What is Health Insurance?
According to the World Health Organization (WHO), it is expected that chronic and infectious diseases will see a rise by 57%. We all have been witnessing the spread of chronic diseases such as coronavirus, which are expensive in treatment as well. Therefore, it is crucial to have some financial shield against unexpected medical emergencies.
This is where health insurance plays an important role.
A health insurance plan is a commitment undertaken by the insurance company such that if the insured person is hospitalised for any illness or disease or even injury, then all agreeable expenses would be paid by the insurer. To avail this benefit, the insured would have to pay a price at the beginning of the policy term, called “premium”.
For example, say you have a fixed deposit of INR 2 lakhs in savings and you get coronavirus and need to be hospitalised. You need to undergo treatments the total costs of which amount to INR 3.5 lakhs. Now consider the following scenarios –
|Without a Health Insurance Plan||With a Health Insurance Plan of INR 5 lakhs|
Types of Health Insurance Plans
There are multiple types of health insurance plans which have been designed to suit the diverse coverage needs which you might have. Let’s have a look at these variants –
Broadly, health insurance plans can be categorised as indemnity and fixed benefit plans, and each category has different health plans under it.
- Indemnity health plans
Indemnity health insurance plans are those plans which cover the actual medical bills that you incur. So, in case you are hospitalised, your medical expenses can be paid through an Indemnity Health Plan. These are also known as Comprehensive Health Insurance Plans.
There are various types of Indemnity Health Insurance plans which differ in terms of coverage benefits like:
- Individual health plans
Which covers a single individual under a single sum insured. This plan can be taken only on an individual basis.
- Family floater plans
It covers the members of a complete family under one policy with a single sum insured. The members who can be covered include self, spouse, dependent children and dependent parents or sometimes even parents-in-law.
- Senior citizen health plans
This is a plan for the senior citizen only, i.e. individuals aged 60 years and above.
- Top-up and super top-up plans
These plans enhance the already existing coverage at a lesser cost. Thus, top-up and super top-up health insurance plans are those who are meant to supplement your health insurance coverage at low premiums. These plans come with a deductible limit, and if claims exceed the deductible limit, the policies pay the excess claim.
- Disease-specific health insurance plans
Disease-specific health plans are those which either cover specific illnesses or individuals suffering from specific illnesses. For instance, there are diabetes-specific health plans which cover diabetics.
The most common types would be:
- COVID care health insurance plans
- Cancer care health plans
- Diabetic health plans
- Dengue care health plans, etc.
- Individual health plans
- Fixed benefit health plans
Fixed benefit health plans are those which pay a lump sum benefit in case of a claim irrespective of the medical costs that you actually incur. This type of plan can be taken along with a comprehensive Indemnity Health Insurance Plan, such that hospitalisation expenses are covered through the indemnity plan and a fixed benefit plan pays for the loss in income, ancillary expenses like nurses, physiotherapy cost, etc. which might not be covered under the indemnity health insurance plan.
The most common types of fixed benefit plans are as follows:
- Critical illness health plans
These plans cover a list of specific critical illnesses. If the insured suffers from any covered illness, the policy pays the sum insured in a lump sum.
- Hospital cash plans
Hospital cash health plans are those which pay a fixed daily benefit if you are hospitalised for a period of 24 hours or more.
- Personal accident plans
Personal accident policies cover accidental deaths and disablements. In case of death or permanent total disablement due to an accident, the sum insured is paid in a lump sum. In case of permanent partial disablement, a part of the sum insured is paid in a lump sum.
- Critical illness health plans
Benefits of Health Insurance
The need for a health insurance plan cannot be stressed enough. However, here are the top reasons why health insurance is beneficial –
- Protection against high medical costs
Medical costs have become very expensive in today’s times and illnesses have also become common due to the current lifestyle. In such cases, if a medical emergency occurs, the expensive costs can drain your financial savings. A health insurance policy acts as a plug to stop the drain. It pays for the medical costs and protects your savings.
- Affordable coverage
The premiums of health insurance policies are affordable and, with the recent changes, you are also allowed to pay the premiums in instalments. Thus, it becomes easy to afford a health insurance plan and avail financial aid in a medical emergency.
- Wide range of coverage benefits
Health insurance plans come equipped with a range of coverage features which cover almost all possible medical expenses that you incur in case of hospitalisation. The coverage, therefore, minimises your out-of-pocket expenses and proves multidimensional in a crisis.
- Coverage for family members
Under a family floater health plan, you can ensure coverage for your entire family under a single policy. Thus, if any family member needs medical attention, the health plan would extend coverage and give financial assistance.
- Different types of plans
Every individual has different need. To ensure that you get an all-round protection suitable to your needs, health insurance plans come in different variants. You can find a policy for almost every type of medical contingency, which you might suffer, thereby ensuring an all-round financial protection.
For example, if you want to cover yourself and your family against all COVID-related ailments, you can opt for a COVID-specific health insurance plan.
- Tax advantage
Investing in health plans allows you a deduction from your taxable income, which reduces your tax liability. You can claim a deduction of up to INR 1 lakh under Section 80D.
What is Covered?
