Fifth-Generation Indemnity Health Insurance Offers Savings for Consumers

On May 6th, leading non-life insurers such as Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, and KB Insurance will introduce the fifth-generation indemnity health insurance products. These new offerings feature lower premiums but come with increased out-of-pocket costs. They are designed to target non-reimbursable services linked to excessive treatments, including chiropractic care, thereby encouraging responsible utilization of services.

Switching to these new policies can yield substantial premium savings, ranging from 30% to 40% depending on demographics. For example, estimated monthly premiums for 40-year-old men and 60-year-old women are approximately 17,000 won and 40,000 won, respectively. This represents a significant reduction compared to previous insurance generations, making the new policies attractive for middle-aged and older customers seeking cost-effective coverage solutions.

These changes will impact policyholders differently based on their initial enrollment period. Those with first or second-generation policies, particularly before March 2013, enjoy comprehensive coverage with minimal out-of-pocket costs but face higher premium rates. Consequently, some may consider switching if premium expenses become burdensome. To facilitate this transition, the government is introducing a buyback scheme and optional discounts, encouraging policyholders to adopt the new generation of plans.

The fifth-generation indemnity plans offer comprehensive changes to address non-reimbursable items with opt-in choices for severe and non-severe conditions. For severe conditions, the annual out-of-pocket limit is set at 5 million won for inpatient care at tertiary and general hospitals. These measures aim to make catastrophic health events financially manageable for policyholders, aligning with broader insurance reform efforts.

Government efforts to boost the adoption of new plans hinge on consumer response. During the fourth-generation rollout in July 2021, uptake was limited, despite significant premium discounts. Those insured after April 2013 have policy terms fixed for 15 years and may benefit more from the reduced premiums of the fifth generation, especially if they have infrequent medical needs. Conversely, frequent healthcare users might derive more value from their existing plans due to their broader benefits.