Health Insurance

Introduction

Health insurance is an indemnity contract between a policyholder and the health insurance company in which the latter agrees to indemnify or pay the hospital bills and related medical expenses of the former in exchange for a periodic amount known as a premium. In simple words, if any medical emergency arises due to an illness, accident, or on the diagnosis of a serious disease and the policyholder needs to be admitted in a hospital, the insurance company pays the hospital bills as well as pre and post-hospitalisation bills. In this way, the policyholder is saved from paying these bills out-of-pocket.

Importance of Health Insurance

Health emergencies often come suddenly. The environment we live in is becoming increasingly toxic as the industrialization is progressing. People are suffering from stress and anxiety as we are moving more towards materialism and the vices it brings with it, such as dissatisfaction, constant comparison, and yearning to earn more to keep up with inflation and meeting the standards of our social circle. In cities, people follow a sedentary lifestyle because of which more and more people are becoming prone to lifestyle diseases in the country. All these factors have contributed to an increased demand for quality healthcare services, resulting in escalating of medical treatment expenses. Without having a health insurance cover, even a short stay at a decent hospital for even conditions considered as not-so-serious like high-grade fever or food poisoning can cause a massive dent in your pocket.

Therefore, a health insurance plan with adequate coverage becomes an absolute necessity to protect the policyholder from exorbitant hospital bills that arise in case of an accident or an illness. Apart from providing financial cover against medical contingencies, health insurance policies also offer tax benefits. The premium paid for health insurance is deductible from taxable income under section 80D of the Income Tax Act, 1961.

Ways in which your health insurance policy can help you.

A health insurance policy can pay for medicines, hospital room rent, surgery, doctor’s fees, laboratory tests, ambulance, etc.
Health insurance plans not only cover in-patient expenses but also cover day care treatment, pre and post-hospitalisation expenses, and domiciliary hospitalisation.
Some health insurance plans also cover OPD expenses up to a specified limit.
Most of these plans provide the facility of cashless treatment in their network hospitals. In this way, they minimize your out-of-pocket expenses.
Couples who are planning a family can buy a health insurance plan that covers maternity and newborn baby expenses.
It is all the more important to have a health insurance policy in these desperate times where the coronavirus is creating havoc. Health insurance policies cover the medical expenses such as cost of PPE kits (up to a specified amount), masks, ICU charges, ventilators, quarantine centre charges, etc.
Health insurance plans also cover the cost of major surgeries such as organ transplantation, open-heart surgery, neuroplasty, and daycare treatments like varicose veins, cataract surgery, dialysis, etc.
If paying insurance premium is difficult for you then you can opt for a standard policy like the Arogya Sanjeevani health insurance policy which covers modern treatments and treatment of COVID-19 as well.
Most importantly, a health insurance plan provides you and your family peace of mind and confidence to tackle the financial drill that comes along with a medical emergency

Research indicates that the penetration of health insurance in India is minuscule. Out of the current population of 1.35 billion, only about one quarter (472 million people) is covered under any sort of health care. Among these health insured people, most have a cover of less than Rs. 2lakh.

How much sum insured can be considered as adequate?

Until recently, the health coverage of Rs. 5lakh was deemed sufficient. But the scenario is changing fast as medical treatment costs are increasing at a rapid pace, so much so that a health insurance cover of Rs.5lakh might fall short in most cases where surgery is required. A procedure such as liver transplantation can cost up to Rs. 20lakh to Rs. 40lakh and cancer drugs can cost more than Rs. 500 per pill.

Don’t be under-insured

Many individuals in India buy health insurance only to get tax benefits. Due to this motive, they buy health insurance only to the extent the premium is deductible from taxable income. According to researchers, in current times only 1 million people in India are sufficiently insured to avail treatment of a serious illness.

When a patient is diagnosed with a serious condition, taking treatment in one of the leading hospitals of the country becomes a necessity. Room rent alone in these hospitals can cost between Rs. 5000 to Rs. 7000 per day. A space in the Intensive Care Unit (ICU) can cost up to three to four times the amount spent on availing a normal room. Therefore, think practically when opting the sum insured in your health insurance policy. Don’t be penny-wise but pound foolish.

Trends suggest that a growing number of people are opting to take treatment of a critical illness outside India. Health insurance plans such as Cigna TTK Life insurance and Religare life protection cover treatment in foreign hospitals. Religare provides coverage for treatment everywhere in the world up to the sum insured of Rs. 60lakh.

