Chapter 11 - Travel Health Insurance Flashcards
TRAVELLER RISKS
What risks do travellers face? All travel attracts various common and uncommon risks, including medical risks, non-medical risks faced by travellers with a medical emergency, and even destination risks.
Medical Risks
Despite the best laid plans, unforeseen illness or injury can occur while travelling — even to the safest destinations. The cost of emergency health services in a foreign country, together with the associated expenses incurred if a trip must be cut short, can be extremely high. And in some countries, hospitals and medical clinics may require immediate cash payment.
Non-Medical Risks Faced by Travellers with a Medical Emergency
Medical emergencies often result in additional expenses for other emergency arrangements. Here are a few examples:
- Child care expenses if a parent must be hospitalized due to an unexpected health emergency while travelling.
- Medical emergency of a travel companion, resulting in early or late return from a trip.
- Return of insured to their residence via regular air or MedEvac service.
- Automobile return to residence if medical emergency occurred while travelling within Canada or the United States.
- Trip cancellation fees or penalties.
- Pet return.
- Return of deceased insured.
Destination Risks
Every destination has certain associated risks. While most destinations are considered safe for routine travel, some may affect the safety and well-being of travellers and are therefore considered too high-risk to be eligible for travel insurance. High-risk destinations include known war zones and/or countries where the Government of Canada has issued Travel Advice or Advisories. According to the Government of Canada website, there are many events that can necessitate an official travel advisory, including the threat of terrorism, civil unrest, war, rebellion, a natural disaster, political instability, and health emergencies.26
Ontario Health Insurance Plan
Residency Requirements
To meet the minimum Ontario residency qualifications, the resident must hold a valid OHIP card and:
- Make Ontario their primary home.
- Be physically in Ontario for 153 days in any 12-month period. If the resident has been out of Ontario for more than 212 days in any 12-month period, their OHIP coverage is cancelled (unless the resident has applied for an exception).27
- Be physically in Ontario for at least 153 days of the first 183 days immediately after the person began living in the province.
TRAVEL WITHIN CANADA
Under the OHIP, eligible Ontario residents are insured for emergency health services when visiting another Canadian province or territory. OHIP also extends coverage to Ontario residents moving within Canada for the first three months in their new home province.
When travelling within Canada, OHIP will cover some of the same services that are covered in Ontario, including:
- Physician services (for example, a visit to a walk-in clinic).
- Services provided in a public hospital (for example, emergency, diagnostic, laboratory).
OHIP does not pay non-medical expenses associated with a travel health emergency while travelling within Canada (for example, air or ground transportation to the person’s residence once their condition has stabilized, or having their car driven home if the person is too ill to drive themself). Later in this chapter, we will learn how THI can fill this gap.
TRAVEL OUTSIDE OF CANADA
In the past, OHIP reimbursed a portion of emergency health services incurred by Ontarians travelling outside of Canada, provided that the resident met the Ontario residency requirement. However, as of January 1, 2020, treatment for emergency medical services incurred while out of Canada are not covered or reimbursed by OHIP.
Let’s revisit our example:
Jackson suffers a heart attack while travelling anywhere outside of Canada. OHIP will not pay for any of his resulting emergency medical costs. Hopefully Jackson carries THI to cover the cost of his emergency treatment!
Exceptions outside of Canada
There are two exceptions where OHIP may cover emergency medical services while an Ontario resident is travelling outside of Canada. They are as follows:
1) Doctor recommended health care outside of Canada.
2) Kidney dialysis for travellers.
Doctor Recommended Health Care Outside of Canada
If recommended by an Ontario doctor, OHIP may cover certain pre-approved medical services provided in a licensed hospital or facility outside Canada. The patient must obtain written approval from the Ministry of Health before receiving the medical service or treatment. To obtain funding by OHIP, the treatment must meet all of the following conditions:
- Must be performed at a hospital or licensed health facility.
- Is not experimental or for research or for a survey.
- Is generally accepted in Ontario as appropriate treatment for a person in the same medical circumstances as the insured person.
