Sunday, May 19, 2013

Costs and Increase Limits Buying Health Insurance

A range of New Zealand health insurance plans, you will notice that there is often a lot of variation in the
claim limits that insurers offer for aspects of their plan (for example the maximum that they will pay for surgical costs may be capped at $100,000). The limits can vary significantly – for example one insurer might offer a surgical limit on their health insurance plan of $300,000 while another health insurer might offer a limit of $100,000. How important are these limits?

First of all, most surgical limits offered by New Zealand health insurance companies are very high – and are high enough to cover any surgical cost that you could currently face. So in this regard, most insurer limits are high enough that you could have confidence in your ability to claim if you needed to. However when comparing two New Zealand health insurance companies, the higher claim limits that might be offered by one health insurer are still worth considering. We will look at two reasons why this is the case.

One reason is that medical costs can change rapidly, and without a great deal of prior warning. It's quite common for costs for certain procedures to increase by 20% a year or more, and there is no set limit on the type of increases that can take place. So, a health insurance policy with a high limit is important - it might not be that you need to claim such a high amount right now – but in 5 or 10 years, it's hard to predict what costs will be, so a high limit means that your policy is future-proofed to a degree.

Some New Zealand health insurance companies will say that they regularly review costs and increase limits when needed. This may be the case, however it's safer to choose a policy with an already high limit, rather than trusting that the insurer will increase their limits to match the actual rising cost of health care in New Zealand.

A second consideration is that some procedures covered by health insurance can be extremely costly. An example in New Zealand is for treatment that involves expensive medication that is not funded by Pharmac. These costs can be very high relative to the usual costs of surgery and medication, and can quite easily reach $100,000 or more. This is the kind of amount that will test the limits offered by some health insurance companies. For this reason it is important to consider limits and match them against possible worst case scenarios (this is why you have health insurance).

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