7 important points to know while buying Health Insurance

Healthcare inflation is close to 20% as compared to overall inflation of 8-9% in the past few years*. Medical breakthroughs have made it possible to treat and cure many major ailments however these benefits don’t come cheap as the cost of the new technologies is passed on to the patients. Thus, the case to have health insurance coverage is very strong. Yet, many people hesitate to buy health insurance or keep on delaying the decision. One reason for this could be that they find it overwhelming to choose the best suited product from the vast choice available today. They may be unsure of what questions to ask for or what features to look for in a product. Let’s discuss below some important points to be considered while buying health insurance:

1)      Do not depend only on employer’s insurance: Many people take their employer’s health insurance plan for granted and shy away from buying their own health insurance policy. While doing so please consider that you will be without any cover when in between jobs and also the sum assured offered by the employer may be inadequate in case of major illnesses. Also post retirement when you most need health insurance on account of advanced age, you will be left without any cover. Paying from your own pocket may eat into a sizeable portion (or all) of your savings considering the medical inflation.

2)      Buy early – When you are young and healthy and have no ailments, there will be no waiting period of pre-existing ailments which in turn will help you optimize your health insurance benefits. Buying health insurance early helps you to accumulate no claim bonuses as the chances of claim in early life are much lesser. The bonuses thus accumulated will increase your sum assured and prove handy during future claims. No claims bonus may range from 5% to 100% of sum insured in most cases.

3)      Buy adequate cover – The sum assured chosen should be well thought over considering that the healthcare costs are going up at a rapid rate. Also, the city you live in will make a huge difference with regard to the hospitalization costs and treatment.

4)      Individual or Floater policy – In an individual policy only a single person is covered whereas in a family floater policy, the spouse and children are also included. The coverage amount can be used for the hospitalization and treatment of any or all the family members who are included in the floater policy till the sum assured limit. As such family floater plans are much more flexible and can help in optimum use of the policy. Some companies even allow dependent parents and in-laws to be included in the floater policy. However, do understand that the premium for such policies is generally arrived at on the basis of the oldest member. Hence, including elderly parents in the floater plan will mean paying a substantially higher premium. It may be better to opt for two separate floater plans—one for self, spouse and children and the other for elderly parents/in-laws. You can also get specific senior citizen plans for the elderly. 

5)      Not reading the fine print – Assuming that the insurer will clear all the hospitalization bills up till the sum assured limit is wrong. Do check for the following:

·         Co-pay – In a co-pay policy, for every claim a certain percentage of the claim amount is paid by the policyholder and balance by the insurance company. For eg: For a policy with 10% co-pay if the hospitalization expenses are Rs 1,00,000/- then 10% of this i.e. Rs 10,000/- will be payable by the insured and the balance Rs 90,000/- by the insurance company. Policies with co-pay feature have lesser premium than those without co-pay. You need to decide whether you wish to go with a co-pay or a without co-pay policy. While taking a decision please keep in mind that for certain critical illnesses the hospitalization expenses can be vey high and a co-pay policy may put considerable strain on your finances.

·         Room rent limit – This is a very important clause which can become a major pain point during claim. Many policies have a room rent limit (per day basis) which is a fixed amount or a percentage of the sum assured, say 1% of the sum assured. For eg: Your policy has a room rent limit of Rs 4000/- per day then the company is liable to pay only this amount even if you get admitted to a room with higher rent. Fair enough! However, if you are thinking that this limit applies only to the room rent and all other charges will be borne at actuals till the sum assured amount, you are hopelessly mistaken. All the other charges will be borne in the same proportion.

Assuming that there was an emergency resulting in hospitalization and only a room with rent of Rs 8000/- was available, so you had no option but to go with this room.

Here the charges will be borne as under.

	Hospital bill	How much insurance company will pay	Explanation for amount
No. of days hospitalized	5 days
Room charges	5*8000=Rs 40,000/-	5*4000=Rs 20,000	Room rent limit is Rs 4000/- per day, so 50% of actuals paid
Surgery charges	Rs 80,000/-	Rs 40,000/-	In proportion to room rent paid i.e. 50%
Doctor visits	Rs 5000/-	Rs 2,500/-	In proportion to room rent paid i.e. 50%
Medical tests	Rs 10,000/-	Rs 5000/-	In proportion to room rent paid i.e. 50%
Medicines	Rs 5000/-	Rs 5000/-	MRP product, hence no deduction
Total	Rs 1,40,000/-	Rs 72,500/-

Thus, the policyholder has to pay (1,40,000 – 72,500) i.e. Rs 67,500/- from his own pocket even if the expenses were within the sum assured limit as most charges are tied up to the room rent.

The options are either to choose a policy which does not have a room rent limit though the premium payable for this will be higher than one with rent limits or to choose a policy which provides higher rent limit (consider the city you are living in) and is in line with the type of room you are most likely to avail of.

·         Sub-limits – In addition to the room rent limit, the insurer can impose sub-limits on specific treatments, doctor’s consultation fees, pre-planned surgeries such as cataract removal, knee replacements etc. Be sure to check the list of diseases/surgeries which come under the sub-limit list along with the sub-limits so that you can make an informed decision. For eg: You may have a sum assured of Rs 3 lakhs, however if the sub-limit for cataract removal surgery is Rs 50,000/- you cannot claim in excess to this amount even though it is well within the sum assured amount.

6)      Cashless network – Do review the list of network hospitals of the insurance company. Check whether reputed hospitals are on their network and also the ones where you are most likely to avail treatment. The cashless facility is available only with the network hospitals. If you are getting admitted in a non-network hospital you will have to settle the bills on your own and subsequently claim reimbursement for which all hospital bills, test reports, doctor’s prescriptions, discharge summary etc need to collected carefully and submitted to the TPA (third party administrator).

7)      Insurer’s claim settlement ratio – The zest to acquire new business is very high among all companies. However, does the same zeal exist at the time of claim settlement? The insurance regulator, IRDAI’s website provides the claim settlement statistics. Do check the claim settlement ratio of the company before your final decision.

Conclusion:

Buying health insurance is a necessity than a choice today. While choosing a health cover, one should ideally start by comparing plans from 2-3 preferred insurers. Trust the checklist provided above will help you as you review various health insurance plans. After all, when you or a dear one is hospitalized you don’t want the additional mental burden of someone pointing out why a claim cannot be paid. Better to make an informed decision beforehand!

*https://www.hdfcergo.com/blogs/health-insurance/healthcare-inflation-is-close-to-20-percent-plan-accordingly.html