The Key Differences Between Local and International Health Insurance
While local health insurance is more affordable, it comes at the price of limited coverage.
Going to the doctor can be costly, especially if you visit a private facility. Despite the exorbitant prices charged by private hospitals, many people still choose to receive care from them because of their superior quality of service and significantly shorter waiting times.
The thing is, most people simply can’t afford to pay the mountain of out-of-pocket fees charged at these facilities. People often seek health insurance coverage to offset these costs. If you're one of them, there are a large number of factors that you will likely have to consider when purchasing a health insurance plan, such as the level of coverage you require as well as the price you are willing to pay for your insurance premium (for more details, see our 10 Tips for Choosing the Right Health Insurance Policy).
But what many people who haven't yet purchased health insurance don't know is that there’s also a question about geographic coverage, namely whether you should choose local or international health insurance.
This article will help walk you through that decision by giving you the basics of these two types of insurance. With that information in hand, you can make an informed decision about whether local or international health insurance best meets your coverage needs.
Local Health Insurance
Local health insurance, as you may have guessed from the name, provides medical cover that is restricted to a single country. Some are even more granular and will only cover you in one state or province. Local policies are not globally portable, so you will usually not be covered by your policy while you're abroad unless there is an emergency.
Who are these policies best suited for?
This type of policy is best suited to people who are predominantly living in one country and choose to buy separate travel or short-term policies whenever they drive across the border or go overseas for a short duration of time (find out more in Travel Insurance: Do I Really Have To?).
It's important to be aware that travel insurance policies tend to offer very limited coverage and are designed for emergencies only. If you require additional treatment, especially for pre-existing conditions such as diabetes, you will need to carefully read the fine print on your travel insurance to find out exactly what it covers.
Consider this before buying a local plan
You should also consider the fact that local providers tend to have a preferred network of providers. This allows them to negotiate better rates but it can significantly reduce your freedom in choosing where you want to be treated. If you were to suffer a medical emergency and be admitted to a hospital that isn't part of your provider’s preferred network, you would likely have to foot the bill yourself and then submit a claim. Some insurers will accept the claim, others may deny all claims for out-of-network care, while others still may only cover a certain percentage of the bill. So before purchasing a local plan, make sure you know not only your network of coverage but also what will happen if you seek care outside of it.
Why do people buy this type of plan?
What attracts most people to local health insurance plans are the lower premiums. Because coverage is limited to one region, the premiums for local policies are naturally lower than those of their international counterparts. If you’re on a tight budget, you may be better off with a local health insurance plan. However, if you travel often or plan to move overseas in the near future, it is highly encouraged that you opt for international health insurance instead.
International Health Insurance
The main difference that sets local and international health insurance plans apart is the worldwide coverage offered by the latter. Most globally mobile expats as well as frequent travelers will find it a more attractive option because international health insurance policies are designed specifically with them in mind.
Who are these policies best suited for?
With access to global coverage, the benefits of an international policy can be enjoyed anywhere in the world, whether you are traveling for business or pleasure.
Another benefit associated with international health plans is that you won’t need to go through the hassle of buying travel or short-term insurance when you're traveling abroad because it will all be covered under a single policy.
As mentioned above, local plans tend to have a preferred network of providers and will often carry restrictions as to where the policyholder can receive treatment. International health insurance eliminates the need to worry about this because it usually provides coverage for visits to any doctor in any hospital, virtually anywhere in the world. This added flexibility is especially beneficial if you were to require treatment in a less medically advanced country, because your international plan will cover your medical costs if you choose to be treated in another country with more advanced healthcare.
Consider this before buying an international plan
One thing to keep in mind is that many international health insurance plans do not cover the US because of the country’s strict Affordable Care Act regulations and high medical costs. US taxpayers will need to keep this in mind and either purchase an international plan that includes US coverage or purchase a separate plan just for the US, on top of their international health insurance.
As you can see, local and international plans both offer an array of attractive benefits, so the type of insurance policy that best suits you will depend on your specific needs and your budget.
There are numerous plans available for both these types of insurance and shopping around for the perfect plan may be daunting, so it may be a good idea to consult a professional insurance advisor for further advice.
Written by Kayla Sloan
Kayla Sloan is the chief editor for Pacific Prime, an international health insurance agent that provides professional advice on various health insurance solutions to individuals and families.
Kayla spent years advising insurance clients both in the UK and throughout Asia pacific while she was working for one of the biggest management consulting companies in the world. Her areas of expertise include management consulting, financial innovation, insurance, IT and operations.