Below are a few health insurance plans that provide a high coverage

Policy	Sum Insured	Annual Premium
Bajaj Alliance Health Care Supreme	Rs. 50lakh	Rs. 31,138
Cigna TTK Pro Health Preferred	Rs. 50lakh	Rs. 36,902
Cigna TTK Pro Health Premier	Rs. 1crore	Rs. 44,118
HDFC ERGO Health (Formerly Known as Apollo Munich) Easy Health	Rs. 50lakh	Rs. 19,884
Max Bupa Heartbeat	Rs. 1crore	Rs. 67,334
Religare Health Insurance Care	Rs. 60lakh	Rs. 19,177

Types of Health Insurance

There are many types of health insurance policies designed to suit the needs of different people, age-groups, and other demographics. The following is a list that will help you understand the broad categories of health insurance plans in India

1. Individual Health Insurance

An individual health plan covers people on an individual basis. However, you can add other members of your family such as your spouse, parents, children, etc. upon paying an additional premium. While calculating the premium, factors such as the individual’s age, habits, and medical history are taken into consideration. The claim filed by one member of the family doesn’t affect the sum assured of the other member. This plan is best for you if you are single or have a spouse with no kids, as the premium of these plans is higher as compared to a family floater plan due to a separate sum insured for each member of the family.

2. Family Floater Health Insurance

A family floater health insurance plan is an umbrella cover plan that extends the coverage to the entire family at a single premium. The premium is calculated on the basis of the age of the eldest member in the family. The coverage is very similar to an individual plan but covered under a single sum assured. This plan is suitable for you if you have small kids and do not have any family members with serious health issues or otherwise, individual family plans would be better as there would be lesser chances of the sum insured getting exhausted. If you have elderly members in your family with severe health issues then the family floater plan might not prove good for you as the whole sum insured would be used upon that individual. For example, if you have a family health policy of Rs. 8lakh and your wife had to undergo open-heart surgery and utilized Rs. 5lakh on it, then Rs. 3lakh would be available for the rest of the members.

3. Critical Illness Insurance

Critical illness policy is a type of insurance that can be bought both as a stand-alone policy as well as a rider attached to an individual health insurance policy or a term insurance policy. There are certain life-threatening diseases such as cancer, heart attack, stroke, kidney failure, etc. These diseases are also called Critical Illnesses and the cost of treatment for such diseases is pretty high, also, the treatment is for a prolonged period which requires multiple visits to the hospitals. The list of the diseases covered as critical diseases under the policy is disclosed at the time of purchase itself. These diseases are financially very draining and the severity of the disease may render the patient incapable of generating any active income. Under this plan, the insurance company pays a lump-sum amount to the insured when such a disease is diagnosed.

4. Hospital Daily Cash Benefit Plans

Under the Hospital Daily Cash Benefit Plan, you get a lump-sum amount for each day of your hospitalization, irrespective of expenses incurred at the hospital. For example, if your plan offers Rs 6000 per day of hospitalization and you are hospitalized for three days, you will receive Rs 18000 from the insurance company whether your bill is Rs 15000 or Rs 25000. The daily hospital cover can be purchased as a rider over a standalone policy.

5. Senior Citizen Health Insurance Plans

Senior Citizen Health Insurance Plans are designed for people who are above 60 years. People in this age-group are more vulnerable to serious ailments and the cost of treatment is also sky-high. It is highly recommended that you buy Senior Citizen Health Insurance for your elderly parents to have a financial backing against any medical urgency in their post-retirement age. The premium of these plans is usually higher due to extensive coverage and higher risk factor. However, the premium paid by you is deductible from your taxable income under section 80D of the Income Tax Act, 1961 up to a maximum of Rs 30000.

6. Group Health Insurance

Group health insurance policy is provided by a company to its employees. The sum insured in such policies is generally very basic and policy features are not very extensive. These plans may cover the spouse and children of the employee as well if the employer desires so by paying extra premium. This policy gets terminated as soon as you separate from the organization. There, it is advisable not to be dependent on your corporate health insurance plan and buy a separate health insurance plan.

7. Maternity Health Insurance

These are health insurance plans that cover the maternity expenses incurred during pregnancy that includes both pre and post-natal care, both types of deliveries (normal or caesarean), and also the medical expenses of the newborn baby during its stay in the hospital. These plans may also cover the cost of transportation for ferrying the expecting mother to the nearest network hospital of choice

8. COVID-19 Specific Health Insurance

To deal with the COVID-19 outbreak, The IRDAI has launched two COVID-19 specific health insurance plans named as Corona Rakshak health insurance plan and Corona Kavach health plan. Corona Rakshak is an individual plan while Corona Kavach is a family floater plan. Both these plans cover COVID-19 related hospitalisation expenses that include the cost of consumables such as PPE kits, masks, oximeters, ventilators, etc.

