What is the Voluntary Health Insurance Scheme?

While it is true that Hong Kong boasts an exceptional dual track healthcare system, since 1999 there has been an increasing imbalance between the public and private options.

The public medical system, run through the Hong Kong Hospital authority accounts for roughly 3% of GDP and provides 88% of all inpatient services in the city. The treatments provided via the Hong Kong public healthcare system are offered at low-cost, heavily subsidized prices, and are provided to a largely aging population.

From 1999 to 2019 these issues only increased, and successive reports commissioned to examine the matter determined that incentivizing the usage of private medical facilities would be the best way to decrease the burden on the public healthcare system. The reason that an incentive is required is due to the fact that Hong Kong has some of the highest average private healthcare costs in the world, and paying for the cost of treatment at a private hospital in Hong Kong out of pocket will be prohibitively expensive.

As such, in April 2019 the Voluntary Health Insurance Scheme was officially finalized and launched to the Hong Kong public under the auspices of the Food and Health Bureau.

Developed to alleviate the burdens facing the public healthcare system, and enable Hong Kong residents access treatment options at Hong Kong’s private hospitals, the Voluntary Health Insurance scheme (or VHIS) is a simple, yet effective health insurance option for residents of Hong Kong to receive superior medical treatment.

Voluntary Health Insurance Scheme Features

VHIS Health Insurance products in Hong Kong are generally far less expensive than traditional Hong Kong Health insurance plans or even International Medical Insurance options. Further to this, VHIS products are standardized – they all start with the same basic level of coverage which makes it easy to compare the pricing you are being offered.

The core benefits, or features, of VHIS products being offered in Hong Kong are:

Certified Products

In most cases insurers are able to create, market, and price a Health Insurance plan as they see fit. With respect to the Voluntary Health Insurance scheme, all plans are certified by the Food and Health Bureau as being “admitted” and “authorized” products. This gives consumers a clear indication of which plans are, and are not part of the VHIS. The certification of admitted products also serves to ensure that policies being purchased via the VHIS are Indemnity Hospital Insurance Plans, and will indemnify you (so the extent allowed by the insurance) against your healthcare costs.

In most cases insurers are able to create, market, and price a Health Insurance plan as they see fit. With respect to the Voluntary Health Insurance scheme, all plans are certified by the Food and Health Bureau as being “admitted” and “authorized” products. This gives consumers a clear indication of which plans are, and are not part of the VHIS. The certification of admitted products also serves to ensure that policies being purchased via the VHIS are Indemnity Hospital Insurance Plans, and will indemnify you (so the extent allowed by the insurance) against your healthcare costs.

Standardized and Expanded Coverage Options

All VHIS plans start with a basic level of standardized coverage. This means that, at their core, all VHIS products offer essentially the same coverage (with the exception of some minor allowed variations). All VHIS products must offer the minimum level of acceptable coverage to be admitted into the scheme.

Some VHIS products will offer further Enhanced Benefits. These are known as Flexi-Plans, which must adhere to a “better-off” principle, by improving coverage over Standard Plans while not removing the protection afforded by those policies.

In some cases, both Flexi-Plans and Standard Plans will enable you to select additional add-on benefits which you may opt to include in your coverage for an increased premium.

Universal Medical Coverage in Hong Kong

While the aim of the VHIS is to encourage policyholders to receive treatment at private hospitals, these products do not stop you from receiving covered treatment at a Hong Kong Public Hospital. Policyholders are able to claim for covered treatment at both private and public hospitals or medical facilities in the city as long as the treatment is being covered under their specific policy.

Additionally, a policyholder does not need to claim for treatment they receive at public hospitals under a VHIS plan. Holding a VHIS insurance product does not impact a policyholder’s rights to access the Hong Kong Public Healthcare system.

Guaranteed Renewability and No Lifetime Benefit

Under VHIS products, policyholders have the guaranteed right to renew their coverage until they reach 100 years of age. This means, as long as you are in Hong Kong, you are able to continue on an existing VHIS health insurance plan until you reach 100 years old.

As part of this, and because the VHIS scheme is designed to provide long-term cover, these products do not offer a lifetime benefit. Benefits are offered on an annual basis, giving the policyholder the assurance that they will never “use up” the coverage being provided by the policy.

Voluntary Health Insurance Scheme Tax Deductions

One of the most interesting considerations for the Voluntary Health Insurance Scheme is that Hong Kong tax payers are able to receive tax deductions for personal tax assessments paid after April 2019 for qualifying premiums paid towards any certified plans for themselves, or specified relatives.

Under Inland Revenue (Amendment) (No. 4) Bill 2018, the deduction is capped at HK$8,000 per year per insured person. There is, however, no cap on the number of specified relatives who may be covered under the related tax deduction. A taxpayer who purchases 4 VHIS policies (for himself, his spouse, and his two children), would qualify for an annual tax deduction ceiling of HK$ 32,000.

By offering tax deductions for the purchase of a VHIS policy, the government is effectively rebating these plans. As such, Voluntary health insurance products are extremely attractive in the current Hong Kong health insurance market.

Voluntary Health Insurance and Traditional health Insurance

The major fundamental difference between a Voluntary Health Insurance plan and a traditional Hong Kong health insurance policy is that the VHIS product has been standardized and regulated by the government through the Food and Health Bureau. This means that all plans, outside incentives offered by the individual insurance providers are, fundamentally the same, which allows consumers to objectively evaluate the policy’s utility to their needs.

By creating a product which provides for full life coverage, is subsidized through tax deductions, and which offers a level playfield and a lower cost than would normally be seen with more traditional forms of medical insurance protection, the Hong Kong government has realized a solution which may alleviate the burden on the public healthcare system, while providing an extremely useful tool for the general public.

CCW Global is able to advise Hong Kong residents on admitted Voluntary Health Insurance Scheme products, traditional Hong Kong health insurance plans, and even international medical insurance options. If you would like to receive a free, no-obligation quote comparing your health insurance options both in Hong Kong and around the world, please Contact Us today to arrange a consultation with one of our expert advisors.