The Useful Recharge Option in Health Insurance Plans

Buying a health insurance plan is now considered to be an essential expense in most middle-income households, in order to protect the family from the shocks and stress of unexpected hospitalisation. However, the last few years have seen rising health insurance costs. The Covid pandemic has also seen hospital bills rise at a far higher rate than inflation and salaries, further pushing up the cost of insurance. As with all expenditure, the wise planner looks for a health insurance plan that gives one value for money.

A good way to deal with this rising insurance cost is to look for health insurance plans with recharge options. The recharge option offered is an assurance that should you make a claim against your plan in a given year and exhaust the sum against which you are insured, the insurer will reload an additional amount, which you could once again access during the same plan year. Most plans that provide the recharge option reload the same amount as the sum insured, though this may vary from plan to plan.

In other words, should you have purchased a health insurance plan with a sum insured of INR 10 Lakhs, and you make a claim against it, thereby exhausting the INR 10 Lakhs, the health insurance provider will make another INR 10 Lakhs available against the same plan, which you could use within the same plan year.

Though perhaps unbelievable, the recharge option is a fact, courtesy perhaps the highly competitive medical insurance market. However, the recharge option also attracts higher premiums than a similar plan for the same individual.

This recharge option is available against both individual and group plans. However, as always, making a claim against the reloaded amount comes with some conditions attached. Most often this recharge cannot be used for hospitalisation against the same or related illness in the case of individual plans. 

So, if by some mischance, the insured is hospitalised for a severe bout of pneumonia during the plan year and exhausts the insured amount, he or she will not be able to use the amount recharged for claims against a repeat hospitalisation for pneumonia during the same plan year. It is also possible that the recharge may not be loaded while you are still in hospital and bills have crossed the claim amount of INR 10 Lakhs.

In other cases, plans may not recharge the amount until the entire sum insured is exhausted. 

This may cause more than a slight problem in case of a second hospitalisation, if the total cost of both hospitalisations crosses the basic sum insured.

Looking for a health insurance plan with a recharge option is especially useful if one is considering a family floater health insurance policy. As you may be aware, taking a family floater plan brings down the total cost of premium you would pay compared to the amount you would have paid if you took out a policy for each member individually.

A word of caution, though - if you or any other family member you seek to cover through a group insurance policy is over forty, it may be best to go for an individual policy for the concerned members. This is because persons over forty are considered to be at higher risk of contracting illnesses and lifestyle diseases and, therefore, at higher risk of being hospitalised. 

As a result, the premiums demanded for the same coverage are far higher than for a younger individual. Thus, covering them under the family floater policy may not be truly cost-effective.

If your health insurance agent does not provide you with the text of the policy document before paying the first premium, be sure to examine the policy document's fine print during the free look period once the policy document is delivered to you. If you're concerned that you've been misguided or if there is a genuine misunderstanding and the health insurance policy does not offer the recharge option you thought you were signing up for, do not hesitate to return the policy and purchase another one. 

The decision on which one to purchase after you return first needs to be a quick one, especially if you are porting your policy, else you may lose the accumulated benefits transferred while porting a health insurance policy. In addition, you will once again go through a waiting period before being able to claim any benefit from your policy.

In the unlikely event the text of the health insurance policy provided to you prior to purchase differs from the text of the policy delivered to you after payment of the premium, and there is no recharge option as expected, you could consider complaining to the Insurance Regulatory and Development Authority of India (IRDAI), through courier or email. Be sure however, to make the complaint personally as the IRDAI does not entertain third party complaints.

Conclusion

To conclude, the additional cost of buying a plan with a recharge option is certainly worth considering while choosing a health insurance plan for yourself or your family. Be sure however, to thoroughly understand the details of when the recharge is provided and under what circumstances it may or may not be used.