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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.

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

  • 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.
  • 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 appli\ance, medical and drugs, chemotherapy, radiotherapy and similar expenses.

EXCLUSIONS

There is a whole list of diseases and disorders where expenses incurred within the first two years from the start date of the policy are not covered. These diseases are typically covered from the third or fourth year onwards as pre-existing covers.

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, and,
  • War, riots, strike, terrorism acts, nuclear weapon induced treatment.

Does Age Affect 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

Health insurance offers attractive tax benefits. The premium you pay towards health insurance is tax deductible under Section 80(D) of Income Tax Act, 1961.

While computing the total income of an assessee, being an individual there shall be a deduction of sum specified in Sub-Section (2) Clause (a) and (b) of Section 80(D).

Sub-Section (2) – Where the assessee is an individual the sum deducted from his/her taxable income shall be the aggregate of the following:

The whole amount paid to effect or to keep in force an insurance on the health of the assessee or his/her family (here family means spouse and dependent children of the assessee) but not exceeding Rs. 15000

The whole amount paid to effect or to keep in force an insurance on the health of parent or parents of the assessee but not exceeding Rs. 15000 in aggregate

For senior citizens, the limit has not changed; it is Rs. 20000 per financial year. To make the full utilization of the said limit, you can add the premiums you paid for health insurance and the premiums paid for the critical illness rider or any other health insurance rider under life insurance policy.

Deductions under section 80(D) is available over and above the deductions under section 80(C) that has a limit of Rs. 1 lakh.

In short, health insurance payments do not just cover the health of yourself and your family; it is financial prudent too, allowing you to save a packet on incom

Health Insurance Claims

Health insurance claims procedures are very specific for different scenarios, such as emergency or planned hospitalization. To avail inpatient hospitalization services, you can go to any hospital of your choice, either at a hospital on the insurer’s network or even outside the network. The difference is at a network hospital, the Third Party Administrator (TPA) can authorize cashless service at a network hospital whereas you will have to settle all the bills at the hospital which is outside their network.

Cashless service is the service where you need not pay any amounts either as a deposit at the time of admission or for the hospital bills at the time of discharge. This facility is available only at the insurer’s network hospitals. To avail this cashless service, you fill the cashless request form available at the network hospital and get an authorization from the TPA. This authorization along with a copy of the card issued by the TPA has to be given to the network hospital at the time of admission.

The general procedure for a health insurance claim includes informing the TPA about the hospitalization and then submitting the claims form. The TPA would then reimburse your expenses or settle with the hospital (if you have availed of the cashless facility at a network hospital).

Health Insurance Coverage

There are different types Health insurance policies available in India like Mediclaim policies, Top-up plans, critical illness plans and Accident policies.

Basic Features of the Health Insurance Policies available are:

Mediclaim Plans:

A Mediclaim policy covers hospitalization expenses for the treatment taken for disease or illness or accident. It also covers pre and post hospitalization expenses up to certain days and certain limit of sum assured. This limit differs from company to company depending upon the policy and sum assured. Mediclaim policies are available as individual plans and also as family floater plans.

Individual Mediclaim policy covers each individual with separate sum insured and in floater policy all family members get covered under one Mediclaim policy with one sum insured. Health Insurance is the one year contract with the insurance company, so the policyholder needs to renew policy every year.

Mediclaim plan also pays pre hospitalisation and post hospitalisation bills for certain days and also pays ambulance charges over and above actual hospitalisation bill. One should remember the following points before buying a new product, i.e. life time renewability, no sub-limits on room rent or diseases, no co-pays, no loadings after claim and coverage of pre-existing disease.

It is always advisable to buy it from agent as the role of agent is very important while settling the claim and it also requires continuous follow up and good agent can give you required service. Normally Mediclaim plans have a waiting period of 30 days and one should also know the list of exclusions before buying new plan.

Top-up Plans:

Top-up plans also cover hospitalization expenses just like Mediclaim plans. The major difference here is that these plans cover the expenses only if the total expenses exceed a pre-specified threshold limit which is called deductible. Since these plans have deductible, the premiums of these plans are very low. One should buy first basic Mediclaim policy and then buy a top-up plan with a deductible of the amount equal to the cover in the basic health plan. This plan can help when there are major hospitalization expenses arising out of serious illnesses, critical illness or major accident.

Critical Illness Plans:

Critical illness is a different type of policy which is a pure benefit policy and pays a lump sum amount (sum assured) on diagnosis of the specified list of critical illness covered in the plan. All major diseases like Cancer, Multiple Sclerosis, Paralysis, Coronary artery bypass surgery, Major organ transplant, First heart attack, Stroke, Kidney failure and Aorta graft surgery are covered under the critical illness plan. The list of critical illness varies from company to company and one needs to check before opting for it.

There is a waiting period of first 90 days and also you need to survive for 30 days after the diagnosis of the illness; only then the sum assured is paid. This cover helps you continue your regular lifestyle even after the loss of income due to diagnosis of critical illness. Premium of critical illness plans is too high compared to all other insurance plans available in the market and therefore most of the people stay away from buying critical illness.

Accidental Death and Disability Insurance:

Accidental death and permanent disability insurance pays you a lump sum amount (sum assured) in case of an uncertain event of death or disability due to an accident. The disability may be permanent like loss of both the limbs, hearing impairment of ears, eyesight etc. or permanent partial disability like loss of one limb, hearing impairment of one ear and loss of eyesight etc. This cover helps you continue your regular lifestyle even after loss of income due to permanent partial or total disability. Premium of this policy are very low still most of the people do not buy this plan.

There are other plans like hospital cash benefit plans which are also available that pays you fixed amount for every day of hospitalisation provided you are hospitalised for minimum days as per policy condition.

Most of the plans now are available online. One also needs to compare the products on the basis of features of the product and also premium payable before opting for any health insurance plan. It is always advisable to disclose all the facts correctly in the proposal form including details of adverse health history and existing policies before buying new product.

Health Insurance Riders

A health insurance rider is an attachment or amendment to a health insurance policy that adds to the coverage in the policy. These riders can be availed by paying an additional premium.

Riders available with Health Insurance:

  • Hospital cash – Provides a fixed amount for each completed day of hospitalization
  • Patient care – Provides daily payments for attendants post-discharge from the hospital
  • New born baby care – Provides payments for new -borns from birth until the end of the policy period