Voluntary Health Insurance Scheme Pros
1. Standardized terms and transparent premiums
Standardized Terms
All Standard VHIS policies on the market provide similar terms and coverage, and only minor changes are allowed to be made, meaning the terms in “Standard Plan” are standardized, and coverages offered by different insurance companies are generally the same.
As for the Flexi VHIS, insurers have the flexibility to provide more benefits and coverages, but they need to provide basic protection as in Standard Plan for the Insured Person, so most of the terms are also standardized.
Standardized terms can certainly help consumers to compare plans easily.
Transparent Premiums
In order to improve transparency, and make it easier for consumers to review and compare, insurance companies participating in the scheme are required to publish premiums tables for their approved products (for both Standard or Flexi Plan).
Premium tables for all approved products can be found transparently on the Health Bureau’s official website of the VHIS.
Looking for the cheapest VHIS plan in HK?
Bowtie’s monthly premium for a 30-year-old non-smoking male for the Standard Plan starting at just HK$123, which is the cheapest plan on the market!
2. No "Lifetime Benefit Limit", benefits recalculated annually
There is no “Lifetime Benefit Limit” in VHIS Standard & majority of VHIS Flexi plans, the coverage amount is recalculated annually, and protection will last until the policyholder reaches the age of 100 or lifelong.
Among the Flexi plans, some of them are with “lifetime benefits”, why?
In order to provide an even more comprehensive protection with affordable premiums, some Flexi Plans (or in other words, a High-end VHIS) have lifetime benefit limits. These plans need to obtain below condition to keep a Lifetime Benefit Limit.
- The minimum annual benefit limit must be at least HK$5 million.
- The minimum lifetime benefit limit must be at least HK$20 million or 4 times the annual benefit limit, whichever is higher.
- At least 10 of the 12 standard protection items specified in the Standard Plan framework have no individual item benefit limits.
Policyholders of Flexi Plan can choose to switch to the Standard Plan at the time of policy renewal without re-underwriting. In other words, even if the Lifetime Benefit Limit has been exhausted, policyholders of the above Flexi Plan can still receive coverage under the Standard Plan.
3. Guaranteed Renewability
VHIS is a “guaranteed renewal” policy.
It means even if the policyholder’s health status, aging, claims history, etc has changed, he/ she can renew the policy up to the age of 100, or lifelong.
4. Applicable to Tax Deduction
Taxpayers who purchase VHIS for themselves or their designated relatives (including spouses and children, grandparents, great-grandparents, parents, and siblings of the taxpayer, children or their spouse) and keep their premium receipts as proof can apply for tax deduction. The maximum qualifying premiums for tax deduction for each insured person per taxable year is HK$8,000.
Example
If a taxpayer purchases multiple VHIS policies for themselves and their designated relatives, the maximum qualifying premiums for tax deduction of the taxpayer would be HK$48,000 (HK$8,000 x 6 insured persons).
| The Insured Person | Paid Annual Premiums (Depends on age/ product) | Maximum Qualifying Premiums for Tax Deduction (limit: HK$ 8,000 per person) | Tax Saving (Assume tax rate = 17%*) |
| Tax Payer | HK$5,000 | HK$5,000 | HK$50 |
| Spouses | HK$4,100 | HK$4,100 | HK$697 |
| Grandmother | HK$16,000 | HK$8,000 | HK$1,360 |
| Father | HK$12,000 | HK$8,000 | HK$1,360 |
| Mother | HK$11,000 | HK$8,000 | HK$1,360 |
| Son | HK$2,500 | HK$2,500 | HK$425 |
| Total | HK$50,600 | HK$35,600 | HK$6,052 |
If two taxpayers (son and daughter) purchase multiple approved product policies for the same insured person (father), each taxpayer can claim for tax deduction for the insured person.
| Tax Payer | Type of Policy and Annual Premium （Depends on age/ product） | Maximum Qualifying Premiums for Tax Deduction (limit: HK$ 8,000 per person） | Tax Saving（Assume tax rate = 17%*） | Total Tax Saving |
| Son | Policy 1: HK$4,000 | HK$4,000 | HK$680 | HK$1,360 |
| Policy 2: HK$6,000 | HK$4,000 | HK$680 | ||
| Daughter | Policy 3: HK$6,000 | HK$6,000 | HK$1,020 | HK$1,020 |
- *Assuming the tax rate is 17%.
5. Coverage for Pre-Existing Conditions
A “pre-existing condition” refers to a health condition that already existed by the time of insurance in force, but was unknown to the policyholder at the time.
To manage risk, most medical insurance policies exclude coverage for pre-existing conditions, regardless of whether they were diagnosed before or after the policy was taken out. However, VHIS can still provide coverage for these conditions.
During the first three years of the policy, known as the “waiting period”, the VHIS provides partial coverage for pre-existing conditions:
- No compensation in the first year
- 25% of the coverage limit in the second year
- 50% of the coverage limit in the third year
Full coverage begins in the fourth year.
Bowtie provides full coverage on Pre-Existing Conditions from the second year.
6. Coverage for Congenital Conditions
Insurance companies may refuse to provide protection to congenital conditions, but the VHIS includes coverage for these conditions. VHIS will provide coverage to the Insured Person for their congenital conditions that appear or are diagnosed at or after 8 years old, with protection arrangement same as pre-existing conditions.
7. Coverage for Diagnostic Imaging Costs
The medical cost for Computerized Tomography (CT) scans, Magnetic Resonance Imaging (MRI), and Positron Emission Tomography (PET) can be expensive, but many medical insurance policies on the market usually only include them in the low-limit “miscellaneous expenses” benefit item, resulting in low compensation for policyholders.
VHIS includes a specific coverage item for “Prescribed diagnostic imaging tests,” which covers the above-mentioned scans performed during hospitalization or outpatient visits.
The Insured Persons of VHIS only need to share 30% of the co-insurance fee, while the insurance company covers the remaining 70% of the cost.
8. 21-day cooling-off period
Someone may ask: I just purchased a VHIS, but changed my mind a few days later. Can I cancel this policy?
Regardless of whether you choose a standard or flexi plan, you can enjoy a minimum cooling-off period of 21 days, and the insurance company may decide whether to provide a longer period. The calculation starts from the moment where the policyholder or his or her representative receives the policy.
This allows individuals who purchase VHIS to reconsider whether to keep it within a reasonable time frame. During this period, they can cancel the policy at any time and receive a full refund of the premium paid, based on the earlier one.
9. Coverage for Inpatient Mental Illness Treatment
The fast-paced lifestyle in the city has boosted up the number of people who suffer from mental problems and illnesses while protection given by most of the medical insurance plans in HK on hospitalization and medical treatment for mental illnesses remain low.
In order to fill in the protection gap, VHIS covers up to HK$30,000 in “psychiatric treatment” per year.
If a policyholder is hospitalized in a Hong Kong hospital and receives psychiatric treatment under the advice of a specialist doctor, the policy will cover eligible expenses (excluding outpatient and psychological counseling).
Summary
VHIS has a lot of benefits, but it is also recommended that consumers should thoroughly understand the content and premium of the product, the rights and responsibilities of the policyholder, and the background and services of the insurance company before selecting the most suitable health insurance product based on personal needs and financial capabilities.
