Johnny Chan

Keeping the money jar filled

A breakdown of health insurance costs


The Thai government does not subsidize private health insurance here. They do regulate it very tightly, though. If an insurance company doesn't maintain the required amount of money to cover anticipated claims, it can be closed down by the government.

Some auto insurers were recently shut down and some life insurers have been warned; but, health insurers seem be maintaining more effective control, possibly because they are much fewer in numbers Buying health insurance, as well as any other type of insurance, is much like everyone putting money together into one big jar for use in the event of a medical emergency.

Actuaries, mathematicians, determine the amount that each age group should contribute to the jar. They use Actuarial science, a discipline that applies mathematical and statistical methods to assess insurance risk for each age group. It is kind of educated-guesswork. If they "guess" right, they can earn a lot of money for the company investors. If they "guess" wrong, they can end up costing the company a lot of money.

Insurance companies use people called Underwriters to carefully evaluate each new insurance application in order to help protect the insurance company against high claims losses. Their job is to find medical problems in the applicant's health history that could have the potential of reoccurring again in the future. If the Underwriters are not careful, they can also end up costing the company a lot of money. Though, the insurance company still has up to two years to find and exclude any pre-existing medical problems that their Underwriters didn't find and exclude.

Unanticipated medical care inflation is another factor that may cause medical insurers to raise premiums.

With medical insurance, you are sharing the risk with thousands of other insureds. In a sense, you are all putting money together into a big "money jar" that any of you can draw from in the event of a medical emergency, up to the limit of the plan that you have chosen. Some of you will have to draw from it. Those of you that don't have to draw from it can gain peace of mind knowing that it's there for you if you ever do.

In order to keep the Jar full, insurance premiums increase when too much money is withdrawn from it.

In the case of an individually insured, the renewal premium will be increased if claims exceed the annual premium. For some insurers, a very high claim can increase the premium by 100%. One insurer restricts individual premium increases for high claims to 25%. But, that same insurer also has a small across the board premium increases every year.

In the case of families, the increase is based on the family premium, even though only one member had a claim. For groups, it is based on the total premium for the whole group.

Remember, the Money-Jar is there for you if you need it, but it's not Santa Claus.




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