For individuals searching for a travel medical insurance plan to protect them during their trip, limited or fixed coverage plans are often more appealing due to their lower premiums when compared to comprehensive coverage plans. However, many people may not be aware of the differences between limited and comprehensive plans and ultimately why limited plans are cheaper, which may result in the traveler going with the cheaper option without weighing the risks. Additionally, those traveling from overseas may not be aware of how incredibly expensive medical costs are in the United States, and how crucial it is to have adequate medical coverage.
The truth is, limited insurance plans pose an inherent risk to buyers due to restricted coverage in the form of fixed benefits, leaving policyholders vulnerable to out-of-pocket costs for expenses beyond their plan’s limitations. Having a deeper understanding of the risks of buying a cheaper limited travel medical insurance plan can empower you to make the right choice when ultimately deciding upon a policy type that fits your needs.
Why Are Limited or Fixed Travel Medical Plans Cheaper?
Limited coverage travel insurance policies are less expensive than comprehensive plans because they offer constricted coverage and significantly less benefits.
How the two different types of travel medical insurance plans work:
- Limited or fixed plans - only pays a fixed, predefined amount per treatment or visit as per its schedule of benefits, regardless of the bill amount
- Comprehensive plans - pays a percentage (anywhere from 75% to 100%) of total eligible expenses up to the policy maximum of the plan
When you consider that limited plans only pay up to a certain amount for each and every service or treatment, out-of-pocket costs are much more likely and the lack of coverage offered is exactly why limited plans are cheaper. Even with a lower premium limited plan, you may eventually end up paying more than you would with a comprehensive plan due to out-of-pocket expenses.
Why Are Limited Visitors Insurance Policies Risky?
Before you choose between a limited travel medical insurance plan and a comprehensive travel medical insurance plan, it’s essential to understand why limited or fixed insurance plans are often considered more perilous due to coverage limitations. Here are some of the risk factors of limited insurance plans to consider prior to making your final decision.
Potential for Higher Out-of-Pocket Expenses
With a limited plan, the fixed coverage for each service or treatment can lead to substantially higher out-of-pocket expenses compared to a comprehensive plan. These costs can accumulate quickly, potentially totaling hundreds or even thousands of dollars. In contrast, a comprehensive plan can protect you against excessive out-of-pocket spending, as it offers flexible coverage based on percentages rather than fixed amounts.
No Fixed Medical Prices in the U.S.
When receiving medical care in the United States, hospitals and doctors do not have fixed costs, meaning a bill can vary greatly from one provider to the next. This means you’ll never truly know your medical fees until you receive your bill. This can make fixed plans risky as the coverage for a particular visit or service is predefined, regardless of what your actual bill is. With a limited plan, you’ll be responsible for expenses that exceed the fixed coverage amount for each and every service.
Coverage Maxes Out for Specific Services, Regardless of Policy Maximum
The policy maximums for limited plans is the overall limit that the insurance company will pay for all incidents combined. This means that although you may have a high policy maximum at first glance, coverage will still max out at the amount listed in your plan’s schedule of benefits for each specific service or visit.
Requires a Deductible Per Incident
For limited coverage plans, you must meet your chosen deductible requirement separately for each injury or illness, as opposed to comprehensive coverage plans where you only need to meet your deductible once for the entire policy period.
Lack of PPO Network Benefit
Most limited coverage plans do not include access to a PPO network of healthcare providers, typically resulting in higher fees. While you can visit any doctor or hospital of your choice, you’ll likely pay a more expensive price than you would if you received care through a PPO network provider and you may be required to pay upfront for your care. Plans that do include access to PPO networks, such as comprehensive plans, have contracted prices so you can take advantage of cost-saving benefits.
Absence of Travel-related Coverage
Limited plans typically lack coverage for travel-related incidents, unlike most comprehensive plans. These benefits are particularly valuable for international travelers, as it can include coverage for scenarios such as passport loss or theft, travel interruptions, and assistance with border entry issues.
Cheaper Prices Can Also Mean Higher Liabilities
Although the cheaper price tag of a limited travel medical insurance plan may be enticing, it’s essential for travelers to understand that lower costs can also mean higher liabilities in the long run. At the end of the day, every traveler has the same probability that they will incur a new illness or injury during their trip, which is why your current individual health shouldn’t be your only consideration when choosing a plan.