VHIS vs. medical insurance: a guide

Kwiksure's guide to comparing VHIS and medical insurance.

Not sure where to start when it comes to choosing the right medical insurance in Hong Kong? You’ve come to the right place. In this quick guide, we’ll be comparing the Voluntary Health Insurance Scheme (VHIS) with regular health insurance. 

In April 2019, the Hong Kong government rolled out the VHIS with an application cut-off date of July 8th, 2020. Already, there are 29 options for the Standard Plan and over 211 options for the Flexi Plan. The choices can be staggering.

So, what’s the difference between VHIS and traditional health insurance? How do you apply for tax deduction? Today at Kwiksure, we’ll give you a quick rundown to all your common VHIS questions. 

VHIS vs. medical insurance

Under the VHIS, Certified Plans are divided into two categories: “Standard Plan” and “Flexi Plan”. The former provides basic inpatient coverage, whereas the latter provides additional, flexible protection on top of that. For example, with a Flexi Plan, you can enjoy a higher benefit limit and broader coverage. 

To be certified as a VHIS product, all plans must adhere to a standardized set of terms and conditions set out by the Food and Health Bureau (FHB).

With that said, is it always better to switch to a VHIS policy? Not necessarily. In the following section, we’ll compare and contrast the pros and cons of VHIS and regular medical insurance.

Each includes its own choice of coverages

All VHIS products must comply with the FHB’s 10 standard clauses. They must cover psychiatric treatment, outpatient surgery (including endoscopy), diagnostic imaging testing (ie. CT, MRI, PET, PET-CT, PET-MRI, etc.), and non-surgical cancer treatment. As you can see, the coverage is more extensive. In contrast, medical insurance may not offer these protections.

Coverage for “unknown” and “congenital” diseases is the biggest advantage of the VHIS. Got an unknown pre-existing condition? You won’t receive any compensation in the first year. However, you’ll receive 25% of the compensation in the second year, 50% in the third year, and full compensation from the fourth year and onwards. 

Congenital diseases refer to illnesses that appear or are diagnosed after 8 years of age. As long as the disease is included in the clauses, it will be covered even if it hasn’t been diagnosed at the start of your insurance.

Guaranteed renewal until you’re 100 years old

Are you a senior citizen who doesn’t have an insurance plan in place for when you get severely ill? Then, you’ll have to shoulder the sky-high medical bill. Most health plans only accept applicants under 65 years of age. Only a measly 20% allows plan renewal for seniors who are 80 years or older. Even if you’ve secured a plan, in the end, numerous conditions are unlikely to be covered. In other words, your insurer would only offer limited coverage. 

From 15 days old to 80 years old, anyone is able to purchase a VHIS plan. Guaranteed renewal is also available until you’re 100 years old. Some Flexi Plans even safeguard seniors’ health by including a lifetime renewal benefit.

No “lifetime benefit limit” is possible

Most health insurance on the market has a cap on lifetime coverage. Once you surpass the insurance coverage limit, you can no longer file for claims. 

In contrast, VHIS’s benefit amount is calculated based on “policy year” with an annual compensation cap of HK $420,000. In other words, every year, the highest coverage amount will be reset and then recalculated. This is the best option for someone with chronic illnesses or needs long-term medical care. 

However, keep in mind that not all VHIS product has a cap on the lifetime benefit limit. Carefully read over the terms and conditions before you make your purchase.

VHIS includes tax deduction

To encourage citizens to join the VHIS scheme, the HK government provides tax benefits for policyholders. Taxpayers like yourself or your relatives could apply for a tax deduction when you purchase a VHIS health plan. This includes your partner, your sons and daughters, paternal and maternal grandparents, parents, and siblings. The higher the tax rate, the higher the corresponding amount of tax deduction. 

Every taxation year, each policyholder’s maximum premium deduction is HK $8,000. What’s more, there’s no limit to the number of policies and the number of policyholders who can apply for a tax deduction. Assuming that the standard tax rate for all policyholders is 17%, then you get almost a 20% discount on medical insurance. 

Premium transparency

All VHIS products are designed and regulated by the government. To increase market transparency and promote price competition, all insurance companies must publish the premium schedules of their certified plans. In addition, you will be able to enjoy a 21-day cooling-off period during which you can cancel the policy at any time and receive a full refund.

Transfer or re-underwriting might increase your premium

Want to transfer your medical health plan to a different insurer’s certified VHIS product? The new insurance company has the right to demand a re-underwriting procedure. Unfortunately, you might get turned down due to your health condition. 

On the flip side, the insurer may accept your application to transfer to a VHIS plan. However, they have no authority to request re-underwriting and must guarantee that you are renewed until the age of 100 if they charge you according to the VHIS standard premium.

All insurance companies that have participated in VHIS should have an option available for their clients to transfer to VHIS. However, it’s up to the insurers to determine the time of the "transfer period". Please check with your insurance company for details.

Does VHIS include “COVID-19 coverage”?

The FHB confirmed that all certified plans will provide COVID-19 coverage after the policy comes into effect. Once you’re diagnosed or suspected that you’re infected with the coronavirus, all related inpatient fees coverage will be calculated based on the terms and conditions.

Even VHIS needs to be chosen carefully 

The Standard Plan of VHIS may not be able to offer 100% of the coverage items in regular medical insurance. Such examples include kidney dialysis, private nursing fees, and bed charges for accompanying family members. Rashly switching from medical insurance to VHIS may even cost you to lose important benefits.

Want to switch to VHIS while simultaneously ensuring you get adequate protection? Consider going for a Flexi Plan. You are encouraged to figure out what you need, then carefully compare the terms of the insurance plans. 

To make sure that you’re making the right choice, the most reliable way is to contact an insurance broker like Kwiksure as soon as possible.

In addition to VHIS, Kwiksure also provides a variety of products such as car insurance (third-party and comprehensive), motorcycle insurance, and domestic helper insurance. Use our online quotation system to get a free quote today! Want to chat with us? Contact our team of expert insurance advisors! They can provide impartial suggestions and help you find the perfect insurance solution.