Potential insurance costs cast shadow over new parent visa

Otago Daily Times

2 days ago

By Liu Chen of RNZ
Insurance experts have raised concerns about potential costs for the long-awaited Parent Boost Visa that was announced by the government.
Immigration Minister Erica Stanford recently said the visa would allow parents of citizens and residents to stay in New Zealand for up to five years, with an opportunity for the visa to be extended another five years.
Included in the health and income conditions of the visa was a requirement for the parents to obtain sufficient health insurance to cover the first 12 months of their stay.
Anyone staying longer than a year would need to renew their health insurance policies for the duration of their stay.
Christchurch resident Xiuyun Liu questioned whether the insurance conditions could make it harder for her parents to take advantage of the new visa.
Her parents, 70 and 73, had been on visitor and study visas to stay in New Zealand, helping her to look after her young children.
"I think it's good that the policy is out now. At least we have hope for the next five years," Liu said.
"But what if I can't get insurance for my parents? Even if they can get insurance [now], there will be a day they won't be able to.
"For example, my father has high blood pressure and some other issues. ... I think getting insurance will be a problem."
The government requires applicants to hold at least one year of health insurance that covers emergency healthcare (minimum $250,000 a year), medical repatriation, return of remains and cancer treatment (minimum $100,000).
Paula Lorgelly, a professor of health economics at the University of Auckland, said she was unaware of any matching insurance products currently on the market, but she expected providers to start work on delivering them.
"Currently a number of insurers have a visiting New Zealand policy to provide cover for a range of travel and medical related claims," Lorgelly said.
"These do have considerable exclusions with respect to pre-existing conditions, which means they are somewhat affordable, about $2200 a year [for a couple who are both 60 years old]."
Lorgelly said many existing policies had upper age limits of 65 or 75, and they would also include exclusions for pre-existing conditions.
"If you have such conditions, which often come with age, then the policy holder will need to pay more to cover them," she said.
The $2200 figure was likely to be on the low side of what a new policy would offer, if cancer treatment was included, Lorgelly said.
Insurance consultant Amy Tao believed any new insurance products would effectively be like existing travel insurance policies.
"It will just be upgraded to include the $100,000 cancer treatment cover, for example," Tao said.
She said insurance companies might cover some low-risk pre-existing conditions with extra premiums.
"But underwriting is definitely required," she said. "If they think the risk is too high, they may not be able to provide insurance even if you pay more."
Her estimation of existing travel insurance policies for an elderly couple was similar to the figure Lorgelly shared, citing $1840 for a couple of 65-year-olds and $2514 for two 70-year-olds, with both policies carrying an excess of $100.
Tao said any new product would be more expensive, adding extra cover for cancer and pre-existing conditions.
"Insurance is for sure going to cost a bit," she said.
"Currently, some insurance companies only allow travel insurance to be purchased for a maximum of one year or two years," she said.
"It can be renewed after the expiration date but cannot be purchased directly for five years."
Speaking to Morning Report on Monday, Prime Minister Christopher Luxon said people needed to hold health insurance for the duration of their stay.
"We're striking the balance of making sure that ... these folks who are not taxpayers, haven't contributed to our publicly funded healthcare system, won't be eligible for those services."
Rob Hennin, New Zealand chief executive of health insurance provider NIB, said the company had begun work in line with the government's announcement.
"We are already working on a product that aligns with the requirements for this visa, and aim to launch it in September," Hennin said.
"While all of the details are yet to be determined, the product would be available to purchase for at least one year to align with government requirements, and cover clients for the entirety of their stay while residing in New Zealand."
When asked about the costing, Hennin said it was too soon to say.
"We will be working through the product design and details and aim to have this ready by the deadline," he said.
Financial Services Council chief executive Kirk Hope said the government had consulted with the industry before the decision was made, and the requirements were reasonable.
"I think it's reasonable given what the costs of the taxpayer would be if someone didn't have insurance and had to rely on the taxpayers," Hope said.
"So, it's important that people are insured when they're here on visitor visits."
Hope said it was important for the types of insurance to be provided by the visitors' home market.
Despite the visa's hefty application fee and additional insurance requirements, immigration lawyer Sonny Lam believed the visa would still be popular at face value.
"It is not excessively high - flying every six months back and forth is going to cost more than $3000," Lam said.
"But the insurance requirement may be harder than it looks," he said.
"I had a look at Southern Cross and travel insurance for people over 75 is not so easy."
Immigration lawyer Arran Hunt also said the cost of insurance would be "the biggest factor for many".
"We expect we'll see more competition in the market, with insurance policies being created to solely meet the criteria of this visa," Hunt said.
"The requirements for the visa, as in the pay levels required for sponsors, should mean it is open to almost all couples where both are working," he said.
"However, some may struggle to cover the insurance costs, especially for older applicants." Parent Boost Visa costs Visa application fee: $3000 ($2450 for Pacific applicants)
$3000 ($2450 for Pacific applicants) International Visitor Conservation and Tourism Levy: $100
$100 Additional processing fee for the third-year health check: $325 ($240 for Pacific applicants)
$325 ($240 for Pacific applicants) Health check fees: About $300-500 per person
About $300-500 per person Health insurance costs