In the Part 1 (available here) and part 2 (available here) of this discussion, we focused on the scope of HMO and Health insurance including similarities, differences and why patients who might be declined treatment in some hospital and yet receive treatment in another hospital within the same HMO network. The business reason for this is largely due to unsettled bills or any other breach of service level agreement in which case the hospital may decline holders of HMO card treatment until such differences are settled. In this final part, the possibilities of having the two types of covers will be considered.

One may be tempted to wonder the relevance of health insurance especially when one is already covered under HMO. This is just one of very many valid questions one may ask as a rational customer. In the earlier series, it was mentioned that HMO is targeted at corporate organizations because they have the number and since insurance generally work on the principle of compensating the few who have suffered a specified loss from the contribution pool of many. On this premise, HMO companies are unlikely to sell to individuals. Organizations usually buy HMO for their employees, therefore the direct cost to the employee is zero (although it could have formed part of the total emolument of an employee). In a typical company, HMO plans are hierarchical which is why a graduate trainee will have a lower coverage plan compared to a senior manager. Each plan is limited in terms of what is covered and employees will need to bear the extra cost of treatment on their own. It is therefore allowed for employees to buy health insurance to cater for what their HMO will not cover.

Enjoying the dual benefits of HMO and health insurance is more of operational issues than compatibility. Employees can buy health insurance to provide an extra layer of treatment above what HMO covers. In this case, they are expected to indicate the existence of HMO coverage on their health insurance proposal form. This will enable the insurance company to know that their prospective customer is a good risk to insure and could enable the prospective customer to negotiate a lower premium. The insurance company will not frown at such because they understand they have an extra layer of protection to fall back on in case of a claim. Also, the prospective customer will also be covered for those treatment that are not covered on the HMO. It is therefore a common place for customers who have the two covers to allow them run concurrently.

Premium payable under health insurance is primarily dependent on the age of the insured person. For instance, young people between the ages of thirteen and twenty-one are very energetic and are not likely fall sick. Therefore, the premium of a middle aged adult (about forty-five years age) will be higher than a teenager’s even though they are both on the same sum insured. Some other factors could also influence the premium payable e.g. lifestyle, presence of pre-existing conditions, etc.

It is also important to note that health insurance premium is calculated with the help of actuaries and therefore they do not follow the usual premium rate. The premium is based on the premium table banded by age and sum insured chosen by the customer. Customers are at liberty to choose the sum insured they want and they can even see the premium payable on different sum insured band. Sum insured chosen could be for just a single insured person or shared with other family members and dependent relatives. The customer who is buying the insurance is considered a primary insured person and may add other secondary persons – spouse, children etc. As a primary insured person, premium payable is slightly higher than what the other additional members are paying even though they are both on the same sum insured. Insurers sometimes give no-claim bonus to policyholders if they do not have claims in consecutive years and health insurance is not an exception.

Since health insurance can be bought individually depending on need, it is a smart addition to personal insurance portfolio like auto and travel insurance. This is becoming more important than ever in the face of rising cost of healthcare especially in Nigeria. A typical policy of about N120,000 is enough to cover a family of six – parents and four children for a year. This is quite affordable as medical expenses and accidents in many cases is not part of monthly budget and when they happen, they must be attended to. Some insurers may agree to premium payment on instalment based on relationship, therefore policyholders are not under pressure to pay the whole premium at once. We are available to guide you on how to buy suitable health insurance plans that will not hurt your budget.

Premium is the token paid to buy certainty when uncertainties happen. – Be Insured Naija

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