9. Unit Linked Health Insurance Plans

Unit Linked Health Insurance Plan (ULHP) is a newly introduced plan. These plans offer a unique combination of investment and health insurance. ULHPs not only provide health coverage but also build a corpus that can be used to meet expenses that are not covered by health insurance plans. ICICI Pru’s Health Saver, Birla Sunlife’s Saral Health, LIC’s Health Protection Plus, and India First’s Money Back Health Insurance are some the better ULHPs available in the Indian market.

IRDA Issues Guidelines for Claims Reported Under Coronavirus

In response to the exponentially rising COVID-19 cases in India, the Insurance Regulatory Development Authority of India (IRDAI) on March 04, 2020, has issued a circular asking all the health insurers in India to come up with medical insurance policies to cover hospitalization and other treatment costs for COVID-19 infections.
The following are some norms laid by the IRDAI which the health insurers are obliged to follow for handling coronavirus health insurance claims.

All the Coronavirus (COVID-19) cases must be expeditiously handled by the health insurers.
The settlement of claims for all admissible medical expenses that include medicines, hospital stay during the quarantine period etc. should be compensated as per the terms and conditions defined in the policy document and the extant regulatory framework.
Any health insurance claim related to COVID-19 cannot be rejected without being thoroughly reviewed by the claims review committee.
As in the past also the insurance companies have been launching health insurance plans targeting treatment of specific diseases, one such type is the plans that specifically cover vector-borne diseases. Similarly, the IRDAI has directed the health insurers to design and launch health insurance plans that cater to Coronavirus specific courses only.
The above instructions are introduced by IRDA as per the provisions of Section 14 (2) (e) of IRDA Act, 1999

Benefits of a Health Insurance Plan

Pre-hospitalization Expenses: Doctors don’t prescribe hospitalization immediately unless there is an emergency or a surgery is required. A patient spends a lot of money pre-hospitalization on doctor visits, medicines, medical tests etc. All these medical expenses up to 1 month before the date of admission in the hospital are covered.
In-patient Hospitalization: If the person remains admitted in the hospital for more than 24 hours, all the expenses including room rent, medicines, cost of surgery, doctor charges etc are covered subject to the caps or sub-limits in your insurance policy.
Post-hospitalization Expenses: The patient needs to follow up treatment post-hospitalization in most cases. There are expenses of medicines, vaccines, doctor consultation, medical tests etc. All these expenses are covered by the insurer up to 3 months from the date of discharge from the hospital.
Ambulance Charges: Many health insurance plans also cover ambulance charges. Thus, in case of an emergency, you can avail the ambulance services without any worry.
Daily Cash Allowance: Some insurance plans also cover expenses incurred on transportation, food etc..
Riders and Add-ons: There are many additional riders that you can take such as accident cover, critical illness cover, education allowance, personal accident cover, OPD expenses, and international treatment etc.
Cashless Treatment: An insurance company has a lot of network hospitals on its panel. If you take admission in any of these hospitals you get cashless treatment.

Process of Cashless Settlement of Health Insurance

Cashless settlement of health insurance claims saves you from the hassles of filing all the hospital bills, pre and post-hospitalisation pharmacy bills and doctor’s fees, and then posting them the claims settlement of office of the health insurance company.

How does non-cash health insurance work?

Cashless health insurance basically eliminates the difficulty of having to pay cash in hospitals at the time of need. In the case of cashless health insurance, insurance providers enter into direct negotiations with the hospitals in their network to pay for the treatment of the insured person.

Why is it so important to have cashless health insurance?

Cashless health insurance is gradually recovering for all the right reasons. This is particularly important during times of emergencies, where you increasing be stuck in cash or has no immediate access to cash. The purpose of the service is to eliminate any form of payment by cash.
All you need to do is ensure that the chosen hospital is present in the network of hospitals covered by the insurance provider. This sample of third party administrators (TPAs) can conveniently be identified in the health care contract.

What kind of cashless health insurance is there in India?

Broadly speaking, cashless health insurance is of two types: cashless family health insurance and cashless health insurance for senior citizens. They will protect the family members with a personal health insurance plan and a second health insurance policy for older citizens protects pre-existing conditions and emergency costs, except for the expense of hospitalization.

What’s the process?

