Health Insurance Considerations for Digital Nomads

Health insurance is something that many young healthy people don’t think about. And many digital nomads are young healthy people, though not all of them are. And if you are from most rich countries you may not think about health insurance as your country makes it pretty easy to just be treated if you have health care needs, without a need to have bought health insurance.

But when you are traveling outside your country health insurance is important. I am not very familiar with the details of how health coverage works for all the different countries so you will have to figure it out for your own country. It wouldn’t amaze me if European countries set up some kind of reciprocal care agreements but I have no idea if they do (they should if they don’t).

In the USA we know what a nightmare health insurance is. The ludicrously expensive USA health care plans generally don’t provide any coverage when you are outside the USA (even inside the USA, but not in your own state there are severe limitations). There are many wonderful things about the USA but the health care system is a nightmare and has been for decades.

If you are going to fly off and become a digital nomad one of the critical items to consider (though many don’t give it the attention it needs) is health insurance. It is true that in many countries you can pay out of your own pocket for health care that would bankrupt you if you used the USA health care system and tried to pay out of your own pocket (tens of thousands of people go bankrupt in the USA due to health costs).

If you use good personal financial planning practices you should have at least 6 months of expenses in an emergency fund (and I would strongly suggest at least a year for any digital nomads). That emergency fund should be able to pay for routine medical visits in many countries (Malaysia, Thailand, India, Indonesia, Vietnam, Singapore… – I would imagine this is true in most countries, but certainly not the USA.) without a need for health insurance.

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Medical Tourism

Medical tourism (traveling overseas to get medical care) is growing and likely to continue to do so. The USA’s extremely high costs of medical care push people to find more reasonable health care solutions. Also in some countries the very rich seek out advanced treatments outside their country.

Seeking more cost effective and more customer focused health care options are likely to lead to booming markets in catering to these customers. Many countries have seen this as a smart market to focus on. And I think they are right.

It is a booming market and the USA’s mess of a health care system doesn’t seem to be getting any better and certainly isn’t getting cheaper. In Europe the demand is largely driven by services that have very long waits if done using their national health system. Those that can pay, can pay to have it done where they live, or they can travel and have it done much cheaper.

The jobs provided in countries serving medical tourism are very good. And it brings in a great flow of foreign currency. Singapore, Malaysia, Thailand, Philippines and Mexico are putting forth smart governmental efforts to boost this industry in their countries.

photo of Raffles Hospital in Singapore

Raffles Hospital, Singapore by John. See more of my photos from Singapore.

Most of the time health insurance won’t pay for optional (emergency care while you travel depends on your policy) health care internationally. So most medical tourism is paid for by the person being treated. This is a somewhat silly policy as insurers could save a great deal of money even by only paying say 50% or less of what they would pay locally for those who were willing to travel.

And some insurers are letting people travel for health care (and even giving them incentives to do so). The governments seem willing to pay inflated local prices and so use things like the fear of untrustworthy foreign health care as unsuitable. And then they work with local health industry interests to restrict covered health care options. There is some sense in worrying about abuse but there is also hundred of billions of dollars that countries like the USA could save by letting people seek out health care solutions much more cheaply overseas. Europe could also save a great deal.

Some countries are doing smart things. At the same time Singapore is building up medical tourism for complex medical solutions (drawing people from SE Asia and further away) they are also working to boost the use of Malaysia to provide less complex medical solutions to Singaporeans. As is often the case, Singapore’s government is acting wisely.

Malaysia, Thailand and the Philippines are going after the large market for reasonably priced basic health care. Which is smart for all 3. They are also looking to move up-market (especially Malaysia and Thailand) which is also fine, but there is likely to be great competition and a much smaller market so I would suggest they do so, but do so with caution.

India has potential but has the general problems with infrastructure and a difficult business climate. The potential is huge though. Other countries targeting this market include Brazil, Hungary and Costa Rica.

Related: The Growing Market for International Travel for Medical Care (2013)Traveling for Health Care (2007)Finding an International Business Bank as a Digital Nomad