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Health Insurance

This is one insurance policy where only the most fortunate person will not make a claim during his life time. Most of us will, unfortunately, be required to be hospitalized some time or the other and will need a health insurance policy to take care of the hospitalization expenses. 

Which one and what is the difference?

  1. The most common policy is the Hospitalization expenses reimbursement policy or "mediclaim" policy as it is commonly known. This will reimburse "eligible" expenses incurred while hospitalized for treatment of any illness or disease or due to an accident. The policy normally does not cover expenses incurred outside the hospital even if they are quite high such as expenses for tests, doctor's visits while not hospitalized or medicines during that period unless it leads to hospitalization in 30-90 days or is a result of hospitalization in the prior 30-90 days. Expenses on elective treatments such as cosmetic surgery, obesity, etc. are also not covered. There is a long list of other permanent exclusions but in the interest of simplicity they are not being given here.

  2. There are policies that pay a lump sum if you contract a serious illness/disease such as Cancer, stroke, organ failure, etc. This amount is payable when the condition is diagnosed and you survive a fixed period after the diagnosis. This type of policy is popularly called a "critical illness" policy and it is supposed to be used to create a corpus to generate income to replace the loss of income that normally occurs after such condition is diagnosed and fortunately you survive. Critical Illness Policies  are in addition to and not a substitute for mediclaim policies.

  3. There is a 3rd kind of policy which pays a fixed sum of money for every day spent in the hospital. This kind of policy is called daily cash allowance policy and is again a supplement to and not a replacement for a mediclaim policy

  4. Another kind of policy pays a larger fixed lump amount if you have to incur any of the surgeries listed in the policy. This policy is suitable only for those people who are unable to get regular mediclaim policies and would like to at least get some protection against surgical costs.

Things to find out about mediclaim Policies 
  1. Renewability ?? Take policies that are renewable till your life time. After all if the policy does not get renewed beyond a certain age you will find it impossible to get a fresh policy on reaching that age. So go for policies that are renewable till lifetime.
     
  2. Sub-limits  - Ignore policies that have a room rent sub-limit as it can seriously impact the amount that you get paid for every hospitalization.
     
  3. Disease specific amount Sub-limits - Be aware that most policies have specific sub-limits for treatments such as cataract, knee or hip replacement etc.
     
  4. Specific Expenses Sub-limits - Apart from room rent sub-limit covered above (avoid policies that have room rent sub limit) and please be aware that some policies also have expense sub-limits on items such as medicines and doctors?? fees.

  5. Waiting periods - Be aware that most mediclaim policies will not pay hospitalization expenses for any pre-existing disease for a period of between 1-4 years. The exclusion will also apply for any hospitalization due to a disease that was a consequence of the pre-existing disease.

  6. Co-payments - Be aware that the policy can require you to pay a portion of the ??eligible?? expenditure from your side. This is called co-payment in insurance parlance. The co-payment is normally conditional such as after reaching a certain age or for hospitalization expenses incurred for a pre-existing disease or for hospitalisation expenses incurred outside the preferred network of the insurance company.
      
  7. Type of rooms - Also there are some policies will restrict the type of room (normally twin sharing room) that you can get yourself admitted to for the purpose of getting treatment. If you choose a higher category room there could probably be a co-payment imposed or the expenses would be reimbursed based on what you would have incurred if you had stayed in a twin sharing room. The second type of conditions can seriously curtail the amount of claim that you can make and you should avoid policies that have such conditions.
     
  8. Which Zone can I be treated in?
    Some policies will restrict the geographical parts of India that you can be treated in. If you choose to get treated in another part of India that has a higher premium there is normally a co-payment that is imposed.
     
Things you should not worry about
  1. Medical examination before the policy is issued
    This is in fact good for you. Coupled with complete disclosure from your side this will ensure that you have the least problems at the time of making a claim. All insurance companies will reimburse 50% of the medical examination cost if they agree to issue the policy to you.

  2. Coverage of Pregnancy
    Only a few policies cover this and that too after a waiting period of 4-6 years after taking the policy. The amount of expenditure covered is also limited to 15-50 thousand depending on the type of delivery.
     
Things that you should definitely do
  1.  Make complete disclosures including any history of past diseases or treatment. It is better to have a more expensive policy or even not to have a policy rather than get a policy by hiding facts which will make the policy useless when a claim arises. 
Read Brochure of the policy carefully before signing on the dotted line. 
Check out all the things that are listed above. 


Why health insurance is essential?

According to recent studies, healthcare costs have been rising at more than 20 per cent on an annualized basis. Also, out-of-the-pocket spending continues to be around 75 per cent of the total medical expenses. Given this increasing cost of medical care and treatment, it becomes essential that you have adequate health insurance cover to reduce the risk of financial difficulties in the event of a major illness or hospitalization. Even the government is getting into the act  to reduce the exorbitant out-of-pocket spending, hence it has been promoting low-cost health care plans.
COVERAGE

A health insurance policy covers the following basic costs in case of hospitalization due to any accidents/ diseases which doesn't form a part of the permanent exclusions of the policy

  1. Room, boarding expenses as provided by the hospital/ nursing home.
  2. Nursing expenses
  3. Surgeon, aneasthetist, medical practitioner, consultants, specialist fees
  4. Operation theatre charges, surgical appliance, medical and drugs, chemotherapy, radiotherapy and similar expenses.

EXCLUSIONS

The exclusions on a health insurance plan vary marginally company to company. What one should pay special attention to is whether pre-existing diseases or treatment for common but expensive treatments, such as cataract or hernia are covered.
The typical expenses that are not covered by a general health insurance policy are:
  • Any disease/injury during first 30 days of commencement of policy (except accidental injury)
  • Permanent exclusions could comprise of the following illnesses:
  • Vaccination, inoculation, change of life, cosmetic or aesthetic treatment, plastic surgery unless necessitated due to accident or as a part of any illness
  • Dental treatment or surgery of any kind unless requiring hospitalization
  • Cost of spectacles contact lenses and hearing aids
  • Convalescence, general debility, "run-down" condition, sterility, venereal disease, intentional self-injury, use of drugs and intoxicants
  • Hospital / nursing home charges not forming part of any treatment
  • Nuclear perils and war group of perils
  • Naturopathy or non-allopathic treatment
  • Any internal congenital illness
  • Pregnancy and childbirth related diseases
  • Expenses arising from HIV or AIDS and related diseases
  • Use or misuse of liquor, intoxicating substances or drugs as well as intentional self injury
  • War, riots, strike, terrorism acts, nuclear weapon induced treatment.

DOES AGE EFFECTS health insurance PLANS AND PREMIUMS

Your age definitely affects your insurance plan in terms of coverage as well as cost. The older you are, the costlier your health insurance premiums.
As you grow older, your body becomes increasingly prone to illnesses, disorders, and malaise - hence the increased insurance premium costs.

TAX BENEFITS ON HEALTH INSURANCE

Premiums paid up to Rs. 15,000 per annum under the health insurance plan for self, spouse, two dependent children are exempt from tax under section 80 D of the Income Tax Act. Moreover you can also claim deduction up to Rs. 15,000 for premium paid towards dependant parents and in case your parents are senior citizen, you can claim a deduction of Rs. 20,000.



 

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