Understanding Medical Insurance
Case studies
Acknowledgements are made to the Insurance Complaints Bureau (ICB) for permission to publish the following abstracts of real-life cases.
Case 1: Congenital condition
Mr A took out a hospitalisation policy for his 11-month-old son. Five days after the policy issuance, his son was admitted to a private hospital for a right herniotomy under general anaesthesia. The final diagnosis was a right inguinal hernia. Mr A subsequently lodged a claim with the insurer. The insurer considered that the medical issues of Mr A’s son were related to a congenital condition and declined the hospitialisation claim according to the exclusion clause in the policy terms. Mr A then lodged a complaint to the ICB. The Complaints Panel of the ICB supported the insurer’s decision, believing that the condition of Mr A’s son was more likely to be congenital in nature based on the opinion given by the attending doctor, reference to some common medical literature, and the time when the insured was diagnosed as suffering from the claimed medical condition.
For details of the case, please refer to the ICB’s Annual Report 2018/2019.
Reminder
Although most medical insurance policies exclude congenital conditions from their coverage, the coverage of all certified plans under the Voluntary Health Insurance Scheme (VHIS) extends to the treatment of congenital conditions. However, note that this coverage only applies to conditions which have manifested themselves or been diagnosed from the age of eight onwards, and the level of coverage is adjusted according to the number of years since policy inception. Consider your own protection needs and compare the coverage and exclusions of different plans before taking out a medical insurance policy. Please refer to the section Tips on applying for insurance on this webpage for more information.
Case 2: Non-disclosure of material facts
After Mr B declared that he had a clean health history on his application form for a hospital insurance policy, the insurer issued the policy with standard terms. Twenty months later, Mr B was admitted to a private hospital for treatment of coronary artery disease, and filed a claim with the insurer. Upon claims investigation, the insurer learnt that Mr B had had frequent consultations for foot and ankle pain and scapular pain in the two years prior to his application for hospital insurance, but had not disclosed this medical history in his application. The insurer then declined his hospitalisation claim on the grounds of material non-disclosure.
For details of the case, please refer to the ICB’s Annual Report 2017/2018.
Reminder
You should proactively and honestly disclose all material facts when filling in an insurance application form. In particular, carefully answer the questions in the health declaration, including those asking whether you have suffered from any of the diseases listed in the form, or have received any of the listed treatments. Do not just skip through the questions and choose the answer “no” without careful reflection. If you are in doubt as to whether a fact is material, it is advisable to disclose it. The insurer will use the information you disclose to decide whether you need to provide extra information or arrange for relevant check-ups, and then make the final underwriting decision. Please refer to the section Tips on applying for insurance on this webpage for more information.
Case 3: Not medically necessary
Miss C had repeated elevated tumour markers and was admitted to a private hospital where she received Positron Emission Tomography (PET-CT) of her whole body trunk to rule out cancer. She then filed a claim to the insurer for the expenses she incurred from this hospitalisation. However, Miss C’s admission was solely for having a PET-CT scan performed, and no medical treatment was carried out during her confinement. Since the PET-CT scan could have been done in an outpatient setting, the insurer rejected the claim on the ground that her hospitalisation was not medically necessary.
For details of the case, please refer to the ICB’s Annual Report 2017/2018.
Reminder
“Medically necessary” is a common clause in most hospital insurance policies. In general, admission solely for conducting diagnostic or laboratory tests, when there is no element of medical emergency, will not be considered as being “medically necessary”. You should learn more about the “medically necessary” conditions defined in your policy before admission. If you are in doubt, consult your insurer or intermediary. Please refer to the section Tips on making claims on this webpage for more information.
Case 4: “Reasonable and customary” charges
Mr D took out a medical policy with full cover benefit for his four-year-old son. Some years later, his son was admitted to a private hospital to receive a colonoscopy due to per rectal bleeding. The surgeon’s fee charged by the doctor was HK$48,000. Mr D then filed a claim for the surgeon’s fee with the insurer. However, the insurer considered that the surgeon’s fee was excessive and adjusted its settlement for the surgeon’s fee to HK$33,638 by applying the “reasonable and customary” clause. Mr D then made a complaint to the ICB. The Complaints Panel of ICB found from the Hospital Authority’s reference price list of private services that the fee for a colonoscopy typically ranges from HK$12,750 to HK$19,350. Given that the insurer’s adjusted settlement for the surgeon’s fee was 70% higher than the Hospital Authority’s highest reference price, the Complaints Panel agreed that the insurer’s offer was reasonable.
For details of the case, please refer to the ICB’s Annual Report 2018/2019.
Reminder
Many policy holders think that once they have bought a policy with full cover benefit, their medical expenses will be fully covered as long as the total hospital charges do not exceed the specified annual policy limit. However, they may have overlooked the “reasonable and customary” clause. To get a better estimate of likely out-of-pocket expenses, consider applying for the pre-authorisation service offered by your insurer after obtaining a quotation from a medical organisation or doctor. The insurer will let you know the pre-approved claim payment so that you can better assess your out-of-pocket expenses and consider whether to look at other treatment options first. Please refer to the section Tips on making claims on this webpage for more information.
The above information is for reference only. For the coverage, mode of compensation, benefit limit and premium levels of any specific medical insurance plan, please refer to the relevant policy terms.