Fifth-generation indemnity health insurance is set to go on sale through 16 insurers starting on the 6th of this month. After the launch of the fifth-generation plans, the coverage limit for nonreimbursable care for non-severe cases will be sharply reduced, and the coinsurance rate will be raised to 50% from the current (fourth-generation) 30%.
On the 4th, the financial authorities said they will overhaul the structure of reimbursable and nonreimbursable care with the rollout of the fifth-generation plans. Reimbursable medical costs are divided into inpatient and outpatient, and inpatient care will keep the current 20% coinsurance rate in consideration of unavoidable medical needs such as severe illnesses and surgeries.
The outpatient coinsurance rate for reimbursable care will be linked to the indemnity insurance coinsurance rate and the National Health Insurance copayment rate. Under this, policyholders will pay the largest of the following: the amount calculated by multiplying the covered medical expense by the National Health Insurance copayment rate, 20% of the covered medical expense, or the minimum deductible (10,000–20,000 won). As part of measures for the low birthrate era, reimbursable medical costs related to pregnancy, childbirth, and developmental disabilities have newly been included in the scope of coverage.
Nonreimbursable care is classified as severe and non-severe. Severe nonreimbursable care targets treatment for conditions eligible for special calculation exceptions, such as cancer, cerebrovascular and heart diseases, and rare intractable diseases, and maintains the existing coverage limit (50 million won per year, 30% coinsurance). In addition, a new annual out-of-pocket maximum of 5 million won has been introduced for inpatient care at tertiary hospitals, with amounts above that covered.
For non-severe nonreimbursable care, the coverage limit has been lowered from 50 million won to 10 million won and the coinsurance rate has been raised to 50%. Items with high concerns of overuse—such as musculoskeletal physical therapy, extracorporeal shock wave therapy, nonreimbursable injectables, and unlisted new medical technologies—are excluded from coverage. Treatments that receive a "not recommended (grade D)" decision in medical technology reassessment are also excluded from coverage.
Optional riders for nonreimbursable care are available, and consumers can choose the scope of enrollment based on their medical use patterns. A no-claim discount and differentiated premiums apply, so if a policyholder does not receive non-severe nonreimbursable benefits for two years, a 10% premium discount is given, and depending on usage, premiums may be surcharged by up to 300%.
For existing first- and second-generation policyholders who do not use much medical care but feel burdened by high premiums, a "selective discount rider" and a "contract conversion discount (contract repurchase)" system will also be introduced. The selective discount rider is characterized by offering, to initial indemnity insurance policyholders who keep their first- or second-generation contracts, a rider that excludes unnecessary coverage at the policyholder's request and discounts the premium. The contract conversion discount allows initial indemnity insurance policyholders to convert their existing contracts to fifth-generation products at their own request, with premiums discounted for a certain period.
With this overhaul, premiums for fifth-generation indemnity insurance will be significantly lower than before. They will be about 30% cheaper than fourth-generation plans and at least 50% cheaper than first- and second-generation plans, and if enrolling only in reimbursable and severe nonreimbursable coverage, premiums could be cut by about half. Additional measures are prepared for initial indemnity policyholders who enrolled before Mar. 2013. When switching to the fifth generation, a 50% premium discount will apply for three years. Consumer protection measures will also be improved, including expanding the personal indemnity insurance suspension system, improving contract change procedures, and refining claims standards.
The Financial Services Commission and the Financial Supervisory Service plan to continuously monitor loss ratios and medical use patterns to supplement the system, and to focus on preventing unhealthy sales practices such as misselling and tying.