Money & Power
Dollar Medical Insurance: Is It for You?
If your career involves periodic relocation, you would be better off with a policy that offers worldwide coverage.
IMAGE COLLAGE Yzabella Cruz
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One of my favorite insurance stories involves a retired executive who joined a club of motorcycle enthusiasts, all of them owners of the expensive, monster-machine variety of motorcycle. However, being of a certain age and status in society, these bikers engaged in relatively tame pastimes, mainly taking out-of-town trips where presumably the heat, the dust and discomfort of the road, and the roar and exhaust fumes of their chariots provided the macho thrill missing from their respectable lives. The retired executive’s wife, though, took a dim view of his hobby. Being something of a raconteur, the executive liked to narrate that, prior to one trip, she asked, in all seriousness, what kind of funeral arrangements he preferred—burial or cremation?

Alas for him, on that trip he rolled into a ditch and broke a rib. His biker buddies took him to a provincial hospital for first aid, but his wife, her worst fears almost confirmed, contacted her insurance broker, who arranged for a plane to take him to Manila for further hospital treatment. Still macho, our hero scoffed at his injury and professed himself horrified at all the fuss, saying he had been tempted to refuse the plane and refrained from doing so only because he was afraid he would be charged for the useless trip!

Gender differences aside, the episode illustrates the advantages of having a medical insurance plan—not only hospitalization and medical treatment, but also emergency evacuation, if necessary. What is slightly different in this episode, though, is that the couple involved had a dollar-denominated plan. A peso plan would have also provided basically the same services at less cost, so why did they opt for dollar-denominated coverage?

Medical insurance is a technical and complex product and, unless one has had years of experience with insurance products, the insurance buyer is better off availing himself of the expertise of an insurance broker.



According to George Winternitz, managing director of the insurance brokerage and consulting firm Winternitz and Associates, the most important consideration is the benefit limit, which is much higher than that of peso plans. For a peso plan, the maximum benefit limit per availment or per year, depending on the plan, is around P3 million. On the other hand, the smallest maximum limit on a hard-to-get dollar policy is $100,000, equivalent to over P4.9 million. The more common policies available have benefit limits of $250,000, with the highest limit at $2 million. In the Philippines, Pacific Cross (formerly Blue Cross) is licensed to issue dollar policies.

All medical insurance plans offer hospitalization or in-patient benefits for accident or a covered illness. These benefits usually involve room and board, expenses related to surgery and post-hospitalization care related to the covered illness or surgery, emergency evacuation and repatriation of remains. Beyond these basic benefits, though, there are wide variations in plan features and benefit levels.  For example, one plan may include treatment for illness in North America, while another may exclude it unless the illness occurred when the insured person was in North America. One type of plan may include maternity benefits as part of its basic benefits, while another might offer it as an option.

There are also medical plans designed for seniors, although typically the premium becomes more expensive while the maximum benefit is reduced to, at most, $250,000. Usually the requirement is that the senior must have already been insured with the company prior to age 65, thus permitting him to migrate to the seniors’ coverage without having to show proof of insurability.

What medical insurance plans do not offer are routine checkups and consultations unrelated to illness, which are the territory of health maintenance organizations (HMOs) or even hospitals and clinic chains that offer executive checkups and wellness programs. There is some degree of overlap in the hospitalization benefits of medical insurance and HMO plans, but typically, medical insurance plans offer much higher benefit limits than HMO plans.

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The medical questionnaire asks if the applicant has had certain ailments or has been confined in a hospital. The applicant must resist the temptation to simplify life by answering “no” to all the questions; a shortcut in the application can later short-circuit the claim.



For the layperson, the variations of medical insurance plans, as well as alternative methods of managing current health needs, can be bewildering. In theory, one can log on to the Internet, get quotations from insurers and download the application form, but the fact is that medical insurance is a technical and complex product and, unless one has had years of experience with insurance products, the insurance buyer is better off availing himself of the expertise of an insurance broker.

Before even considering any insurance product, though, a prospective buyer should ask his broker whether the insurer uses community or individual rating in setting premiums since the method used by the insurer affects the buyer’s long-term costs. In individual rating, the renewal premium is based on the insured’s own claims experience. If he files a claim in one year, he could be hit the following year with a renewal premium that is—ouch!—two or three times his original premium. In community rating, the claims experience of a large group of people is used in setting or adjusting the premium resulting in a much smaller premium adjustment, say, 10 or 15 percent. The downside is that even if the insured has no claim, he, too, has to pay the adjusted premium.

