The costs and benefits of different types of complementary health cover policies.

In our November Newsletter we provided an explanation of complementary (top-up) health cover in France, who provides it and what it covers.

This month we examine the levels of reimbursement under such policies, the costs of taking out such a policy and whether it makes good sense to have one.

The analysis will not be relevant to those who hold a private health insurance policy for all of their health costs, although many private polices do not provide 100% reimbursement of costs.

Levels of Reimbursement

One of the major problems for anyone seeking to evaluate different complementary health policies is the cryptic language that is frequently used by the insurers.

The starkest illustration of this is in the reimbursements levels offered under the contracts, some elements of which are expressed as a percentage of the 'social security rate'.

Thus, you will find that policies offer reimbursements at different percentage levels, be it 100%, 150%, 200%, 300% and so on.

Clearly, the higher the percentage level of reimbursement, the greater the sum you will receive, but the higher will be your premium.

The problem with expressing the reimbursement levels in this manner is that it does not really tell you much about what you will get, and can be very misleading.

This is because these percentage figures do not indicate the actual base charge from which they are derived and so give a false impression of just what you are getting.

For example, in the case of the reimbursement of a pair of glasses, the social security system will reimburse 60% of the 'base rate'. However, as the base rate is around €10 for adult frames and lenses, this means that your social security reimbursement will be around €6, when the actual costs may well be several hundred euros.

Accordingly, a complementary policy which states you will be reimbursed at the rate of 200% of the social security rate, really only means that you will only be reimbursed an additional circa €20, leaving you to pay the vast majority of the costs!

Statutory reimbursement levels for prescription glasses in France are low, and the same applies to dentistry, so a policy which offers several hundred percent of reimbursement for glasses and dental care may not actually be worth very much at all, despite the level of the premium that you will need to pay for such cover.

In the same manner a basic policy which offers 100% reimbursement may not mean a great deal, for most medical treatment in France is covered at the rate of around 70%, leaving only 30% to be covered by the patient. In the case of hospital treatment it is 80% reimbursement, leaving 20% to the patient.

Clearly, if you have a policy which reimburses 200% to 300% of the social security charge, some or all of the additional costs imposed by many consultants (dépassements d'honoraires) will be covered. However, in a standard policy offering 100% reimbursement, it is unlikely to cover any of the additional consultant charges.

Once again, therefore, do not be led into a false sense of security when complementary insurers offer '100%' cover; it will very often leave you will costs that you will need to pick you yourself. You need to ask yourself (and them) '100% of what'?

Type of Complementary Health Cover

In a recent comparative study the University Sciences Po Paris considered three alternative approaches to meeting the residual costs of health care:

• i. No complementary policy
  
• ii. Standard policy
  
• iii. Hospitalisation Only Policy.
  

The study examined the costs of these alternatives for three profile groups - a single male aged 35 years, a couple aged 45 years with two dependent children, and a couple aged 65 years.

It is beyond the scope of this article to detail the profiled health services and costs incurred by each of these groups, so what the figures below show is the insurance premium and the net cost that is left to the patient to pay after reimbursements. The figures cover complementary health costs over a 5 year period.

These figures also exclude the mandatory social security contributions payable for affiliation to the French health system by those in business or employed, or those in the Couverture Maladie Universelle (CMU).

The insurance premiums stated are the average of 30 policies examined, so some insurers offer cover for a lower premium, but they are also higher.

i. No complementary policy

In the first analysis no complementary health policy is taken out, so the profile groups each take personal responsibility for meeting the health costs not reimbursed by the social security system.

Taking the case of the retired couple shown in the table below, the total bill to them over the 5 years is €12,327.

ii. Standard policy

In this scenario our profile groups have taken out a 'standard' complementary health policy, covering both routine medical treatment as well as the costs of hospitalisation.

Of course, as we have seen above, no contract is 'standard' in the sense that there are different levels of reimbursement. However, as we have stated, the insurance premium used in the example is the average of the 30 health insurance policies examined in the study.

As can be seen from the table below, in the case of our retired couple, the cost of their insurance premiums over 5 years is €11,500. After statutory and complementary health insurance reimbursements, their net cost of healthcare over 5 years is €3,558.

iii. Hospitalisation Only policy

In addition to the range of 'standard' policies most insurers also offer 'hospitalisation only' policies.

The policies are not as widely publicised as standard policies, perhaps because they are less lucrative to the insurers.

What they amount to is that you take personal responsibility for meeting your routine health costs (as well as optical and dentistry) not reimbursed by the social security system, but that in the event of hospitalisation the insurer will meet most or all of your non-reimbursable statutory costs.

As can be seen from the table below, these policies look potentially interesting for all three of our profile groups, as the cost of the insurance premium is lower, yet most of their health costs are covered, either by the statutory system or by their complementary health policy.

However, as with the standard policies these hospitalisation only policies vary in the level of their cover, so you would need to read the policy carefully, particularly with respect to dépassements d'honoraires and other 'comfort' items you may seek if admitted to hospital, eg single room.

Conclusion

With such figures it is easy to jump to the conclusion that hospitalisation only policies make more sense, as indeed they may well do for many individuals and families.

However, there is no 'one size fits all' with health cover, and for some individuals the psychological importance of having full health cover with a good standard policy may well outweigh the cash costs of such policies.

In addition, if you regularly need health support, and these costs are not covered through long-term illness reimbursement rules, then you may well find that a standard policy is more suited to your needs.

Your age will also be a major factor, not only because of your likely higher health needs the older you are, but because subscribing to a policy when you are younger does moderate your insurance premiums in later life.

Where you live may well also be an important consideration in the choice of complementary cover, for around the Ile de France and Rhône-Alpes in particular, additional charges imposed by consultants is more frequent, and this alone may necessitate more comprehensive cover.

Nevertheless, hospitalisation only policies clearly offer a potentially interesting alternative for many individuals, and ought to be considered when you assess your complementary health cover needs and options.