Analysis: International PMI and chronic conditions

Unlike domestic private medical insurance, international PMI typically provides cover for chronic conditions such as diabetes. But just how expensive does that make cover – and what are the implications for people who choose to go without? Harvey Jones investigates

Chronic conditions pose a long-term challenge for the private medical insurance (PMI) industry. You could call it a chronic challenge, one that has to be managed, rather than cured.

Domestic insurers have found a simple cure. They just excise all cover for chronic conditions from their policies, and direct clients to the NHS.

With international PMI (iPMI), where expatriate clients can not rely on the local state system, there are complications. And every insurer has a slightly different way of tackling them.

Most insurers will offer cover for chronic conditions such as asthma, diabetes or arthritis on their more comprehensive policies, but refuse to cover pre-existing chronic conditions.

Other insurers will cover pre-existing chronic conditions, particularly on group schemes, but at a price.

PMI is designed to cover acute conditions and accidents, says Sue Bailey, section head at JBI International Insurance Brokers.

"It isn’t designed to insure long-term health problems," she says. "Yet most iPMI policies have some element of chronic conditions cover and palliative care. If you suffer from hypertension, for example, it may cover the cost of medication to keep that under control.”

A chronic condition is ongoing, recurrent, needs palliative care and has no permanent cure, Bailey says.

“For the less serious conditions it may be something you die with, rather than from. Insurers therefore have to cap their exposure, otherwise they would be haemorrhaging money, year after year. If you suffer from diabetes and are moving for example to the US, China, Japan or Switzerland which have expensive medical costs, your insurer would have to pick up a large, predictable bill for your insulin injections.”

INSURER ATTITUDES

Insurers limit their exposure to costs in different ways, Bailey says.

“On basic plans, they may exclude chronic conditions altogether, with limited cover for acute episodes," she explains. "On more comprehensive plans, they might offer up to £2,000 cover a year, with a lifetime limit of £20,000, rising to £40,000 on the most comprehensive plans.”

This leaves both employer and expat with a problem: who pays for any costs on top of that?

“Sometimes the company might pay the difference, or split the bill 50-50 with the employee,” Bailey says.

When a broker takes on a new piece of group business, they hope staff will not suffer from too many pre-existing chronic conditions.

“If too many people need regular medication, the insurer will have to factor that into their premiums," Bailey points out. "This can make the policy very expensive.”

Individuals moving abroad often fail to think through the implications of waving goodbye to the NHS.

“I was recently talking to a client who was thinking about moving to California and having a baby," Bailey continues. "I warned she should budget at least $15,000 and $20,000 for an uncomplicated birth – considerably more for a caesarian section or complications. She was shocked. When you are moving from a state-funded system to a private one, you are moving to a very different world.”

DIFFERENT APPROACHES

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