In the event of planned hospitalization, the choice of a hospital must be limited to the network of hospitals provided by the insurance company. With your agreement, you can obtain an agreement card that will be needed to use the cashless facility at the hospital. You will need to fill out a pre-authorization form after submitting the policy file. The attending physician must also fill out this form correctly so as to ensure that the facts mentioned are accurate. The TPA must review this form to determine its validity and eligibility. The hospital must submit a letter approving the care following the TPA’s sanction. Nevertheless, the process needs to be hastened in the case of emergency hospitalization. The TPA would usually authorize cashless care within six hours. You should make the claim first and get the money reimbursed by the insurance provider in case you need urgent medical attention.

Issues to bear in mind:

A cashless health insurance scheme has some drawbacks. To make use of the cashless facility, you will adhere to the hospital network as given by your insurance provider. You may also deny your application for cashless insurance. Make sure the details in the pre-authorization form are accurate to prevent TPA denial. The insurance company does not cover costs such as ambulance bills, supplies such as breathing masks, nebulizers etc. Furthermore, the proposal does not contain reporting costs and service costs. Once you buy a contract, make sure you read the documents carefully to ensure you are aware of the terms and conditions stated. Keep a copy of all records and bills from the hospital in case of future reference. When the guaranteed balance is depleted, you will have to pay from your own pocket for the remaining amount.

To make it simpler for you, we have a list of insurance providers providing cashless insurance facilities here:

Bharti AxA Smart Health (Basic)	Rs. 5lakh	Rs. 4,102	1. Unlimited room rent eligibility 2. Four years waiting period for pre-existing diseases 3. Nil co-pay
Company	Insurance Amount	Premium (Annual)	Facilities
HDFC ERGO Health Suraksha	Rs. 5lakh	Rs. 5,688	1. Unlimited room rent eligibility 2. Four years waiting period for pre-existing diseases 3. Nil co-pay
Religare Health Insurance CARE	Rs. 5lakh	Rs. 5260	1. Eligible for single private room 2. Four years waiting period for pre-existing diseases 3. Nil co-pay Star Health MEDICLASSIC
Star Health MEDICLASSIC – INDIVIDUAL	Rs. 5lakh	Rs. 5817	1. Rs 5,000 room rent eligibility per day 2. Four years waiting period for pre-existing diseases 3. Nil co-pay

Pre-existing disease in a health insurance plan

Pre-Existing disease means the policy purchaser is facing any illness prior to buying such a health insurance policy. This condition includes all health issues like asthma, diabetes, blood pressure, etc.
Nowadays, health insurance plans have become a necessity for all, and for the people who want to buy a health insurance plan, it is a daunting task if they have any pre-existing disease

The pre-existing disease is not liked by health insurance companies

Insurers are afraid to provide health insurance cover to people who suffer from any kind of pre-existing disease. It is because there are more chances of filing a claim by the people who have the pre-existing disease and thus, imposes a higher financial risk on the insurer. At times, it is not easy to predict any disease in advance but insurance providers may be somewhere aware of the pre-existing disease of the buyer. But it is a harsh reality that insurance providers are also working for a profitable business.

Precautions for buying health insurance, if you have a pre-existing disease:

Different policies by different companies: It is not easy to get health insurance if you already have a pre-existing disease, but, all not all the health insurance companies completely dislike it. Some of the insurers take into consideration the entire medical history of insured while determining pre-existing disease and other insurers may consider the medical history of the past few years only.
Concealing of pre-existing disease: Insurer can reject the health insurance claim, in case, if he gets to know that you have hidden the information of any pre-existing disease at the time of purchase of health insurance policy.
Counts of doctor visits: Health insurance companies do not consider the short term health issues which do not have long term effect on the health, just like cold, cough, viral infection, headache, flue, etc. The insurance companies only consider those health issues which generally have a long-run impact on health.
The pre-existing disease can also be covered: All pre-existing diseases are not always excluded from the cover of health insurance companies. There is a term ‘waiting period’ in case of pre-existing diseases. The waiting period is the period during which the insurer can reject your claim for those specified diseases. To cover these specified diseases, you will have to wait for that waiting period to end. Also, some insurance companies offer coverage of some pre-existing diseases as well that the insured is might be suffering from in advance. Insured cannot claim a few medical expenses such as doctor fees, medical expenses, hospital expenses, etc. during the waiting period for these pre-existing diseases. It can be claimed only after the lapse of the waiting period or these pre-existing might not be covered in the policy.
Working around the waiting period: Whether it is an individual health insurance policy or a family health insurance, there is always a waiting period which comes as a constraint for you from filing a claim for specific diseases. The waiting period duration in most of the health insurance policies may vary and can be different as per the insurance provider and your medical conditions. It also depends on the time and period of your pre-existing diseases.