- Is either not performed in Ontario by an identical or equivalent procedure, or is performed in Ontario but the insured person must receive the services outside Canada to avoid a delay that would result in death or medically significant irreversible tissue damage.
Dialysis
OHIP provides an exception for eligible residents who require kidney dialysis but who are otherwise able to travel. OHIP will reimburse dialysis costs up to a maximum of $210 (Canadian dollars) per treatment with no maximum number of treatments. The application and approval process for out-of-country dialysis is administered for OHIP by the Ontario Renal Network (ORN).28
Credit Card Companies
Many credit card companies offer lost baggage or trip cancellation insurance if the credit cards were used to pay for airfare or a travel package. However, the average credit card does not offer THI.
Premium credit cards may offer THI, but these cards are only available to high-income earners, and the coverage limits, policy conditions, and exclusions vary from one credit card to another.
These policies also have typical restrictions, such as:
- Pre-existing medical conditions (these may invalidate all coverage).
- Maximum number of days per trip (for example, 15 days per trip).
- Maximum number of days the cardholder can be out of the country in total, regardless of the number of trips (for example, 30 days in any 365-day period).
- Sports injuries (these are usually excluded).
- Age (many policies expire once the cardholder turns 65).
Employee Group Benefit Plans
Some employee group benefit plans may include emergency THI for employees and their family members. Group benefit plans THI coverage may have similar restrictions to credit card plans. Encourage your client to review their group plan documents or contact their health benefit administrator to find out if their plan includes THI and, if so, to determine coverage benefits, limits, exclusions, and restrictions.
Note: Canadians relying on the THI provided by a premium credit card or an employee group benefit plan must pay attention to coverage restrictions as they are applied at the time of a claim (whether the cardholder reads them prior to travelling or not!).
OAP 1, Section 4: Accident Benefits Coverage
Section 4: Accident Benefits Coverage of the OAP 1 provides very broad coverage for emergency health care services for insured persons or persons injured in an automobile accident. Follow-up medical and rehabilitation care, as well as income replacement coverage, are also included. These benefits extend to policyholders who use their vehicle on vacation or who are hit by another automobile as a pedestrian. However, the accident must occur within the OAP 1 territorial limits (Canada, the United States, or on a vessel travelling between ports of those countries). Benefits are subject to the policy’s monetary limits, time frames, and conditions.
Example 3A
Jung is a self-employed IT consultant residing in Toronto. He does not have a private or group benefit plan, and he did not purchase THI before driving his car to New York City. While speeding on a freeway in the United States, he lost control of his car and broke his hip in a rollover accident. In New York, he received emergency treatment and a hip replacement, and was flown home by air ambulance. At home, Jung needs follow-up medical appointments, physiotherapy, and transportation to these appointments. He will be off work for two months.
Jung’s OAP 1 will pay for his treatment and care in New York, all associated costs described which are not covered by OHIP, and his loss of income while off work.
Limitations of OAP 1 Benefits
Note that the OAP 1 benefits are often not sufficient for most travellers. The OAP 1, Section 4: Accident Benefits Coverage is only applicable to a health emergency resulting from an automobile accident occurring in the territorial limits of the policy. In contrast, a THI policy provides protection for travel health emergencies due to an automobile accident occurring outside the territorial limits of the OAP 1, as well as travel health emergencies not associated with an automobile accident.
Collateral
Simply defined, collateral benefits are sources of benefits available to an injured person. They can include group or private income replacement, rehabilitation benefit, and more.
The OAP 1, Section 4: Accident Benefits Coverage is subject to the regulations found in the Ontario Statutory Accident Benefits Schedule (SABS). Regulation Section 47(2) of the SABS permits an insurer to deduct certain collateral benefits from those payable to an insured person following an automobile accident (for example, the income replacement available from a private or group disability plan).
Example 3C
In the situation described in Example 3A, assume Jung has a private disability income replacement policy. In this case, his Ontario automobile insurer is entitled to deduct the disability income he receives under his private plan from the income replacement benefit available under the OAP 1.
Organization
A distributor (the intermediary). An underwriter (the carrier). A third-party administrator.