There are a number of factors to consider when purchasing dollar medical insurance. The first is the applicant’s personal situation. Does he spend more time in the Philippines, or abroad? If he spends most of the year in the country but wants treatment in America for an illness incurred here, he should be prepared to pay a higher premium than if he decides to be treated in the Philippines. However, if his career involves periodic relocation, he would probably be better off with a policy that offers worldwide coverage.

If price is a consideration, the applicant may consider deductibles and co-pays. In a deductible, a fixed amount of the medical expense, say $1,000, is shouldered by the insured person, with the balance being paid by the insurer. In a co-pay, the insured person pays, for example, 20 percent of the incurred expense and the insurer pays 80 percent. Thus, although the benefit payments may be reduced, the initial cash outlay is also reduced.

Age and health are the most important factors in medical insurance; youth and good health mean lower premiums. Some locally-issued (on-shore) plans are guaranteed renewable, so that even if the insured person later develops a medical condition, the medical insurance policy cannot be cancelled and that particular condition will also be covered. Depending on the plan and the insurer, however, there might be an adjustment in premium.

A person who decides to buy medical insurance, particularly a dollar plan, must consider it as a valuable asset, and respect the whole process involving the acquisition and availment of that asset.

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Since dollar medical insurance is much more expensive than peso coverage, the client should be willing to spend time with his broker or consultant to evaluate which kind of medical insurance is best suited to his needs.



The first step in obtaining insurance consists of filling out the application form, the medical questionnaire and the health declaration. This task is way too important to be delegated to a secretary, as busy or tired executives may be tempted to do. On the basis of the application, the insurer will decide whether (1) to accept the applicant at a standard premium rate, (2) require him to undergo a medical examination, (3) accept him but with an addition to the premium called “loading,” (4) exclude from coverage a medical condition currently affecting the applicant, or (5) reject him as uninsurable. Foreign insurers, especially, operate by the book—the application stands or falls on its own.

The medical questionnaire asks if the applicant has had certain ailments or has been confined in a hospital, and asks for details of treatment, medication, etc. The applicant must resist the temptation to simplify life by answering “no” to all the questions; a shortcut in the application can later short-circuit the claim. Because many insurance applicants do not realize the significance of the application form, Winternitz says he makes it a point to be present to ensure that an applicant makes a full disclosure and understands the repercussions of omitting information. If he had a choice, Winternitz says, he would always involve the applicant’s wife in the process because she “ knows everything about her health, her children’s and her husband’s.”  

The client, according to Winternitz, should also consider how long the insurer will carry him on his books. Will he be dropped at age sixty-five, or will he be allowed to emigrate to a senior plan without showing proof of insurability? Winternitz says, “Choose an insurer who will carry you as long as possible.”  

The claims process is actually simpler than the “pay first, reimburse later” procedure that is usually associated with medical insurance. Given advance warning of a confinement, Winternitz said, his company can arrange a direct billing system between the insurance firm and the hospital, in whatever country the latter is located.  

Although he represents the client, Winternitz admits that most problems are due to deficiencies on the part of the client or the intermediary. “In my experience,”—experience that goes back 42 years, with thirty years spent in international coverage—“the only thing that goes wrong is if the applicant has not filled out the medical questionnaire accurately, or if the broker failed to assist him properly. Insurance companies have extremely deep pockets and are anxious to keep their reputations. I have had claims of $300,000 and $500,000 which were paid with no problems. I have heard of another claim of $800,000 which was also paid without problems. Claims can be paid for years for a chronic condition. The only real issues I’ve had have been with interpretation of medical terms.”

Other headaches arise when clients do not follow the claims rules, particularly on submitting original documents, thus resulting in delayed payments. The final component for a successful relationship with the insurer is for the client to follow the rules to the letter.

Since dollar medical insurance is much more expensive than peso coverage, the client should be willing to spend time with his broker or consultant to evaluate which kind of medical insurance is best suited to his needs. As in any major decision, he must carefully balance costs and benefits and the effect on the current budget versus the consequences of doing nothing or postponing a decision. Illness, like death and taxes, is inevitable, and similarly inevitable is the relentless rise in the cost of quality medical care. Nevertheless, with foresight and planning, the consequences of such contingencies can be managed, and the ensuing peace of mind is surely worth it.

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Araceli Z. Lorayes
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