Except for Water Treatment, Compensation Limit 200,000 Won Daily
- The Financial Services Commission (FSC) has outlined its fifth-generation loss insurance plan, targeting a normalization of the medical system and a fairer distribution of premiums.
- The new insurance model distinguishes between patients with severe conditions and those with non-severe ailments, adjusting coverage accordingly.
- The updated insurance excludes coverage for non-salary treatments like musculoskeletal therapies and certain injections, including water treatments.
Fifth-Generation Loss Insurance Aims to Normalize Medical System, Reduce Premiums
The Financial Services Commission (FSC) has outlined its fifth-generation loss insurance plan, targeting a normalization of the medical system and a fairer distribution of premiums. The reforms aim to curb excessive compensation and tailor benefits to individual patient needs.
Key Changes in Fifth-Generation Loss Insurance
The new insurance model distinguishes between patients with severe conditions and those with non-severe ailments, adjusting coverage accordingly. Compensation limits for those with less severe conditions will decrease from 50 million won annually to 10 million won. Outpatient hospital treatment will be capped at 200,000 won per month.Previously,patients could receive up to 200,000 won daily for otolaryngology and orthopedic treatments.Inpatient salary-related costs will remain at the previous limit of 50 million won per year.
focus on Reducing Unnecessary Treatments
The updated insurance excludes coverage for non-salary treatments like musculoskeletal therapies and certain injections, including water treatments. Authorities cite the high proportion of insurance payouts in these areas as the reason for the exclusion.
Enhanced Coverage for Severe Cases
Patients with severe illnesses will receive increased benefits under the new plan. The FSC defines severe patients as those with health insurance-designated special diseases, such as cancer, cardiovascular and cerebrovascular diseases, rare and intractable conditions, and severe burns or trauma. The annual out-of-pocket limit for these patients admitted to senior and general hospitals is set at 5 million won. Pregnancy and childbirth-related salary treatments are newly included in the covered insurance area.
Applying Changes to Existing Contracts
To maximize the impact of the fifth-generation loss insurance reforms, the FSC intends to apply the new terms to existing policyholders.This includes subscribers of second through fourth-generation loss insurance plans. Contracts from these generations include clauses allowing for changes to terms and conditions after five or 15 years. These changes are expected to take effect approximately 10 years from July of next year. The FSC also plans to encourage insurance companies to offer contract re-purchases to first-generation subscribers whose policies do not include such clauses.
Addressing Past Concerns
Some critics argue that insurance companies are to blame for creating flawed products in the first place. Though, an FSC official stated, “It is indeed hard to say that the insurance company was expected to have a ‘medical shopping’ as it was at the time of the first insurance company.”
Expected Premium Reduction
Financial authorities anticipate that limiting excessive compensation will lead to an overall premium reduction of 30% to 50% for subscribers.
Fifth-Generation Loss Insurance: Your Questions Answered
What is Fifth-Generation Loss Insurance?
The Fifth-Generation Loss Insurance plan is a new initiative introduced by the Financial Services Commission (FSC). it aims to reform the medical insurance system by focusing on a fairer distribution of premiums and a normalization of the medical system. The reforms aim to curb excessive compensation and tailor benefits to individual patient needs.
What are the Key Changes in the New Insurance Model?
The primary change in the new insurance model is the distinction between patients with severe conditions and those with less severe ailments. Coverage is adjusted accordingly. Here’s a breakdown:
- Lower Compensation Limits for Non-Severe Conditions: Annual compensation limits will decrease from 50 million won to 10 million won.
- Outpatient Treatment Cap: Outpatient hospital treatments are capped at 200,000 won per month.
- Inpatient Salary-Related Costs: Inpatient salary-related costs remain at the previous limit of 50 million won per year.
- Exclusion of Certain Treatments: Coverage for non-salary treatments is excluded, such as musculoskeletal therapies and certain injections like water treatments.
- Enhanced Coverage for Severe Cases: Patients with severe illnesses receive increased benefits under the new plan.
- Pregnancy and Childbirth: Salary treatments related to these are included in the coverage area.
How Does the new Insurance Model Reduce Unnecessary Treatments?
The updated insurance model specifically excludes coverage for non-salary treatments like musculoskeletal therapies and certain injections, including water treatments. Authorities are implementing these changes because these areas have a high proportion of insurance payouts.
Who is Considered a “Severe” patient Under the New Plan?
the FSC defines “severe” patients as those with health insurance-designated special diseases. This includes:
- Cancer
- Cardiovascular and Cerebrovascular Diseases
- Rare and Intractable Conditions
- Severe Burns or Trauma
The annual out-of-pocket limit for severe patients admitted to senior and general hospitals is set at 5 million won.
Will the New Insurance Terms Apply to Existing Policyholders?
Yes, to maximize the impact of the reforms, the FSC intends to apply the new terms to existing policyholders, including subscribers of second through fourth-generation loss insurance plans. The changes are expected to take effect approximately 10 years from July of next year.
What About First-Generation subscribers?
The FSC plans to encourage insurance companies to offer contract re-purchases to first-generation subscribers whose policies do not include clauses allowing for changes to terms and conditions.
Are Insurance Companies Being Held Accountable for Flawed Products?
Some critics argue that insurance companies are to blame for creating flawed products initially. However, an FSC official stated that it was hard to expect insurance companies to have foreseen “medical shopping” behavior that occurred later.
How Much will Premiums Be Reduced?
financial authorities anticipate that limiting excessive compensation will lead to an overall premium reduction of 30% to 50% for subscribers.
Key Differences: Old vs. New Insurance Model
The following table summarizes the key differences between the prior and the new fifth-generation loss insurance models:
| Feature | Prior Model | Fifth-Generation Model |
|---|---|---|
| Coverage for Non-Severe Conditions | Up to 50 million won annually | Up to 10 million won annually |
| Outpatient Treatment | No limit | Capped at 200,000 won per month |
| Coverage for Certain Treatments | Included musculoskeletal therapies, water treatments and certain injections | Excluded musculoskeletal therapies, water treatments and certain injections |
| Severe Illness Coverage | Limited | Increased benefits and reduced out-of-pocket expenses |