OneInsure Blog

Health Insurance

Post By Mariya Panwala

What’s and How’s of Health Insurance

Recent reports state, Indian families meet 70% of their health expenses out of their own pockets which gradually thrusts them towards poverty line. Today, there’s a dire need for the citizens of India to buy health insurance policies, which is abruptly becoming one of the key elements of the economic well-being of the country.

The following article provides an adequate understanding of health insurance policy. An attempt has been made to succinctly answer all the important questions pertaining to health insurance.

What Is A Health Insurance Policy And What All Does It Cover?

Health Insurance is a type of insurance that covers medical and surgical expenses of an insured individual. It pays the insured in either of the two ways:

Cashless Treatment - Health Insurance Companies work in liaison with different hospitals (which are referred to as network hospitals in insurance industry) where the policy holder is entitled to cashless treatment. This process is made simple with a health card that is provided by the insurance company to the policyholder. The insured person can use that health card in any of the network hospitals for both planned and unplanned hospitalization.
Reimbursement – If the policyholder goes to a non-network hospital, she or he pays the hospitalization expenses initially and later makes the claim to the insurance company who reimburses the expenses. Besides, if the policyholder goes to the network hospital but hasn’t brought the health card for whatsoever reason, she or he pays the hospitalization expenses initially which later gets reimbursed by the insurance company.

The expenses are paid to cover hospital rent, ICU charges, surgeon and doctor fees, nursing charges, operation theatre, medicines, and other specified expenses. In most cases, insurance companies also cover the medical expenses incurred both during pre (usually 30-90 days) and post (usually 60-180 days) hospitalization.

What’s Not Covered in a Health Insurance Policy?

A health insurance policy doesn’t cover the following:

Hospitalization for investigation/evaluation purposes only
Cosmetic surgery, genetic disorder, AIDS or HIV related ailments
Mental disorder, weight control treatments and self inflicted conditions
Aesthetic treatment, plastic surgery, experimental, unproven or non-standard treatment

Who Is Eligible To Take A Health Insurance Policy?

Any individual can take a health insurance policy. However, if the individual is not earning, a proposer can take the policy on his/her behalf.

Do I Need To Buy A Health Plan Separately If I Already Have A Corporate Health Plan?

The answer is yes. Medical expenses are rising year on year. The coverage offered by your company’s health plan may not be sufficient to meet all the expenses. So, it is advisable to buy a separate health plan.

However, you also have the option of shifting from corporate to personal health plan, with the condition that the shift can be made within the products from the same insurer.

What Are The Versions Of Health Insurance Policies?

Generally there are 2 versions of health insurance policies:

Individual Health Plan – Here, an individual who has sought the policy specifically for himself/herself is covered for medical contingency.
Family Floater Plan – Here, the husband, wife, two dependent children and two dependent parents (usually up to six members but some insurers offer to include more members) can be covered under a single Sum Insured with a single premium under a single policy.

Let’s see how a family floater works:

Mr. Insured has a family floater plan with an annual premium of ₹8,000 against a Sum Insured of ₹4,00,000 for a year covering 4 members. Let’s take 2 different contexts.

Insured’s son metwith an accident and is hospitalized. Total expense amounts to ₹3,50,000. Insurer reimburses ₹3,50,000. Later, Mr. Insured’s wife gets hospitalized for an ailment that amounted to ₹1,00,000. Insurer will now reimburse₹ 50,000. Rest ₹50,000 will be paid by Mr. Insured himself. Now let’s say Mr. Insured had auto-recharge benefit on his plan. In that case his wife will get complete ₹1,00,000 coverage from the family floater plan.

Insured’s entire family gets hospitalized for viral flu. The expense per person is ₹1,25,000 that sums up to ₹5,00,000 for the entire family. Here, insurer will pay ₹4,00,000, being maximum sum insured amount while the rest ₹1,00,000 will be paid by Mr. Insured himself.

Hence, in case of a family floater plan, if a single member exhausts the entire amount, the other members can still get the claim within the same year if the policy has an auto-recharge benefit. Also, a member who uses the coverage for a particular ailment in a particular year cannot use the coverage in the same year for the same ailment. However, other members can use the coverage for the same ailment.

What is No Claim Bonus (NCB)?

What if in a particular year you do not claim the coverage amount at all? Insurance companies have a provision for this which is known as‘No Claim Bonus’. You can also call it Cumulative Bonus. Let’s say in the second year of the policy you do not make any claim, then you will be eligible for a special benefit by way of a raise in the sum insured amount in the next year.

