A fifth-generation indemnity health insurance plan with lower premiums will go on sale starting on the 6th. The key change is reduced coverage for some noncovered services, including manual therapy, aimed at easing a cycle in which heavy use of noncovered care drives up loss ratios and, in turn, premiums.
Financial authorities said on the 5th that 16 life and nonlife insurers will sell the fifth-generation plan starting on the 6th. Premiums are expected to be about 30% lower than fourth-generation plans and at least 50% lower than first- and second-generation plans.
The overhaul comes as indemnity insurance faces chronic losses. With broad coverage of noncovered treatment, the loss ratio for first- through fourth-generation plans has reached 119.3%, a factor behind premium hikes. Authorities said they see high risk of overuse in certain nonsevere noncovered items, including manual therapy, extracorporeal shock wave therapy and noncovered injections, and adjusted the benefit structure accordingly.
Under the fifth-generation plan, noncovered care is split into severe and nonsevere categories. Coverage levels are maintained for severe noncovered treatment for cancer, cerebrovascular and heart disease, and rare and intractable diseases. A new annual out-of-pocket cap of 5 million won applies to inpatient treatment costs at advanced general hospitals and general hospitals.
Coverage for nonsevere noncovered care is reduced. The reimbursement limit is cut to 10 million won from 50 million won, and the coinsurance rate rises to 50% from 30%. Some items, including musculoskeletal physical therapy, extracorporeal shock wave therapy and noncovered injections, are excluded from coverage.
Covered benefits are also linked to the national health insurance system. For covered inpatient care, the coinsurance rate remains 20%, but for covered outpatient care, the coinsurance rate will be set in line with the national health insurance patient share. Covered medical costs related to pregnancy and childbirth and developmental disabilities, which were not covered under existing indemnity plans, are newly included.
Authorities also prepared options for early-generation policyholders facing high premiums. The measures apply to first- and second-generation policyholders whose contracts, before March 2013, did not require revised terms or re-enrollment. Starting in November, eligible first- and second-generation policyholders can choose either an optional discount rider or a contract-conversion discount program.
The optional discount rider keeps the existing contract but lowers premiums by excluding certain benefits, including musculoskeletal physical therapy, extracorporeal shock wave therapy, noncovered injections, and some noncovered MRI and MRA coverage. The contract-conversion discount program offers a 50% discount on fifth-generation premiums for three years for early-generation policyholders who switch. In principle, conversion is possible without separate screening, and policyholders can return to the previous product if they have not received an insurance payout within six months after switching.
Authorities said consumers should check benefit changes that come with lower premiums. Switching to the fifth-generation plan or choosing the optional discount rider may be an alternative for people who use medical services less or feel burdened by premiums. Those who frequently use nonsevere noncovered treatments such as manual therapy or noncovered injections may be better off keeping their current coverage.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.