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Expatriate health insurance: Don't leave your homeland without it

Expatriate insurance is a specialized type of health insurance designed specifically for people on extended stays outside the United States. Though the insurance is specialized, access to it is by no means limited, especially given the increasing number of people living and working overseas on temporary assignments.

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working on beachThis type of plan comes to the rescue of a medical disaster strikes you while you're living abroad.

"Most of the horror stories I've heard involve people not having expat insurance and being stuck in a hospital in somewhere like London, that are in need of triple bypass surgery," says Phil Tyson, spokesperson for Norfolk Mobility Benefits, an expatriate insurance provider. "It is like dealing with a person that is uninsured and needs emergency medical care in the U.S."

Most expatriate health insurance plans are identical to domestic plans, except they offer richer benefit options.

"If you are going to be living in a Third World country where living conditions are harsh, most expatriate insurance plans will be higher in cost but they cover anything that could happen to you while you are there," says Tyson. "The big difference between an expatriate plan and a domestic plan is the expatriate insurer has the appetite and wherewithal to absorb the risk that comes along with foreign residency. They are used to covering people who work all over the world. Domestic insurers are used to covering people within a certain locality."

Expatriate insurance does not require you to stay within a defined network of doctors or other medical providers. It also addresses the other special needs of travelers who must cope with foreign health care systems. These include language translation, foreign currency exchange, transportation to Western treatment centers and a variety of cultural issues.

Other health insurance plans fall short

Most American health insurance plans are not intended to cover lengthy trips out of the country. HMOs, for instance, while covering emergency room treatment anywhere, generally offer additional coverage only through networks of doctors within your own area. Preferred provider organizations (PPOs) cover a greater portion of your medical costs only if you go to doctors in the network and those networks are usually local. As for Medicare, it doesn't cover any health insurance expenses incurred outside the United States.

"A lot of domestic carriers will not cover you when you permanently reside and work out of the country," notes Tyson. "It's a risk most domestic carriers aren't willing take on. Travel insurance is fine for short-term business or leisure travel, but there are severe restrictions on pre-existing conditions, and only some offer to cover medical-evacuation costs, but have limits."

That said, although travel insurance can be cost-effective in certain situations, it typically has a six-month limit on benefits. If you break your leg during your seventh month of travel, you will be the one footing the bill. Or if you are injured during your third month and your treatment continues past the six-month mark, you are responsible for medical expenses incurred after that point.

Factors that can affect your health insurance premiums

  • Age
  • Sex
  • The range of benefits
  • Pre-existing medical problems
  • Extra coverage for dangerous activities
  • Extra coverage for team-sports participation
  • Evacuation coverage
  • U.S. rates: Some plans increase your premiums if you remain back in the United States longer than a set time, even if you haven't sought medical care.

It’s also important to make sure you purchase your insurance coverage in your home country, prior to your trip. If you opt to buy expatriate insurance from a foreign company once you're already overseas, it's not likely to do you any good if you need to return stateside.

The Centers for Disease Control and Prevention (CDC) has issued its own recommendations regarding the importance of bringing certain documentation along when you travel: “If the health insurance policy provides coverage outside the United States, travelers should be advised to carry both the insurance policy identity card (as proof of insurance) and a claim form.”

The CDC points out that failing to make sure you have the right coverage can be a costly mistake. It notes that health insurance companies will pay "customary and reasonable" hospital costs abroad, but very few will pay for medical evacuation to the United States. According to Tyson, medical evacuation can easily cost in excess of $75,000, depending on the location and the extent of illness or injury.

"The people who don't have evacuation coverage are those we hear from the most," says Tyson. "They are stranded somewhere and have no way to get to the nearest hospital, so they have to arrange for a private plane and pay a company doctor out of pocket. This is one of the reasons why we never sell medical insurance without proper evacuation coverage."

Edward Hasbrouck, travel expert and author of the book The Practical Nomad, points out that there are some risky activities that may lead to a need for medical evacuation, such as scuba diving and extreme sports. If you are an extreme-sports enthusiast and plan to take your hobby with you during an 18-month work project overseas, you should know the sports are often excluded from medevac coverage.

"When you are traveling to foreign country, it is even more important to read the fine print to determine what is and is not covered," suggests Hasbrouck.

Multiple choices for health insurance coverage

Deciding which expatriate plan to buy depends on you and your family's personal needs, finances and travel itinerary. If you're heading for London rather than the farthest reaches of Antarctica, you can probably do with less than $250,000 in emergency-evacuation coverage. But Tyson recommends that if you are traveling to other places like The Democratic Republic of the Congo or remote places like the islands of Tristan Da Cunha, a good evacuation policy should provide no less than $1 million in coverage.

What to look for in an expatriate health insurance plan

  • Evacuation coverage of at least $1 million
  • A "guaranteed coverage" clause
  • Few or no pre-existing condition exclusions
  • No "underwriting at the time of claim" clause
  • A well-known expatriate insurance company with a good track record
  • A plan that is considered "creditable coverage" according to the laws of HIPAA.

Source: Norfolk Mobility Benefits

It's a good idea to make a detailed list of all the features you need in a plan, those you'd like and those you can do without.

Individual expatriate insurance plans are medically underwritten, so be prepared to submit medical evidence about your health when you apply for a plan. The good news is that most plans can be issued immediately, so you don't have to wait a long time to know if you've been accepted.

Tyson cautions that there are two things that could cause you to be denied enrollment in an expatriate insurance plan: Poor health and war zones.

"You want to make sure you have certain war-risk areas covered," he says. "There are international insurers that will also not cover you if you are going to war zone. You have to tell your insurer that you are going to a place like Afghanistan and you need them to remove the war-risk exclusion. They may still offer you a policy but it will be substantially higher than a standard policy."

Tyson says that when a policyholder goes to a war zone, the cost of medical coverage is 25 to 30 percent higher. In addition, life and accidental death and dismemberment insurance can be 10 to 15 times higher.

Plan pricing hinges on your desired menu of benefits, the area of the world you'll be living in or visiting and other factors. Experts caution against shopping on price alone, because if a product is much less expensive than others, it often has major exclusions.

Although expatriate plans are likely to address most health insurance needs of Americans traveling abroad for extended periods, there may be some drawbacks.

For example, a plan might not fall under the jurisdiction of your state's insurance regulators. If the sight of tulips in Holland makes you plunge from your bike into a canal and your expatriate health plan refuses to pay your medical bills, you may have no recourse. This is especially true if the insurance company isn't licensed in your home state.

In addition, if your expatriate health plan has been issued by an insurer based in the United Kingdom or other foreign soil, you'll probably have to rely on the insurer's own complaint process to settle your gripe.

A final note about HIPAA

In addition to potential claims disputes, understand the possible consequences for your federal HIPAA rights before you buy an expatriate plan.

HIPAA, the Health Insurance Portability and Accountability Act, grants you certain rights when you switch health insurance plans so that you aren't penalized if you have pre-existing medical conditions. This could become a concern if you return to the U.S. and join a new group health plan. If your expatriate plan was not considered "creditable coverage" under federal law, you could lose your HIPAA protection and wind up without coverage for your pre-existing medical problems for as long as a year, according to the Centers for Medicare and Medicaid Services, which administers HIPAA.

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