I have come across significant number of people who understand the importance of Health Insurance however they do not buy one because they find it too difficult to understand. Another deterrent is a feedback they or someone close in their network have been denied a claim in past. So what is it with Health Insurance companies that make it so complex? Below are things to know while buying health insurance.
1. Sub-limit or Capping:
At times insurance companies put a cap or a limit certain expenses for which they shall be liable to pay. It is important to read through the plan and understand what are these expenses. It is not that plans will have such limits or capping on expenses. For example few plans either have a limit to using a shared room or they will pay upto 1% of SA as the room rent. Suppose you have a health insurance of Rs 5 lakh, incase of a admission to a hospital the insurance company shall reimburse you costs upto Rs 5000 per day only. Private rooms/ Suites are always expensive as compared to general or shared room. Similar to capping on room rent there could be a capping on ICU charges which is around 2%.
- Capping on certain procedures: Certain surgical and non-surgical procedures at times come with capping. Like for example, Cataract in certain plans have a capping of Rs 20000-25000 when is most cases in Delhi I have encountered hospitals charge Rs 30,000-40,000. Similarly maternity has a capping for approx Rs 20,000-25000 for normal delivery and Rs 30,000-50,000 for cesarean delivery. These capping shall vary from plan to plan and also the Sum Inured that you choose. Higher the sum insured higher will be your limit on expenses for maternity.
There are certain plans that don’t have capping to certain surgical procedures, however all maternity plans have limits defined which is basis the sum insured that one takes
2. Waiting Periods:
All insurance plans come with some waiting periods that differ from plan to plan. There are basic waiting which one has to adhere to before making a claim. Accident is however covered from Day 1.
- Basic Period: All insurance policies have a very basic 30 days waiting period. No claim will be processed during this waiting period. There are however few illness or disease specific plans that cover certain diseases from day 1 like diabetes, hypertension, heart etc.
- Day Care Procedures or certain surgeries: A day care procedure is one that due to technological advancements can be performed in less than 24 hrs and for which hospitalization is not required e.g. cataract. Apart from day care there could be some surgeries that are covered after waiting period of 2- 3 yrs. This waiting period depends on plan to plan and hence can vary.
- Pre-Existing Disease Waiting Period: A pre-existing disease/condition is covered after a waiting period of 2-4 years. This waiting period varies from plan to plan. It is not mandatory for an insurance company to accept one’s pre-existing disease or condition, since they see a higher risk in future they could exclude it completely or ask for additional premium towards it’s coverage.
- Maternity Waiting Period: Waiting period in this case may vary from plan to plan for a policy holder and is also dependent on the amount of sum insured one chooses. The waiting periods in this case can vary from 9 months to 7 years in some plans. Not all plans cover maternity and therefore incase one of the objective of taking health policy is maternity coverage then cross check.
At times insurance companies include a co-payment clause. This means part of the bill amount will be borne by the policyholder. This amount could be anywhere between 5% to 30% or more and can vary from plan to plan. There however are certain plans that do not have concept of co-payment at all. An insurance plan may have below types of co-payment under various scenarios
- Compulsory co-payment: This is to be paid mandatory paid by the policyholder.
- Optional co-payment: A policy owner has an option to choose if he wants co-payment as part of his policy. By doing so premium comes down.
- Co-payment towards pre-existing illness: Incase you have a pre-existing illness/ disease then few plans have a clause for co-payment.
- Co-payment after certain age: Some policies have a clause for co-payment after certain age. There are some policies currently available that have compulsory co-payment after 60 or 65 yrs age.
- Co-payment for change in zone: Insurance premiums are based on zones. A metro city shall have higher premiums then the non-metro cities/ towns.
4. Network Hospitals:
Health Insurance companies tie-up with hospitals wherein incase of hospitalisation the treatment is done on cashless basis. Therefore before buying health insurance do check list of hospitals around the place you stay. Although one should not make a decision solely on basis of network hospital as companies keeping updating its network hospital list. Incase a policyholder is getting a treatment done in a non-network hospital the expenses will be reimbursed to him/her.
5. Premiums Increase with age:
Your premiums increase as you grow with age. This is because companies see an increase in their risk for a claim. Some companies have specified age bands while others increase every year. Incase one has a family floater then it is the age of the eldest member that will determine the premium.
6. Consumable Expenses & Admin Charges:
A basic health insurance plan does not pay for consumable expenses. These are to be paid directly to the hospital. These usually are 5-7% of the total bill amount. All health insurance companies provide a list of consumable expenses that are part of excluded items. These are expenses like bandages, hair removing cream, gloves, mask etc. There are now some plans that offer cover for consurmables as part of the plan or charge a little extra.Similarly there are certain administrative charges like admission fee, admission kit etc which are not paid to a policy holder.
7. No-Claim Bonus:
Most of us will be aware of NCB from from motor insurance as it helps us get cash discount on the premium. In Health Insurance NCB works differently. The NCB here gives a policyholder extra value without impacting your premium. The NCB amount varies from 5% to 50% per year as it varies from plan to plan. This means if you have a sum insured of Rs 10 lakhs and NCB is 10% then for every claim free year the policyholder will get Rs 10,000 additional value next year. The no-claim bonus can not keep increasing or accumulating for life time, all plans have a limit to which it will accumulate, some plans specify this as 25% or 50% or 100% of basic sum insured. Some plans currently available also give NCB upto 150% of no-claim bonus as well.
IRDA in Sept, 2011 gave go-ahead to portability in health insurance. This allowed policy holders to move from one insurance company to another without compromising on accrued benefits like the waiting periods. Most companies do not allow transfer of NCB while portability instead they will be willing to give you higher insured cover. One can port a policyholder only at time of renewal and subject to approval from new insurance company. One can reach out to an insurance company for portability 45 days prior to renewal date.Remember insurance companies are not bound to accept a portability This gives enough time for insurance company to process & investigate the papers. As part of the portability process a policyholder shall require to submit past policy documents to the new insurance company. It is therefore essential to retain past policy documents for future use.
9. Declaration of Past medical condition or Pre-existing diseases:
A pre-existing disease is one for which treatment was taken 4 years ago. This is one of the most important aspect in the policy while filling the health insurance form. Insist in filling it yourself or request your agent/ adviser to fill it in front of you. Hiding a past medical condition or pre-existing disease could lead to denial of claim in future. It is always better to declare conditions that occurred 20 yrs ago as well.
10. Buy health insurance when young:
It is important that one buy’s insurance they he/she is young and healthy. Insurance providers do not sell insurance to those who are old and unhealthy as they see them as high risk cases. Also when incase you come in contact with a disease or illness insurance companies might deny to cover it as permanent exclusion or add loading or deny giving you a policy altogether. Don’t wait till you fall ill to buy a health insurance buy now.
I hope above information shall help you in choosing the right insurance plan. As a policy, I have refrained myself in naming any specific insurance plan/s in the above examples as need of every policy holder is different.
Your queries, comments & feedback are always welcome.