First published in ITIJ 113, June 2010
Milan Korcok takes a look at the some of the most common pitfalls for American travel insurance consumers who have pre-existing conditions to contend with
For American consumers with pre-existing medical conditions, buying travel insurance to protect their trip investment takes perseverance. It’s not as easy as the website promotions suggest, given that insurers differ so markedly in what they offer, what they exclude, and the demands they make of their clients.
When Phyllis from Pittsburgh asks if she can get her money back for cancelling her trip to Patagonia because of a gall bladder attack, her travel insurer might say ‘yes’, ‘no’, or a ‘definite maybe’ – depending on what insurance she bought, when she bought it and what shape she was in when she bought it. As American consumers are finding out, they need to pay attention to the details.
Plans by design
Most American travel insurance policies are designed to protect the costs of a pre-paid trip against cancellation or interruption due to disruption of travel arrangements, weather conditions, unexpected death in the traveller’s family, terrorism threat, baggage loss, medical emergency or other unforeseen contingencies. Although all trip protection plans have some coverage for medical emergencies and evacuation costs, the benefit levels for these are very low compared to most Canadian or European travel insurance benefits – often just $10,000 to $25,000. There are also higher cost travel medical and evacuation plans with emergency medical benefits of $500,000 to $1 million dollars. But according to one poll taken by the US Travel Insurance Association (UStiA), such plans represent only a four per cent share of the American travel insurance market.
Selling trip protection or travel medical insurance in tandem with, or as close as possible to, the trip sale date, is common practice
Although all travel medical or trip cancellation plans are subject to pre-existing medical conditions limitations, many now offer to waive such exclusions and to cover pre-existing conditions. Sounds good in theory, but there are a few twists and turns to negotiate.
HTH Worldwide’s Trip Protector plan, for example, will cover pre-existing conditions if the insurance is purchased within 24 hours of the final trip payment, and if the traveller is not disabled or prevented from travelling by any medical condition at the time payment is made. The rationale for the 24-hour time limit is that the longer the client waits after purchasing the trip to buy cancellation cover, the greater the chance the client or a travel partner or members of the family might develop a pre-existing condition that would invalidate their coverage.
CSA Freestyle and Freestyle Luxe will waive the pre-existing exclusion if the insurance is purchased within 24 hours of the final trip payment; Travel Guard Cruise, Tour & Travel Platinum require a sign-up within 14 days after initial trip payment; Travel Insured Gold, 30 days; Access America, 14 days of initial trip deposit; Travel Safe gives 15 days. Patriot Trip Insurance offers a pre-existing conditions exclusion waiver if the policy is purchased within 10 days of trip deposit. Some grace periods go up to 21 days, even 30 days.
Selling trip protection or travel medical insurance in tandem with, or as close as possible to, the trip sale date, is common practice in Canada too, even though Canadian insurers have not taken to offering the pre-existing conditions exclusion waiver as their policies are based primarily on covering medical emergencies up to multi-million dollar limits. That’s a big risk to waive.
Matt Davies, client services manager for Ingle International, a Toronto-based brokerage that sells a broad range of travel products from various insurers, told ITIJ that many Canadian companies have become more flexible regarding trip cancellation policy purchase deadlines in recent years. “While at one point this type of deadline was common, only two of the trip cancellation plans we offer for Canadians must be purchased within a certain amount of time after the trip has been paid for. These policies also stipulate that such a deadline is not applicable if cancellation penalties do not yet apply. In other words, an insured person would have to purchase the insurance at the time their trip is booked unless the amount they have paid is still refundable.”
Davies noted further that: “The other trip cancellation policies we offer for Canadians do not have this type of strict rule regarding when the insurance must be purchased. However, one of them has an exclusion which states that … a claim resulting from a sickness (occurring) within 72 hours of purchasing the insurance will not be covered. Another cancellation policy states that if the insurance is purchased any time after the trip is booked, the insured person must be in good health and not know of any reason to cancel the trip in order to be eligible.” He went on to say: “While overall cancellation policies have become more accommodating for insured persons purchasing more than 48 or 72 hours after booking their trip, we still encourage our customers to purchase cancellation coverage as soon as possible after making their first non-refundable payment for a trip. As soon as a non-refundable payment has been made, a traveller risks losing that amount if their trip is cancelled, so it is prudent for them to purchase cancellation insurance promptly.”
