On 1 April 2019, the government of Hong Kong introduced a new individual Voluntary Health Insurance Scheme (VHIS). This legislation aims to offer consumers additional choices through private healthcare services, alleviate the burden on the public healthcare system and encourage an improved level of quality for in-hospital insurance products. In addition, individuals’ premiums paid to VHIS are tax deductible up to HKD 8,000 per insured person.
Hong Kong’s highly congested public healthcare system created a demand for more attractive private plans. Therefore, due to the limitations of the public healthcare system, the private health insurance market in Hong Kong is well developed. The government of Hong Kong introduced VHIS to encourage more people to use private healthcare facilities by purchasing private health insurance. This also gives consumers more choices and allows for greater transparency.
VHIS is administered by the Hong Kong Food and Health Bureau (FHB) and covers only hospital insurance products. Insurance companies that decide to participate in VHIS should register and comply with the FHB as VHIS providers.
VHIS offers a standard certified plan with basic standardized features including:
- Guaranteed renewals up to age 100.
- No lifetime benefit limit.
- Cooling-off period of 21 days during which consumers can cancel their policies with a full premium refund.
- Psychiatric inpatient treatments in local hospitals.
- Coverage of pre-existing conditions not known at the time of joining.
- Coverage of day-case surgical procedures, imaging tests and non-surgical cancer treatments.
- Transparency on products and premiums, allowing consumers to compare premium schedules of all certified plans which can be accessed on the insurance providers’ and VHIS websites.
VHIS providers have the possibility to offer certified “Flexi Plans” with enhanced protection so long as all protection under the certified standard plan is guaranteed.
To encourage participation in VHIS, the government passed the Inland Revenue Ordinance (Cap. 112), which introduces a new tax deduction for VHIS premiums paid up to HKD 8,000 per insured person. It covers Hong Kong resident taxpayers and their relatives, including spouses, children, grandparents, parents and siblings. The tax deduction may be claimed by the taxpayer for each insured person under the VHIS certified plan. To claim the tax deduction, taxpayers should provide the tax administration with the VHIS certified plan premium(s) receipt or the annual premium statement issued by VHIS providers.
Employers who currently offer benefits below the VHIS minimum requirement level may want to consider providing supplementary healthcare coverage or make changes to close the gap to avoid facing pressure from their employees.