A simple approach to understanding how insurance can assist medical travellers

Robin Ali, Head of Practice at The Consilient Consultancy, gives his view on the role of the insurance sector in supporting medical travellers.

Much has been written about the lack of assistance that people who travel abroad for medical treatment find in insurance policies or indeed the lack of relevant policies. This is often because many people engaged in the medical travel sector don’t always understand that insurance is to pay for the risk of something going wrong, not to pay for something the policyholder chooses to happen.

For example, we know that motor insurance will pay for damage to or replacement of a vehicle involved in an accident, but no-one expects the insurer to pay for a new set of tyres when the old ones wear out or to pay for a repaint to deal with a rust problem. Why then do people expect insurance to cover them if they choose to have medical treatment abroad? Can insurance help at all?

What risks can be covered and are relevant to a medical traveller?

Based upon the specific policy type, its terms and conditions, insurance policies may cover the following:

• Costs of the initial procedure
• Complications arising from the initial procedure
• Additional costs incurred because of a complication (such as extension of stay, additional accommodation and travel costs for the insured and/or companions)
• Normal travel insurance risks such as delay, cancellation, curtailment, loss of baggage, accident and emergency and others.

These are now each addressed in turn.

Costs of the initial procedure

Conventional health insurance plans are widely marketed in many countries but are not specifically designed to cover treatment sought by medical travellers. Such plans are typically known as private medical insurance (PMI) or international private medical insurance (IPMI) and are purchased either by individuals or by employers on behalf of their workers. Even so, the terms of such policies may allow for the medical traveller to make a successful claim. However, there are several obstacles to being able to make a successful claim on a conventional health insurance policy for a medical traveller so you need to check the policy coverage.

• Firstly, health insurance policies will normally only cover medically necessary treatment, so if you are travelling for cosmetic treatment, for example, you are not covered.
• Secondly, such policies will always have a geographic scope. This means that the policy will only pay for treatment in specific countries which could be your home country only, a specified list of countries, a specified region (such as Europe or North America) or worldwide, either including or excluding USA and/or Canada. So, even if your treatment is medically necessary, if you are travelling to a country outside the geographic scope it will not be covered.
• Thirdly, even if it is within geographic scope, the amount payable may be restricted to what is known as a “reasonable and customary” amount. This means that the insurer may limit the claim to an amount that it considers reasonable and customary in your home country or in the country of treatment. So, if you receive treatment at a hospital that is relatively expensive compared to this measure, the claim will be scaled down accordingly.
• Fourthly, insurers often have networks of preferred healthcare providers. These may be networks managed directly by the insurer or, as is often the case where the treatment is carried out in a country where the insurer does not have a network, managed by a third party. The latter networks are often known as Preferred Provider Organisations (PPO). Either way, even if you have satisfied all the previous requirements, if your treatment is outside the insurer’s network or PPO, you may find that the insurer will not pay at all or will only pay on an adjusted reasonable and customary basis.
• Fifthly, there is the not so well known exclusion for “pre-existing conditions”. If your policy has this exclusion and the condition existed prior to you becoming insured under the policy then the insurer will not pay your claim. The definition of pre-existing condition can be quite Draconian. It can often include conditions that you may not even have known about or have never been treated for or diagnosed with. Sometimes, instead of a pre-existing condition exclusion, the insurer may impose a “moratorium clause” meaning that you may not to be able to make a claim at all for a set period of time from becoming insured or that certain conditions are excluded for a specified time period.

Policies will also often have a long list of other exclusions, some being specific to certain medical conditions or treatments (cosmetic, fertility, gender reassignment or dental for example) and others relating to treatment for conditions caused by specific circumstances (war, self-inflicted injuries, alcohol or drug abuse etc).

As well as exclusions, policies will always have monetary limits on coverage. These limits will normally place an annual or lifetime limit on claims and often have sublimits relating to particular treatments. If you exceed these limits, the policy will pay no more than the limit.

Given these obstacles, how likely is it that a conventional health insurance plan will pay for the treatment of someone who wants to be treated in a country other than their own country, whether they are insured under a group scheme established by an employer or through an individual plan? There is no straight answer here, other than that you must check your policy against what you are trying to claim for. It is also fair to say that, usually, the more expensive the plan, the more extensive the coverage and the more likely it is that you will be covered.

