Crossing the age of 21 and starting my professional career got me thinking about the health insurance cover that my employer provided as a benefit to me. It is okay if you do not have much knowledge about health coverage since it is still a new concept in India to support your medical expenses through insurance. My research over it busted many myths in the mind and clarified my viewpoint and guess what, it is actually beneficial! Here are some of the headers of the research:
Why health insurance?
Health care can be very expensive. Health insurance is a way to reduce that cost to an amount that you can manage by sharing the risk with others. It works because most people are healthy most of the time, so their premiums help pay for the expenses of the small number, who are sick or injured.
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Medical inflation in India is approximately 15%. So in every five years the cost of medical procedures and treatments almost doubles. You need your health insurance to at least be adequate for the next five years – before you can increase your cover.
Here are some of the terms related to health insurance you should know for starters:
- Claim – A request filed by an insured to the insurance company to pay for services obtained from a health care professional.
- Certificate of Insurance – The description of the benefits and coverage provisions forming the contract between the carrier and the customer.
- Co-Payment – When the insured files for a claim, there is a certain fraction of the claim amount he has to bear himself before the insurer steps in. This fraction is known as co-payment. Co-payment is shown as percentage of the total claim amount.
- Policy – It is a legal document which acts as a contract between the insurer and insured. It contains conditions of the insurance.
- Deductible – The amount of loss borne by the insured. This loss can be a certain money amount or a percentage of the claim amount. Higher the deductible, lower is the premium.
- Dependents – Spouse and/or unmarried children (whether natural, adopted or step) of an insured.
- Premium: This is the amount you will pay for health insurance (typically every month), regardless of whether you see a doctor.
What’s the best health insurance plan for me?
Choosing between different health insurance plans isn’t always easy. Which of those plans is right for you depends on your health and your financial situation. There is no one “best” plan for everyone. In order to help you answer this question, here are a few things to consider:
- Long-term coverage or short-term– If you are between jobs for 1-6 months, you may want to look into some short-term coverage options. Alternatively, if you have no prospects of receiving group health insurance coverage through an employer, you may value the stability and increased benefits offered through an individual and family health insurance plan which will provide longer term coverage. Don’t lean too much on the group cover from your employer. Group covers have lots of exclusions and may not cover all the costs incurred during the hospitalization.
- Basic coverage or more comprehensive coverage– Some insurance plans offer basic coverage to cover you in case of a major accident or illness. These insurance plans typically have a lower monthly premium, and may be appropriate for people who intend to use their insurance primarily in the event of a serious accident or illness. Other insurance plans offer more comprehensive coverage which may include benefits such as: preventative care, physician services, etc. These insurance plans typically have a higher monthly premium, and may be appropriate for people who intend to use their insurance on a regular basis.
- The type of policy to buy should be determined by your family’s needs– The number of family members and their age is crucial to identifying a policy. For instance, a young family can do with a basic cover of Rs 5 lakh, while a family with older members should opt for a larger floater cover. Family floater premiums are linked to the age of the oldest member. If the parents are over 50, it would be sensible to get a separate senior citizen cover for them, and not include them in the floater plan also since they are most likely to fall ill.
- While comparing plans, look for a summary of benefits– Online marketplaces usually provide a link to the summary and show the cost near the plan’s title. If you’re going through an employer, ask your workplace benefits administrator for the summary of benefits. www.policybazaar.com might come to your rescue here. See which plans cover a wider scope of services. Some may have better coverage for things like physical therapy or mental health care, while others might have better emergency coverage.
- Pre-existing diseases – This is the factor which contributes to the maximum number of health insurance claims being rejected. Plans have standard clauses that any pre-existing ailment (at the time time of buying the plan) will not be covered for the first 2-4 years. So when you file for a claim, the first thing that an insurance company investigates is that if the ailment is anywhere linked to a condition that you already were suffering from and if they find it, sorry claim denied!
- Call the customer service of the insurers you’re considering to address any lingering questions- Here are some examples of what you could ask: I take a certain medication.
- How is that covered under this plan?
- What maternity services are covered?
- What happens if I get sick when traveling abroad?
- How do I get started signing up, and what documents will I need?
According to India’s taxation system, if you are paying the premiums, then you can avail income tax rebate u/s 80D of ITA upto Rs.25000 for Indians in the age group of 18-60 years, while the premiums paid for anyone above 60 years of age reaches Rs.30000. Well, that is an icing on the cake surely!
Some other useful tips
- Read the policy inclusions and exclusions carefully before buying.
- Check the individual expense limits for different heads like hospital room rent, doctor’s fee etc., to avoid last-minute surprises.
- Check if there are any treatment-specific caps that limit the amount you can claim for some treatments.
In the race to excel in our professional lives and provide the best for our loved ones, we sometimes neglect our most important asset – our health and in turn our lives.
In rural India, almost 80% of the out-of-pocket expenditure is on medicine, whereas in urban areas it is around 75%. The doctor’s fee varies between 11 and 14 per cent and diagnostic tests account for 7-8 per cent of out-of-pocket expenditure.
There is a popular saying about health insurance: “Buy health insurance when you don’t want it, because you may not get it when you want it.” So It becomes imperative to have a health insurance plan in place, to ensure that no matter how critical your illness, it does not impair your financial independence.