Medical Insurance in China,focusing on Guangzhou

Medical insurance in China is divided into two categories: Basic Medical Insurance for Employees and Basic Medical Insurance for Urban and Rural Residents.

• Basic Medical Insurance for Employees, prior to the promulgation of the “Social Insurance Law of the Peoples’ Republic of China” was formally referred to as Basic Medical Insurance for Urban Employees ¹. This insurance applies to employees of enterprises and the government, as well as to individuals working for individual businesses and in flexible employment. ² According to “Interpretation (II) on Issues Concerning the Application of Law in the Trial of Labour Dispute Cases”, Article 19 ³, employees are mandatory.
• Basic Medical Insurance for Urban and Rural Residents was consolidated with Basic Medical Insurance for Urban Residents and New Rural Cooperative Medical Care in 2016. ⁴

Basic Medical Insurance for Employees

Cost

The insurance contributions are distributed between employers and employees.
Local governments are responsible for establishing the contribution rates, with the central government providing the base specifications. For instance, in Guangzhou, the employer contributes 6% of the total employee payroll, while the employee contributes 2% of their salary as the contribution base. ⁵ It should be noticed that the contribution base is subjected to upper and lower limits. Should an employee’s salary exceeds 300% of the previous year’s average local salary, it will be treated as 300% of the average salary for the contribution base. Conversely, if an employee’s salary is below 60% of the average salary, it is treated as 60% of the average salary for that. ⁶

Benefits

The contributions made by employees are credited to their individual accounts. Following 2021, the employer’s contributions will be fully allocated to the Basic Medical Insurance Fund, as opposed to being partially credited to employees’ accounts. ⁷ The Fund may provide reimbursement for medical expenses that exceed a special deductible. Nevertheless in the event that the deductible amount is outside the established range, the Fund will not provide reimbursement. ⁸ The reimbursement rates and deductible range are specified by the local government.
notice: Any deductible medical expenses that exceed the range of reimbursements available from the Basic Medical Insurance Fund, can be covered by an insurance policy called ‘Subsidy for High Medical Expenses for Employees’ but this is beyond the scope of our discussion.

Effective Period

The determination of the effective date for the insured to be eligible for benefits is made by the local government. In Guangzhou, this is scheduled for the following month after the current contributions have been paid. ⁹ The benefits will stop the following month, if contributions stop. However, if contributions resume within three months, the benefits will be reinstated for the previous three months. ¹⁰

For Retirement

Those whose total contributions reach the statutory period can continue to enjoy medical benefits after retirement. ¹¹ The statutory period is specified by local governments. In Guangzhou, This is 10 years or 15 years for contributions made before 2014. ¹² For those who have been contributing since 2022, this will gradually increase to 30 years for male employees and 25 years for female employees by 1 January 2030. ¹³

Effective Spots and Treatments

The Basic Medical Insurance Fund only covers treatments included in the List of Medicines, the List of Medical Consumables and the List of Medical Services, collectively known as the “Three Lists of Medical Insurance”. ¹⁴
Outpatient medical expenses can only be reimbursed by the Basic Medical Insurance Fund in designated hospitals. In Guangzhou, insured individuals can select one primary care provider, one traditional Chinese medicine provider, and one other additional healthcare provider as designated hospitals. ¹⁵ Outpatient treatments are not subject to a deductible. Outpatient treatment can be reimbursed at a rate of 80% at designated primary care provider and 65% at other designated care providers.
The deductibles for inpatient treatment are as follows: 250 yuan for primary care providers, 500 yuan for secondary care providers and 1000 yuan for tertiary care providers. Reimbursement rates for retirees are 93%,89.5% and 86% for primary, secondary and tertiary care providers, respectively while rates for employees are 90%,85% and 80% respectively. ¹⁶ The upper reimbursement limit for inpatient treatment is 6 times of the average salary of the previous year, while the limits for outpatient treatment are 5% and 7% of the previous year’s average salary for employees and retirees, respectively. ¹⁷ However even if all treatments are included in the ‘Three Lists’, you may still have to make a co-payment for certain category B medicines or special treatments. ¹⁸

Basic Medical Insurance for Urban and Rural Residents

Cost

Basic Medical Insurance for Urban and Rural Residents is intended for individuals who do not have insurance under the Basic Medical Insurance for Employees scheme, including students. The annual insurance contribution is shared between insured individuals and the local government. In Guangzhou, for instance, the contribution fee is calculated using the average of the previous per capita annual disposable income of urban and rural residents, multiplied a rate( totalling 2.42%). For students, the rate is 0.73%; for all others, it is 0.97%, with the government covering the remainder. ¹⁹ In 2025, the contribution is 413 yuan per insured student, with the government contributing 956 yuan, and 549 yuan per other insured individual, with the government contributing 820 yuan. ²⁰ Should the insured choose to discontinue their contributions, they will be unable to benefit the following year. ²¹

Benefits

As with Basic Medical Insurance for Employees, Basic Medical Insurance for Urban and Rural Residents only provides cover for treatments included in the “Three Lists”. In Guangzhou, insured minors and students can choose one primary care provider and one other healthcare provider as designated outpatient hospitals. Other insured individuals can only choose one primary care provider. ²²
Insured minors and students can be reimbursed 80% of outpatient treatment expenses at a designated primary care provider and 50% at another designated healthcare provider. Other insured individuals can be reimbursed 60% only at designated primary care provider. ²³ The outpatient reimbursement has an upper limit of 1000 yuan per year for minors and students, and 600 yuan per year for other insured individuals. ²⁴
For inpatient treatments, the deductibles are as follows: 150 yuan for primary care providers, 300 yuan for secondary care providers and 500 yuan for tertiary care providers. Reimbursement rates for minors and students are 90%, 85% and 80% for primary, secondary and tertiary care providers, respectively, while rates for other insured individuals are 90%, 80% and 70% respectively . The maximum allowable expenses for diagnostic tests and examinations per admission are subject to limits as follows: 500 yuan for primary care providers, 1000 yuan for secondary care providers, and 1500 yuan for tertiary care providers. ²⁵
If all the treatments are included in category B medicines, special diagnostic and therapeutic procedures and special medical materials, even those covered by the “Three List”, a co-payment will still be required. ²⁶