Are you really covered?

When Suzanne Simpson envisioned her honeymoon in Paris, lazy strolls along the Seine and Bordeaux-tippling evenings were to be the main events. Instead, she was the victim of a reckless driver and wound up spending three weeks in a critical-care hospital ward with a traumatic brain injury. More than a decade later, Simpson still suffers symptoms and has no memory of the accident. She can only go by her husband’s recollection of the incident: “It was pretty scary… Pretty scary expensive.”

Compounding the couple’s misfortune was the discovery that their travel health insurance coverage had not been filed properly. What ensued next for Simpson, who lives in Whitby, Ont., was a legal nightmare that took five years to resolve. After an estimated $100,000 in lawyers fees, a portion of her extensive foreign medical costs were finally repaid. The fact is, when it comes to purchasing travel health insurance (or using existing coverage through a credit card or work plan), the onus is largely on consumers to make sure they meet the requirements of policies. Consider the following tips carefully before your next trip because a bad health insurance purchase could cost you your life savings.

Know your medical status

Most travel health insurance policies cover virtually all hospital and medical costs—but only if you meet the medical eligibility requirements of the plan. “It’s the first thing applicants should look for,” says Milan Korcok, editor and publisher of the consumer advisory website, travelinsurancefile.com. “Too many look for cheap insurance and then try to shoehorn themselves into the eligibility requirements by ‘forgetting’ about a certain medication, or a symptom or a hospitalization they may have had five years ago. It’s not worth it, as leaving out medical information can invalidate a claim after the fact—that means after services have been provided and the client has accumulated $250,000 in charges.” The kicker is that even if your emergency wasn’t related to your condition, because you didn’t fully disclose it, the policy would still be revoked.

“Because medical conditions are complex, it’s imperative that you contact your doctor if you’re uncertain about your medical status and need help answering medical questions,” says John Thain, president of the Travel Health Insurance Association of Canada (THIA). “Also talk to your insurance company if you need help understanding the form.”

You may not be eligible

Some terminal conditions, such as AIDS or certain types of cancer or heart conditions, won’t be covered. But most insurers make allowances with medically underwritten policies—for example, cardiac patients would be covered for any condition not related to their heart. This assumes the person is willing to take the risk and the insurer confirms other situations are covered, says Korcok.

Non-terminal pre-existing conditions, such as diabetes, can also affect your coverage. Most insurance companies will cover conditions that are stable and controlled for 90 days prior to the departure date. “Your policy will have a definition of what stability means, so it may say something like there’s been no change in your medication or no other symptoms have arisen,” says Thain. “Consult with your doctor. Ask, ‘Did you change my prescription during our last medical visit?’”

How much do you need?

Policies with coverage of $2 to $5 million are the benchmark, says Thain. While 99.9% of all emergency medical claims fall under $1 million, in very rare circumstances treatment for conditions such as burns or paralysis would prevent a patient from being safely transported back to Canada immediately. In such a scenario, costs would exceed $1 million. So always go with the $2 to $5 million policy, as that range would be sufficient for any type of medical emergency. Moreover, Thain says, the difference in premiums between a $1 million policy and a $2 to $5 million policy are minimal.

Pick the right provider

Buying direct from an insurance company, such as Manulife or RBC Insurance, usually offers the most complete coverage, says Korcok. “They will cover clients for the number of days they buy (for up to a year). They will pay providers directly, have the most generous benefits and will cover repatriation of a patient to a hospital at home if medically necessary.”

High-end credit cards also typically offer out-of-country insurance benefits with high limits. Problematically, though, many provide only two weeks of coverage, says Thain. “So you may be on vacation for 16 days but you’re only covered for 14.” This is easily overcome by purchasing top-up coverage from your credit-card provider, but be certain that there will be no gap between the two different coverages.

Keep in mind, too, that most cards cover only individuals under 65 years and because there is no medical questionnaire, any preexisting conditions are not covered. In addition, some credit-card providers don’t pay directly, meaning you’re on the hook for the immediate bill. “That can be a big problem if a client is confronted by a big Croatian nurse demanding $50,000 U.S. before she lets you out of the room,” says Korcok.

Travel health insurance through a work or retirement plan can have all the same pitfalls as credit-card policies. But an additional setback is lower benefit limits, says Korcok. “They sometimes have a lifetime maximum, such as $100,000. So each time a claim is made, it drains down the bank of benefits for any future emergency.”

Buy Canadian

Thain strongly advises buying policies from Canadian companies regulated by the federal government’s Office of the Superintendent of Financial Institutions Canada (OSFI). “They’re the ones in charge of all insurance companies in this country,” he says, meaning you’ll be protected in the case of insolvency of your provider.

Purchasing insurance outside Canada can also be problematic because a foreign policy may assume you already have some private health insurance coverage. For instance, many cruise line or tour operators in the U.S. offer coverage but it is usually designed for Americans who already have individual health insurance policies that include provisions for foreign travel; therefore, the cruise line coverage may only cover medical expenses related to getting you home. “Canadians don’t have any travel health coverage,” says Thain. “You need to make sure your policy is covering medical emergencies and not just getting you back home.”

• Also read: Get travel coverage for less

Look before you leap

Travel health insurance covers only unexpected emergencies. So before you go bungee-jumping off a bridge in Malaysia, be sure to consult your policy first to see whether claims generated by certain activities are payable. Claims may not be covered if they involve drug or alcohol abuse or travel to unstable countries or regions.

Stay in touch

Most Canadian travel insurance companies provide a 24-hour emergency assistance hotline you can call from any place in the world for advice and assistance in handling a medical emergency, says Korcok. In the case of a medical emergency, it is critical to contact that line immediately or as soon as medically possible. Failure to do so could result in your benefits being reduced and your coverage being limited.

TD Bank’s travel health insurance, for instance, requires policy holders to contact their hotline within 48 hours of hospital admission, or as soon as is reasonably possible. Failure to do so could limit the maximum benefit payable under the policy to 80% of eligible expenses, to a maximum of $30,000.

After the emergency

After your medical emergency is over, don’t expect anything to be covered. For example, says Thain, if you required ongoing physiotherapy following your incident and chose to stay outside Canada rather than coming home, the insurance company wouldn’t provide that. Also bear in mind that while most travel health insurance policies generally provide generous benefits (upwards of $5 million in coverage per trip), that doesn’t mean your policy is a blank cheque, either. If you have a medical emergency while outside Canada, your insurer is calling the shots at all times, says Korcok. “The insurer will determine when the client will come home—by air ambulance or other means—as soon as they are fit to travel according to the insurer’s doctors and attending physicians.”

Always contact your insurance provider if you have any questions about your policy. Making a false assumption could have a devastating effect. It could mean the difference between the vacation of a lifetime or a vacation you’ll spend your life paying back.