Finally, such plans will not cover travel or accommodation costs other than hospital accommodation for the patient undergoing covered, medically necessary treatment and they certainly won’t cover treatment that was expected, recommended or scheduled prior to buying the insurance plan.

Complications arising from the initial procedure

People who travel abroad for medical treatment can be funded in one of five ways:

• Under the terms of a conventional health insurance plan (group or individual);
• Paid for by an employer;
• Paid for by the patient’s government;
• Paid for by a charity or other not for profit foundation;
• Funded by the patient themselves

Regardless of how it is funded, there is always the possibility of a complication arising either during or after the planned initial procedure. Where complications arise, costs will include not only the additional cost of dealing with the complication but also costs related to extension of stay, additional travel and accommodation costs and even possible evacuation costs.

Where the initial treatment is covered under a conventional health insurance plan, any “in theatre” or “post-operative” complications are usually covered (subject, of course, to any monetary limits mentioned above). However, in other circumstances, the costs of dealing with complications and associated additional costs are not covered. In such cases, either the funder or the patient themselves will have to cover the costs.

In an attempt to mitigate the risk to medical travellers of such costs, a very small number of companies (4 that we know of) developed plans to provide some form of cover for dealing with complications and their associated costs. All of these plans are essentially conventional travel insurance plans (see below) but with added coverage for the costs of complications. However, there are several drawbacks to these plans.

Firstly, the cover rarely extends to “expected” complications, paying benefits only for “unexpected” complications. An expected complication is one that medical literature would normally attribute to a planned initial procedure. Therefore, if you had undergone gastric banding and then suffered acute stomal obstruction, band slippage, haemorrhage, port infection, bronchopneumonia or any number of other complications associated with the procedure then the policy will not cover the claim.

Secondly, the pricing of such policies tends to be related to either the cost of the entire trip or the cost of the procedure. This is unscientific. Our research shows that the trip or procedure costs have little correlation to either the probability of a complication arising or its severity, that is, the cost of rectifying the problem. As an example, the probability of a complication arising from a heart bypass is lower than 4% compared to a gastric bypass where the probability of complications ranges up to 50% yet the cost of the former procedure is far more expensive than the latter: so why pay a higher premium for a procedure that is far less likely to go wrong?

Thirdly, availability of these plans can be restrictive: one plan covers only UK residents who travel abroad for treatment, another covers anyone but only if they are undergoing the initial procedure in Dubai.

Fourthly, the coverage period can be as little as 30 days from date of discharge or just 3 days from return home although some will maintain cover for 180 days.

Additional costs incurred because of a complication

These will typically be costs to cover the following:

• An extended hospital stay;
• Additional accommodation for companions during the extended stay;
• Additional travel costs for a delayed return home;
• Evacuation to another treating facility capable of dealing with the complication;
• Costs of dealing with an “in-transit” complication;
• Additional travel costs for dealing with a complication that arises after return home

Our comparison of the four available products known to us indicates that there is some coverage for several of these events. However, they form part of the main complications policy and cannot be purchased by themselves.

Normal travel insurance risks

In addition to the risk of needing a medical procedure in the first place, the risk of suffering a complication during or after that procedure and the associated additional costs, the final risks that insurance can help with are those that are covered by conventional travel insurance such as cancellation, loss of deposits, curtailment, delay, loss of baggage and personal effects and accidents and emergencies that may befall the medical traveller and/or their companions.

Options available here are to either effect a standalone travel insurance policy or to take out a complications policy that either has these benefits embedded or offers them as an added option. Conventional health insurance plans do not cover these risks.

The difficulty with the first option is that travel insurance companies are wary of offering travel insurance to people whose reason for travelling includes undergoing a medical procedure. Consequently, many insurers will refuse any claim where the purpose of travel includes medical treatment.

Conclusion for medical travellers

Some existing conventional health insurance and travel insurance products may benefit medical travellers and whilst there is a demand for insurance products that offer benefits specifically for the needs of medical travellers, insurers tend not to understand the market and its opportunities and customers have not so far been presented with products that satisfy their needs. That may change soon.

For more information, contact [email protected].