Policies that allow for the waiver of pre-existing conditions usually tightly limit their loss exposure. Trip cancellation policies are limited by the total value of the trip, which rarely exceeds US$50,000. Travel medical policies that cover out-of-country medical emergencies and evacuation or repatriation are limited by the costs of medical services rendered and those can run to the hundreds of thousands of dollars or more.
American trip protection policies stipulate that applicants for pre-existing conditions waivers be medically able to travel and most are quite lenient about what that means. Generally, if a client has a pre-existing medical condition that has not deteriorated, or is not imminently due for further treatment or diagnosis, or doesn’t physically prevent the client from travelling, it will be covered so long as insurance is purchased within the given time period after the trip is purchased, and a deposit or trip payment has been made.
Clearly, applicants with serious illnesses that require constant medical intervention or are getting worse won’t make the waiver threshold. They are then subject to pre-existing conditions exclusions, most of which rule out coverage for conditions that have manifested symptoms, required a change of medication, treatment or referral for further investigation. The exclusion language can become quite serpentine.
Although all trip protection plans have some coverage for medical emergencies and evacuation costs, the benefit levels for these are very low compared to most Canadian or European travel insurance benefits
One example found, from TravelSafe, states: “Pre-existing condition means any injury, sickness or condition (including any condition from which death ensues) of you, or your travelling companion, or your or your travelling companion’s family member travelling with you which within the 60 day period prior to the effective date of your trip cancellation coverage under the policy: (a) manifested itself, became acute or exhibited symptoms which would have caused one to seek diagnosis, care or treatment; (b) required taking prescribed drugs or medicine, unless the condition for which the prescribed drug or medicine is taken remains controlled without any change in the required prescription; or (c) required medical treatment or treatment was recommended by a Legally Qualified Physician.”
There are other definitions just as contorted, others less so; none of them written by language teachers or journalists. Because of the ragged nature of their domestic health insurance, Americans buying trip cancellation or travel medical insurance must also be aware of other arcane measures insurers use to limit their exposure to medical costs.
About 85 per cent of Americans have private health insurance or Medicare to cover their medical needs at home and some of these will cover medical services abroad to some extent. But there are notable exceptions. Medicare, which covers some 40 million elderly and disabled people, does not cover out-of-country medical emergency services, but most Medicare beneficiaries buy supplemental plans to top up their coverage and some of these do offer limited medical coverage while travelling. Most, however, don’t provide direct payments to foreign hospitals or doctors and don’t provide medical air repatriations; neither do many of the private employer-based plans, although they use terms such as ‘out of area medical costs are covered’.
Some trip protection or travel medical plans clearly state that applicants must have primary health insurance (by a domestic insurer) in order to buy their out-of-country plan – this limits the travel insurer’s exposure as the primary insurer should pick up the bulk of costs (minus deductibles or copayments).
Other plans label themselves secondary payers, specifying that if the applicants have primary domestic insurance, they will pick up the out-of-country charges their primary payers don’t (such as air ambulance). Since primary payers are also responsible for pre-existing conditions, a pre-existing conditions exclusion by the travel insurer doesn’t seem like such a great risk.
And there are some travel insurers that are primary payers, which means they will deal with foreign hospitals and doctors from the first dollar – going back to the domestic payer for their share – again, a pretty good hedge against pre-existing medical conditions.
About 85 per cent of Americans have private health insurance or Medicare to cover their medical needs at home
All in all, for Americans who seem befuddled by their health insurance, travel insurers offer something of a safety net for travellers, even those with pre-existing conditions. But finding out the rules of the game require some effort.