Distributors
Although some insurance companies use only their own distribution network, others use a variety of marketing sources. THI products are most commonly marketed and distributed through a network of intermediaries or channels, including travel agents, financial institutions and financial planners, life and general insurance agents and brokers, affinity associations, tour organizations, credit card companies, and group benefit plans. These marketing firms are known as the distributor.
The distributor signs an agreement with one or more underwriters to market THI products. Fees and commissions are added to the basic underwriting costs, and premiums are determined much like any other insurance product.
Underwriters
n the world of travel insurance, the term “underwriter” refers to a life insurance or casualty company licensed to underwrite this type of risk. The underwriter’s main products (other than THI) may include group accident benefits or casualty products. Underwriters negotiate with distributors to provide some claim and expense protection, but generally will act in partnership with the marketing network.
Third-Party Administrators
A third-party administrator (TPA) is an organization that is contracted to take over management of a THI claim on behalf of the insurer (that is, performs a task traditionally handled by the underwriting company). Also known as the “claims manager,” the TPA’s function is to provide claims management and the return of the insured to health and/or to Canada.
Inbound THI
Inbound THI is for international travellers arriving in Canada from another country, who are not covered by a Canadian GHIP. This type of policy provides benefits for a new emergency accident or sickness occurring during the coverage period. The coverage must be purchased before the visitor arrives in Canada and is subject to eligibility requirements.
Example 4
Priya emigrated to Canada several years ago. She is looking forward to an upcoming visit from her parents, who live in India. Her broker recommends Priya purchase a THI policy for her parents, in case one of them suffers a health emergency while in Canada.
Outbound THI
Outbound travellers are Canadian residents who travel outside their home province, territory, or country for pleasure or business. Outbound THI policies pay the reasonable and customary medical and non-medical charges for such costs incurred while travelling.
THI plans vary, depending on the planned length of the trip and the traveller’s frequency of travel. Let’s take a look at the different types of coverages available to outbound travellers.
- Single-trip plans: Cover a fixed number of days for a single trip, equal to the total length of the trip, including the insured’s departure date and return date. If the client knows their exact departure and return dates, a single-trip plan is appropriate.
- Frequent traveller plans: Include those who travel often for business, for pleasure, or perhaps for caregiving of elderly family members in another province or country. A frequent travel plan is an annual policy providing the traveller with coverage for any number of short-term trips in the one-year period. The length of each trip and the total number of travel days in the policy period are limited. Premium credit card companies may offer such plans.
As with any other insurance product, it’s important to compare THI contracts to protect the consumer, paying attention to benefits included, benefit limits, limitations, exclusions, and general provisions. Of course, you’ll also compare the cost of premiums — however, the lowest price does not necessarily reflect the best product for the client.
As discussed earlier, THI is important for outbound Ontario travellers for two reasons:
1) Ontario residents with a valid OHIP card are covered for emergency health costs only when travelling in another Canadian province or territory — not outside of Canada.
2) OHIP does not cover non-medical expenses either inside or outside of Ontario or when travelling outside of Canada.
In contrast, THI policies include coverage for medical expenses and much more:
- Emergency medical services and extended health care benefits.
- Trip cancellation, interruption, or delay.
- Miscellaneous benefits.
We’ll now examine each of these coverages in more detail.
EMERGENCY MEDICAL SERVICES AND EXTENDED HEALTH CARE BENEFITS
Trip Cancellation
Trip cancellation benefits apply if, prior to the start of a trip, the insured is forced to cancel due to the death of the insured, a member of their extended family, or their travelling companion. The policy will reimburse the insured for the non-refundable portion of any prepaid transportation (such as air, rail, or cruise ship) or the non-refundable portion of any of the unused, prepaid travel arrangements.
Interruption
Interruption coverage applies to a trip already in progress. If an occurrence prohibits the insured from completing the trip as scheduled, the policy will return any non-refundable portion of any unused prepaid accommodation, and/or the extra cost to change the return ticket to a one-way economy fare by regular scheduled transportation back to the departure point or to the group’s next destination.
