Health Insurance-What do they Cover?

One of my client’s friends was having a health insurance scheme from his employer. He resigned from the job and was in a gap of two months to join the new company. During this period he met an agent from one of the health insurance company and got convinced for buying a Family Floater for his family in addition to his  employer scheme. He decided to sign up for the policy next week. Unfortunately, after two days while he was travelling on his bike he met with a severe accident. He was hospitalized for three months and was not able to join the new company. The total cost of his hospitalization was Rs.4 lakhs for which his family had to sell some of the assets .

The incident not only highlights rising medical cost but also the importance of health insurance in today’s world.  If not adequately insured the cost can put a huge dent in your pocket. But choosing a right product is also a dilemma for any insurance buyer. Sometimes it also becomes a difficult task for an advisor to pick the right product for his clients.

With a basic understanding of health insurance and its benefits, the process of selection can be simplified which lead to a better decision making for your family. During selection you should look at the features which you need and not what company provides. For e.g a family of four (two adult and two child) might not be interested in a maternity cover. So whether company provides maternity cover from fourth year or from first year will not be a factor for consideration.

Individual Health insurance: This policy covers an individual for any medical cost arising due to hospitalization.

Family Floater: Here, the health insurance policy will cover all family members (2 or more) under one policy. The sum insured will be shared among the entire family.

Let’s understand this from an example. Suppose Mr.X His wife and their son are covered for Rs.1 lakh each under an individual policy. They would pay a premium for 3 policies of Rs.1 lakh each. In any unforeseen situation any individual (among the three) would be covered only upto Rs 1 lakh. But if Mr.X and family opt for floater plan, then the same Rs 3 lakh would be shared among the entire family which means in any unforeseen situation, any individual would be covered upto Rs.3 lakh.

These are benefits which will be covered by all health insurance companies under their individual or floater policy-

        Pre & Post Hospitalization: Generally, 30 days pre-hospitalization and 60 days post-hospitalization expenses are covered under any policy. Some companies have a cap on the maximum expense that is paid under this benefit while some like Appollo Munich do not put a cap and the same benefit is increased to 60 & 90 days if intimation is given 5 days prior to hospitalization.

·   Day Care Procedure: These are procedures or surgeries taken by the insured as an inpatient for less than 24 hours in a hospital. All companies have a list of day care procedures which they cover.

·       Maternity Cover: This benefit is provided after 3 or 4 years continuation with the same company.

There are other benefits like Domiciliary Treatment, Critical Illness Rider, Emergency Ambulance and Health Checkup which companies offer. One has to look at policy wordings to know the scope of cover for these benefits.

Waiting Period: This is the period for which benefit is/are not covered and starts only when waiting period gets over. Some of the major period’s are-

Ø  30 days for all illnesses (except accident)

Ø  24 months for specific illnesses

Ø  Waiting period for pre-existing diseases

Ø  Waiting period for maternity cover and others

Renewal Benefits: When you renew your policy with same company then you are eligible for benefits like Cumulative Bonus (10-50%) and Free Health Check up (at every 4^th year).

1.     Cashless: Companies have tie-up with hospitals where an investor holding a health insurance scheme from the specific company can get treatment without paying a penny from the pocket (If within prescribed limits).The claim is settled through TPAs in some companies while some has in-house claim management.

2.   Reimbursement: There are hospitals where companies don’t have tie-ups. In this case, the expense of hospitalization is reimbursed by submitting the necessary documents. The only point one has to remember is that the hospital should come under the minimum eligible criteria laid down by IRDA.

Exclusions: Every health insurer has some exclusion for the waiting period and the diseases covered. One can get the list from the policy wordings. While buying any health insurance policy, buyer should clearly read the exclusions in the policy to avoid any dissatisfaction during claim settlement.

Thus during a search for that right health insurance scheme an investor should consider factors which cover his family according to his/her requirements. There are numerous products available in the market which draws a lot of confusion but if aligned with your needs, the right product  can be easily found.