Chapter 11 - Travel Health Insurance

Question 1

TRAVELLER RISKS

Answer 1

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.

Question 2

Medical Risks

Answer 2

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.

Question 3

Non-Medical Risks Faced by Travellers with a Medical Emergency

Answer 3

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.

Question 4

Destination Risks

Answer 4

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

Question 5

Ontario Health Insurance Plan

Residency Requirements

Answer 5

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.

Question 6

TRAVEL WITHIN CANADA

Answer 6

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.

Question 7

TRAVEL OUTSIDE OF CANADA

Answer 7

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!

Question 8

Exceptions outside of Canada

Answer 8

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.

Question 9

Doctor Recommended Health Care Outside of Canada

Answer 9

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.

Question 10

Dialysis

Answer 10

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

Question 11

Credit Card Companies

Answer 11

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).

Question 12

Employee Group Benefit Plans

Answer 12

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!).

Question 13

OAP 1, Section 4: Accident Benefits Coverage

Answer 13

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.

Question 14

Limitations of OAP 1 Benefits

Answer 14

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.

Question 15

Collateral

Answer 15

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.

Question 16

Organization

Answer 16

A distributor (the intermediary).
An underwriter (the carrier).
A third-party administrator.

Question 17

Distributors

Answer 17

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.

Question 18

Underwriters

Answer 18

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.

Question 19

Third-Party Administrators

Answer 19

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.

Question 20

Inbound THI

Answer 20

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.

Question 21

Outbound THI

Answer 21

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.

Question 22

EMERGENCY MEDICAL SERVICES AND EXTENDED HEALTH CARE BENEFITS

Question 23

Trip Cancellation

Answer 23

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.

Question 24

Interruption

Answer 24

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.

Question 25

Delay

Answer 25

The delayed departure benefit covers the same scheduled benefits as interruption coverage, if the departure is delayed due to an emergency (including severe weather conditions, mechanical breakdowns, or accidents involving land transportation to the insured’s departure point).

In the scenario described earlier, Rita’s travel companion, Helen, did not wish to continue the hiking trip alone. She was able to fly on the jet with Rita. Helen’s travel insurer paid for her passage home.

Question 26

MISCELLANEOUS THI BENEFITS

Answer 26

Additional benefits may be included in the base policy or sold as optional extras, including flight accident insurance, pet return, rental car collision, and automobile return.

Question 27

EXTENSION OF COVERAGE PERIOD

Voluntary extension

Answer 27

: A voluntary decision to remain at the trip destination past the original intended date of return (or termination date). If an insured wishes to extend coverage, they must declare that there has been no change in their medical condition.

Question 28

EXTENSION OF COVERAGE PERIOD

Involuntary extension

Answer 28

n involuntary extension past the date of return, for reasons beyond the control of the insured (for example, the insured has a medical condition and is not sufficiently stable to go home on the expected date of return).

Question 29

EXCLUSIONS AND LIMITATIONS

Answer 29

The study of travel insurance would not be complete without examining the Exclusions and Limitations section. Exclusions and limitations prevent undue selection against the carrier by limiting the exposure to normal travel risks and providing coverage suitable for the average client at a reasonable cost. Subject to an additional premium, some exclusions or limitations may be amended to remove restrictions to give coverage for certain situations or activities.

There are several exclusions found in outbound THI policies, and brokers should point all of them out to policyholders. The three exclusions below are the most well known:

1) Travel advisories.
2) Sports activities.
3) Pre-existing medical conditions.

Question 30

Travel Advisories

Answer 30

Insurance carriers are naturally concerned about providing insurance to those who wish to travel to destinations when and/or where their safety and well-being may be affected. They may void THI coverage if a policyholder travels to certain regions.

The Government of Canada continuously collects reports on safety and security abroad from a variety of sources and monitors world events. The government analyzes this information and, where necessary, issues official Travel Advice and Advisories for countries or regions where security conditions put Canadians at heightened risk due to the following reasons:

• Political instability (for example, the threat of terrorism, civil unrest, war, rebellion).
• A natural disaster (for example, severe earthquake, flooding).
• A nuclear catastrophe.
• Health emergencies (for example, active epidemic or pandemic in the country or region).

The following is from the Government of Canada website:29

“Risk levels and Travel Advisories

Exercise normal security precautions

There are no significant safety and security concerns. The overall safety and security situation is similar to that of Canada. You should take normal security precautions.

Exercise a high degree of caution

There are identifiable safety and security concerns or the safety and security situation could change with little notice. You should exercise a high degree of caution at all times, monitor local media and follow the instructions of local authorities.

IMPORTANT: The two levels below are official Government of Canada Travel Advisories and are issued when the safety and security of Canadians travelling or living in the country may be compromised:

Avoid non-essential travel

There are specific safety and security concerns that could put you at risk. You should reconsider your need to travel to the country, territory or region. If you are already in the country, territory or region, you should reconsider whether or not you really need to be there. If not, you should consider leaving while it is still safe to do so. It is up to you to decide what “non-essential travel” means, based on family or business requirements, knowledge of or familiarity with a country, territory or region, and other factors.

Avoid all travel

There is an extreme risk to your personal safety and security. You should not travel to this country, territory or region. If you are already in the country, territory or region, you should consider leaving if it is safe to do so.”

The Government of Canada also posts advisories for specific countries at https://travel.gc.ca/travelling/advisories, in addition to the following information:

• Local safety and security conditions.
• Areas to avoid.
• Entry and exit requirements.
• Local laws and culture.
• Possible health hazards and health restrictions.
• Natural hazards and climate.
• Where to find help.