Let’s take an example.

Mr. Insured had bought a health insurance cover of ₹3,00,000 in the year 2014. His policy is active and he pays premiums regularly. In 2016he was not hospitalized at all. Hence, he made no claim that year. Therefore, his insurer gave him a benefit of 10% (or as specified) on his coverage amount i.e. ₹3,00,000 for the year 2017. Consequently, Mr. Insured has a total of ₹3,30,000 (3,00,000+10% of 3,00,000) to claim in case of medical emergency for the year 2017.

How Will My Premium Amount Be Determined?

In order to determine the premium amount for health insurance policy, the insurers take the following aspects into account:

Current age – the younger you are, the lesser will be your premium.
Pre-medical condition – premium is calculated based on your past and current medical conditions.
Coverage amount – your desired coverage amount will influence your premium.
Family composition – in case of family floater plan, the number of members to be included in the plan will also influence the final premium amount.

What Aspects Should I Examine Before Purchasing My Health Insurance Plan?

In order to avail the most befitting health plan, you need to examine the following aspects of it.

Credibility and Reputation of the Insurance Company – Don’t forget to check the market standing of the insurance company you’re intending to buy your policy from. Most importantly, examine their claim settlement ratio. The higher the settlement ratio, the better it is.

Coverage Amount – Check if the coverage amount offered by the plan is adequate. Rising medical costs, inflation rates, etc. have a larger impact on your hospital bill. Do consider these factors to assess a future required amount in case of hospitalization. Taking a plan with lower premium cannot be the best solution. Let’s say, a plan with ₹6,552 annual premium gives you a cover of ₹3,00,000 while another gives you a cover of ₹ 3,50,000 with an annual premium of ₹ 7,100. Here, a saving of ₹ 548 today may cost you ₹50,000 tomorrow when you raise the claim.

Waiting Period – The policy holder has to wait for a specific period after signing up a health policy to be able to claim the coverage amount. This is called the waiting period. The condition of waiting period is to restrict people from taking a health plan right after being diagnosed with a disease.Usually, the waiting periods in health insurance come under 3 categories. They are:
- Initial Waiting Period:30 Days - No treatment (except accidental injuries) is covered in first 30 days of buying policy. However, this is not applicable in subsequent renewals.
- Pre-Existing Diseases:4 Years – Coverage amount will not be available for any pre-existing diseases until 4 years of continuous coverage elapse. However, there are some insurers who offer health policies with only 2 to 3 years of waiting period for Pre-Existing Diseases.
- Pre Specified Surgeries:2 Years – Coverage will not be available for pre-specified surgeries like cataract, hernia, and stones.
  Please Note: The above waiting periods vary from insurer to insurer and plan to plan.

Room Rent Sub-Limit – Sub-limits on room rent vary from one insurer to another. Usually public sector companies provide room rent sub limit of 1% on sum insured. Let’s say, Mr. Insured bought a health plan whose sum insured amount is ₹ 3,00,000. So, he shall be eligible for ₹ 3,000 room rent. Private companies usually have no such sub-limit on room rents.

Co-payment – If your health insurance plan has a co-payment clause, some per cent of the total claim amount will be borne by you and the rest will be borne by the insurer. The per cent of co-payment can range anywhere between 10%-50%. Let’s say, Mr. Insured has a plan with 20% co-payment. Now, every time Mr. Insured raises the claim, 20% of the total claim will be first paid by him and then the rest 80% will be borne by the company. So, go for a plan where your share in co-payment is lower even if you have to pay a little higher premium.

From Where Can I Buy A Health Insurance Plan?

You can buy a health insurance plan online or by getting in touch with the insurer, banks, insurance broker or a local agent. Let’s evaluate both the online & offline methods:

Buying Online:

Buying a health insurance plan online is probably the easiest and quickest way of getting a health plan. However, you need to be able to compare and evaluate, to choose the most befitting plan for yourself.

You can compare & buy some of the best health insurance policies online.

Buying offline (direct insurer, broker, banks or local agent): When you buy a health insurance plan from offline, the knowledge and experience that the expert has acquired all through the years will go into assisting you to choose the best for yourself. Besides, in case of any dispute, your expert will be your advocate, who will guide you through the complexities of the insurance world.

Note: A Health Plan is typically renewed annually. Some insurers however, can renew it once in every 2 or 3 years.

That’s it for now. For any further query regarding Health Insurance, do drop a mail at support@oneinsure.com or check OneInsure's website.