Different health insurance policies have different waiting period which may vary from period to period. This waiting period may range from 2 years to 4 years. It is rather suggested that in case if you have switched the insurer only after completing the waiting period at one. Nonetheless, there are some insurance providers who also reduced this waiting period by charging some extra insurance premiums amount. Some of the health insurance companies provide a clause of co-payment by which you can cover some percentage of the expense of pre-existing diseases by paying some extra premium amount. So, it is not true that all insurance companies don’t provide health insurance coverage to the people who have pre-existing diseases. You can get health insurance; even if you have some pre-existing diseases by selecting the right insurance plan and be pre-informed.

Grace Period in a Health Insurance Plan

The grace period is the extra time that you get from the insurance company to get your policy renewed. Thus, if you miss the due date to deposit your premium due to any circumstances, need not worry as most of the health insurance companies provide up to 15 days of the grace period, whereas, some other insurers provide up to 30 days of the grace period. Also, there are some companies that don’t provide any grace period. Failure to make payment during the grace period leads to cancellation of the policy.
The policy document contains details about the grace period provided by the company. Therefore, you need to read the policy wordings carefully to see if there is any grace period provided by the insurer.
An important thing to understand is that your health insurance grace period is different from the insurance waiting period. The waiting period in case of a health insurance policy is the time duration until the exhaustion of which you cannot file a claim for certain diseases or conditions. For example, many health insurance policies cover pre-existing diseases after a waiting period of 2-4 years. Similarly, some health insurance providers cover maternity and new-born baby expenses after a defined waiting period
In contrast, the grace period is an absolutely different term. The insurance company understands that some unforeseen circumstances can arise that may force you to miss a payment of premium until its due date. Instead of terminating the policy right after the passing of the due date, the insurer gives some extra time to make the payment as it is in the interest of both the parties to keep the policy running. A health insurance policy is like wine, i.e. it gets better with time as certain waiting periods cool-off and makes its utility more attractive for the policyholder. And for the insurer, it keeps its customers intact.
For instance, if the due date to deposit your health insurance premium is on January 01, 2020, you may get grace period till 31st January to make the payment. If you fail to make the payment within this grace period then it is highly unlikely that the insurance company would take your request to accept payment and keep the policy running. Thus if you are keen on continuing your policy, make sure that you make the payment within the grace period at least. Try to make payment before the due date. As a practice, don’t delay payment beyond its due date, the grace period is for emergency or inability to pay due to some contingency. It is an unhealthy practice to deliberately delay payment thinking of the grace period as a cushion.

A few drawbacks of not getting your policy renewed on time are discussed below: You are not covered in the grace period –

Since you have not paid the premium on or before the due date, you will not be covered till the time you make payment within the grace period. For example, your due date of renewal is 30th August 2020 and you get grace period till 15th September 2020 and you make the payment on 10th of September, 2020. You would not be covered from the mid-night of 30th August 2020 till the 10th of September, 2020. During this period between 30th August and 10th September, if you need hospitalization, the whole billed amount shall be borne by you even if you get the policy renewed within the grace period. Thus to enjoy coverage without any discontinuation it is imperative that you deposit the premium at least two days before due date in an ideal case.

Possibility of denial of renewal –

Once you miss the due date, it gives the insurer the power of discretion. The Insurer can choose whether or not to renew your health insurance policy. And if he chooses the latter then you shall have to buy a new plan. The new plan might be costlier and have lower coverage.

You lose your earned Waiting Periods –

Under health insurance plans, certain ailments or benefits are covered after a stipulated period of time. Your keeping a policy continued for some years reward you with benefits like coverage of pre-existing diseases and maternity cover etc.

A late fee might be imposed

Missing the renewal date is not a healthy practice and may impact your pocket in the form of a late fee when you deposit the premium in the grace period. For people who frequently miss their due date or have formed a habit of depositing the premium in the grace period, the insurance company often charges a higher premium to discourage this habit.

Risks of not paying the premium even within the grace period

When the grace period is up and you still haven’t made the payment then the policy gets cancelled. Thus, you get open to great financial risk as now if there would be any need for hospitalization, it would be out of your pocket. The bigger risk is that seeing your history of getting your policy lapsed, other insurers might deny you policy issuance. Even if you could buy a policy from a different company, it would not be without medical tests. If your medical tests are not satisfactory then the insurance provider would deny your issuance. In other cases, if you are able to buy a policy from another insurer, there are high chances that you now would be paying a higher premium.