiation system.

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

▲ The new product has the advantage of lower premiums compared to existing products. 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.

- Will premiums increase for elderly people who have many non-reimbursed medical treatments?

▲ Elderly people who may have high medical usage and are long-term care benefit recipients under the Long-Term Care Insurance Act are exempt from the premium differentiation system. As of 2019, about 1.5% of the population aged 65 and over were classified as level 1 or 2 long-term care recipients. Choosing the senior indemnity health insurance (available for ages 50?75), which does not apply the premium differentiation system, can also be considered.

- Will the premium differentiation system be introduced for group indemnity health insurance?

▲ The premium differentiation system will not apply to group indemnity health insurance. This is because group indemnity insurance has a one-year policy period and the policyholder (group) can change insurance companies annually, making it structurally difficult to apply the premium differentiation system.

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