Question 31

Risky Sports

Answer 31

Many travellers enjoy participating in risky sports activities while on vacation — but they do not realize that they will not be insured for any resulting medical emergencies. Such activities are considered “outside the edge of normal” travel activities and are excluded from the average THI policy.

It is important to note that the sports activity exclusion differs across policies — some exclusions are more restrictive than others. Brokers, and their clients, need to compare their options.

Below is an example of a sports activity exclusion:

“We will not pay for losses or expenses incurred for, or as the result of, injury or loss while participating in any high-risk activity. ‘High Risk Activity’ means:

• scuba diving
• bungee jumping
• gliding, hang-gliding, parachuting, skydiving, sky-surfing, hot air ballooning
• freestyle skiing/snowboarding, heliskiing/snowboarding, ski jumping
• street luge, skeleton activity

Example 6

Shandi suffered a ruptured ear drum and lung damage while scuba diving during a family vacation in Cuba. Due to the sports activity exclusions, her THI policy will not cover any emergency medical costs or extended health benefits resulting from these injuries.

• mountain or rock climbing with or without ropes
• participation in any rodeo activity
• practicing for or participation in sanctioned competitive sports or in any contest of motorized speed

Question 32

Pre-existing Medical Conditions

Answer 32

Brokers must be able to explain the pre-existing medical condition exclusion to applicants and ensure clients understand the consequence of failing to disclose them.

A pre-existing medical condition refers to any health condition that already exists when the policy becomes effective or within the pre-existing condition period (for example, three, six, or nine months prior to the date of policy issue).

Importantly, pre-existing conditions are grounds for a claim refusal. They can include:

• A medically recognized complication or recurrence of a medical condition.
• An unstable medical condition (usually three months of stability is required).
• A sickness or injury that would cause an ordinarily prudent person to seek medical investigation or treatment prior to departure.
• A change in health condition, meaning any illness, accident, injury, or symptoms for which the insured:

○Consulted a physician (other than for a regular checkup).

○Was hospitalized.

Tony and Elisa booked a Caribbean cruise two months ago and purchased THI for their trip. Four weeks before the trip, Tony went to his doctor because he felt dizzy and light-headed. The doctor changed his blood pressure medication, and he felt better almost right away. Tony must disclose this change in condition to his travel insurance carrier and confirm if his policy will still be valid or if a policy change is needed.

Note: Diagnosis is not necessary to define a pre-existing condition. The fact that abnormal symptoms existed prior to the purchase of the policy, or that any symptoms or signs of illness or disease were known to the insured prior to the effective date of the policy, is sufficient.

○Was prescribed or received a new treatment.

○Received a change in an existing treatment.

○Was prescribed a new medication.

○Received a change in existing medication (including usage or dosage).

Question 33

Other Common Exclusions

Answer 33

Other common THI exclusions include:

•Sickness or injury:

○Occurring while the policy is not in effect.

○Resulting from non-compliance of medical treatment.

○Which does not relate directly to an emergency, including general assessments or checkups, experimental drugs, preventative medicines or vaccines, elective treatment, elective or cosmetic surgery in any form, or treatment that can be delayed until return to the insured’s country of residence.

• Non-emergency hospital or medical treatment, where the policy is sought specifically for the purpose of obtaining such treatment, whether or not recommended by a physician.
• Continuing medical treatment, if the insured is medically fit to return to their country of residence following emergency treatment of a critical sickness or injury.
• Pregnancy, childbirth, and miscarriage, including:

○Any complications due to pregnancy occurring within eight weeks of the expected delivery date (this is a common

limitation to coverage during pregnancy).

○The birth of a child while travelling, prenatal care, or complications of the pregnancy or childbirth.

Suicide, self-inflicted injury, or attempted suicide, whether or not the insured is mentally ill.

•Illegal or negligent act:

○Injury or death resulting from, or related to, negligent behaviour or involvement in the commission or attempted commission of a criminal offence or a negligent or illegal act.

• Air travel, unless as a passenger in a commercial aircraft with a seating capacity of six people or more, licensed to carry passengers for hire (for example, the insured flying their own private plane, in a friend’s private airplane, or flying in a small plane for the purposes of skydiving or parachuting). (For more information on sports activity exclusions, see Section 11.5.2.2.5.2.)
• Civil disorders, war, or acts of war (whether war has been declared or not).
• Expenses due to:

○Early or delayed return home when caused by a situation that, before leaving, the insured was aware would make it unlikely to complete the trip as booked (for example, the insured knew their mother’s death was imminent before leaving on an insured trip).

○Trip delay or interruption when the purpose of the trip is to visit a person who is ill, and the medical condition of the ill person worsens or death occurs, causing the delay or interruption to the insured (for example, the insured travels abroad to visit their father who, at the time of policy purchase, was expected to pass away at any moment).

Question 34

CO-ORDINATION OF BENEFITS WITH OTHER PLANS

Answer 34

What happens if an insured has overlapping THI coverages? For example, they might have access to coverage under a premium credit card as well as through an employee group benefit plan. The co-ordination of benefits clause is intended to ensure that benefits payable under multiple policies do not exceed 100% of a person’s eligible incurred expense (upholding the principle of indemnity).

The benefits from a private THI policy are generally paid in excess of a person’s OHIP coverage. Benefits are also co-ordinated with other plans or sources of coverage held by the policyholder. The THI policy becomes the second payor.