As you explore options for travel medical insurance plans, you’ll likely encounter two primary types of policies available: limited coverage and comprehensive coverage. While reviewing the benefits of each type of plan, it may not be immediately apparent what sets them apart or which one best suits your needs. However, it’s important to understand what a limited coverage plan entails in order to make a well-informed choice when selecting your travel medical insurance policy.
What Is a Limited Benefit Plan?
A limited health insurance policy is typically the lower-cost option for travel medical insurance. These plans generally offer fewer benefits compared to comprehensive plans and the coverage is usually significantly less. A limited insurance policy is designed to offer very basic coverage for the average traveler. Coverage works on a fixed benefit model, meaning that coverage for specific services or treatments is predefined.
It typically offers coverage for emergency medical situations such as hospitalization or urgent care visits, emergency medical evacuation, or medications for new illnesses or injuries that occur during your travels.
How Does a Limited Coverage Plan Work?
In limited insurance coverage travel medical insurance plans, there’s a maximum payout specified for each service in your plan’s benefit summary. This implies that irrespective of the final bill for a particular visit, consultation, service, or treatment, your insurance will only cover eligible costs up to the maximum amount designated for that benefit, up to the policy maximum, and only after you have met your deductible.
Example of How a Limited Coverage Plan Works
Let’s say your limited plan’s benefit summary lists coverage for a doctor’s visit of up to $75 per visit and your doctor’s bill is $300, a limited plan will only cover $75 of that bill after your deductible is met. You will be responsible to pay the remaining amount. Additionally, limited plans have a deductible per incident, meaning you have to pay your chosen deductible per each injury or illness, while comprehensive only requires a one-time deductible per policy period.
Due to the predetermined per-incident benefit amount, those who choose limited coverage plans often end up paying for services and visits out-of-pocket. This can be risky for those who are looking for a more comprehensive plan in which their personal costs are kept to a minimum.
Limited Coverage vs. Comprehensive Coverage
Putting this all into a big-picture perspective, there are two differentiating factors for limited coverage vs. comprehensive coverage.
Fixed Benefits vs. Percentage-Based Rates
When comparing limited coverage plans with comprehensive coverage plans, the biggest difference is in coverage. While limited coverage plans only cover a fixed rate per incident up to the policy maximum, comprehensive coverage plans typically pay anywhere from 75% to 100% of eligible medical expenses. This means that oftentimes, comprehensive coverage plans will cover most, if not all, of your eligible medical expenses after your deductible is met.
Differences in Policy Maximums
Comparing policy maximums, a $50,000 policy maximum for a limited plan versus a comprehensive plan is not the same. A $50,000 policy maximum for a comprehensive plan works significantly different from that of a limited plan.
- In a comprehensive plan, a $50,000 policy maximum would be the coverage limit for all eligible expenses. This means that the plan will cover up to $50,000 of eligible expenses for various medical needs or treatments, regardless of the specific costs incurred for each service.
- On the other hand, in a limited plan, a $50,000 policy maximum represents the sum of all individual covered costs, each of which is fixed. In other words, since the coverage is segmented into predefined amounts for specific services or treatments, the policy maximum applies only to the total of all combined prefixed amounts paid.
For example, if your hospital bills totaled $50,000, even if a limited plan’s policy maximum is $50,000, they are only going to pay the predefined amount per service or treatment for each covered bill item per the plan’s schedule of benefits.
Why Are Limited Coverage Plans Cheaper Than Comprehensive?
Although the low cost and low deductible options for limited coverage travel medical insurance plans may appear attractive, the primary reason for their affordability compared to comprehensive plans is the significantly restricted coverage they provide. Comprehensive plans can offer better coverage and will protect you financially if you need medical care while traveling.
What Are the Pros and Cons of a Limited Benefit Plan?
Before you select a limited coverage plan, it’s important to understand the pros and cons of limited and comprehensive plans.
The Pros of a Limited Benefit Plan
- Cost savings: If cost savings are a primary concern, limited insurance coverage can help you save money while still providing some travel protection.
- Suitable for shorter trips: If you’re taking a short trip with lower risk exposure, a limited plan can offer basic coverage.
- Supplemental coverage: If you already have some coverage through another insurance policy or credit cards, limited benefit plans can complement that existing coverage. As domestic health insurance doesn’t always cover you abroad, limited benefit plans can offer additional protection for specific risks during your trip. Read about primary vs. secondary coverage.
The Cons of a Limited Benefit Plan
- At risk for high costs: Although small services or minor doctor visits may not pose too much of an issue, the biggest risk of a limited coverage insurance plan can unfold if you have a medical emergency or require hospitalization during your travels.
- Payment structure can get more complex: Limited plans have a deductible per incident. If you have a medical event, this can make the process more complicated as you have to understand how to categorize the incident and pay your chosen deductible per each injury or illness.
What Are the Pros and Cons of a Comprehensive Benefit Plan?
Making the best choice for yourself also requires considering the pros and cons of a comprehensive benefit plan.
The Pros of a Comprehensive Benefit Plan
- Peace of mind: Even if you are a young, healthy traveler and feel that limited coverage is all you need, a comprehensive plan can give you peace of mind, knowing you’re protected in the event of a serious injury or illness. You can focus on enjoying your vacation without worrying about potential high medical costs.
- May include travel-related coverage: Comprehensive plans may include additional travel-related insurance such as coverage for lost luggage, missed flight connection, or travel delay. So, paying for higher-cost insurance often brings in more trip-saving benefits.
The Cons of a Comprehensive Benefit Plan
- Higher costs: Since a comprehensive benefit plan offers more coverage than a limited benefit plan, this involves paying higher premiums. If you’re on a budget, this may put more strain on your travel planning. You may need to adjust other areas of your vacation (e.g., food, lodging, transportation, etc.) to accommodate your comprehensive plan cost.
When Would You Want to Have a Limited Benefit Plan?
Overall, an individual may decide on a limited benefit plan for the following reasons:
- On a budget: The affordability of limited benefit plans makes them an ideal choice for those on a tight budget.
- Embarking on a short trip: A shorter trip may mean the risk of exposure to health concerns is lower, which may help you feel more comfortable opting for a limited plan.
- Comfortable with lower coverage limits: A limited benefits plan may still offer you the coverage you want if you are a fairly healthy individual who has not suffered from recent or severe health conditions.
Understanding the Risks of a Limited Coverage Plan
Before you select a limited coverage travel medical insurance plan, it’s important to understand the potential risks of choosing a limited plan over a comprehensive plan. This will empower you to make a more informed decision regarding your travel medical insurance coverage.
Although small services or minor doctor visits may not pose too much of any issue, the biggest risk of a limited coverage insurance plan can unfold if you have a medical emergency or require hospitalization during your travels, especially in the United States where medical fees are exorbitant. Even if you are a young, healthy traveler and feel that limited coverage is all you need, a comprehensive plan can ultimately give you peace of mind knowing that you may be protected in the event of a serious injury or illness.
Make an Informed Decision
It’s essential for all travelers to carefully review the terms, benefits, and exclusions of travel medical insurance plans before buying in order to ensure that the plan they ultimately decide on provides adequate coverage for their trip and meets all of their needs.
Now that you understand what is limited insurance and how it works, you can compare travel medical insurance policy options and decide on a plan that is right for you! If you have additional questions about which plan to buy, contact our award-winning customer service team or chat with our 24/7 travel companion, Luna.