As mentioned in the benefits that health insurance plans offer a wide scope of coverage, here’s a look into the standard coverage benefits which you can find under a standard health insurance plan –
|In-patient hospitalisation||The costs incurred on hospitalisation and treatments are covered if you are hospitalised for 24 hours or more|
|Pre-hospitalisation expenses||The costs incurred before being hospitalised are covered for up to a specific duration which is usually between 30 to 90 days|
|Post-hospitalisation expenses||The costs incurred after being discharged from the hospital are covered for up to a specific duration which is usually between 60 and 120 days. These costs are incurred for monitoring your recovery after treatments|
|Daycare treatments||Those which do not require hospitalisation for 24 hours due to advanced medical techniques. Such treatments are also covered under health insurance plans|
|Domiciliary hospitalisation||If you are hospitalised at your home its expenses would be covered if such hospitalisation is because of non-availability of hospital beds or because you cannot be shifted to the hospital|
|Organ donor expenses||In case you undergo an organ transplant surgery, this feature would cover the expenses incurred on harvesting an organ from a donor|
|Ambulance costs||For hiring an ambulance to transport you to the hospital is covered up to a specific limit|
|AYUSH treatments||Non-allopathic treatments like Ayurveda, Unani, Siddha and Homeopathy are also covered under many plans|
|Free health check-ups||Health insurance plans allow you the benefit of monitoring your health through free preventive health check-ups. This facility is allowed once in 1-4 policy years depending on the policy you choose|
|Sum insured restoration||If you use the sum insured on a previous claim, this feature restores the sum insured to its original amount so that you get complete coverage for subsequent claims which occur within the same policy year|
|Maternity benefit||Under this benefit the costs associated with pregnancy, childbirth and pre- and post-natal care are covered up to specified limits. Maternity cover is beneficial if you are planning a family|
|OPD expenses||OPD expenses are those which are incurred on an outpatient basis on doctor’s consultations, medicines, diagnostic tests, etc. Many health plans allow coverage for such expenses up to specified limits|
|No-claim bonus||No-claim bonus (NCB) is a reward for you if you don’t make a claim in a policy year. You are either allowed an increase in the sum insured free of cost or a premium discounts on renewal through no claim bonus|
What is Not Covered?
Though health insurance plans allow a comprehensive scope of coverage, there are some medical costs and treatments which are not covered. These are called policy exclusions and some of the most common exclusions include the following –
|Pre-Existing Illnesses||Which already exist at the time of buying the plan. Usually, it is either not covered or not covered at least in the initial 2-4 years (waiting period)|
|Specific Illnesses||Like hernia, joint replacement surgeries, fistula, cataract, etc. are not covered within the first one or two years of the policy|
|Illnesses contracted right after buying the policy||Illnesses suffered within the first 30 to 90 days of buying the policy are usually not covered, other than accidental injuries, which is covered from the first day itself|
|Cosmetic Treatment||Which are not medically necessary would not be covered|
|Dental Treatment||Other than resulting from an accident|
|STD||Venereal diseases and sexually transmitted diseases like HIV or AIDS are not covered under health insurance plans|
|War and allied perils||Injuries or illnesses suffered due to war, mutiny, civil unrest and other similar reasons, including nuclear contamination, would not be covered|
|Overuse of drugs/alcohol||Health complications due to overuse of intoxicating substances would not be covered|
|Experimental Treatment||An unproven and experimental treatment is usually not covered|
You should know these policy exclusions to know the instances when your claims would not be paid by the insurer.
How to Compare Health Insurance Plans Online?
You should buy a health insurance policy only after comparing it with other plans in its category. The comparison allows you to choose the best health insurance plan available in the market which –
- Suits your coverage needs
- Provides an inclusive scope of coverage
- Has a reasonable premium
Comparing health insurance plans is quite simple, thanks to the online platform. However, when comparing, there are several parameters which should be used to judge and compare health plans. Let’s have a look at these parameters –
- The coverage benefits offered and their relevance to your needs: Check for the actual coverage of the plan and whether that is what you need. For example, if you would be starting a family soon, look for maternity coverage in health plans but if you already have kids and not planning to have another one, maternity coverage would not make much of a difference.
- Room rent limit: Many health insurance plans impose a limit on room rent. This limits the coverage of in-patient hospitalisation. If you are admitted in a room which has a higher rent than the limit of the plan, you would incur out-of-pocket expenses, since the claim would be reduced. You should, therefore, look for plans which do not have any sub-limits on room rent.
- Waiting period: If you or any family member suffers from a pre-existing illness, a plan with a low waiting period for pre-existing diseases would make more sense. You should, therefore, look for plans which have a short waiting period of 2-3 years before allowing coverage for pre-existing diseases.
- Premium: The policy should charge a competitive premium proportionate to the coverage benefits offered. So, compare the plans on the basis of their coverage vis-à-vis their premiums and choose a plan which offers the most coverage features at the least amount of premium.
- Network hospitals: The insurance company would pay a cashless claim if you get admitted in a networked hospital. A cashless claim is where the hospital bills are directly handled by the insurance company and you don’t have to bear the financial burden. So, when comparing, look at the network of cashless hospitals tied-up with the insurance company. The wider the network, the better it would be for you to locate a hospital in your area for an easy cashless claim settlement.
Health Insurance Premium Calculator
Premium is the cost that you pay to the insurance company to provide you coverage against medical costs. This premium is calculated by the insurance company considering different factors which impact your health risk. If the health risk is high, the premium would be high. Let’s have a look at the factors which affect the premium –
- Age: Higher the age, the higher is the premium as the greater would be the chances of suffering from a medical illness or injury.
- Health conditions: Healthy and no existing illness would have lower health risk and so lower would be the premium.
- Coverage amount: Higher the coverage, the higher is the premium.
- The coverage benefits: Higher the benefits, the higher is the premium. This is because as the coverage benefits increase, the insurance company takes higher risk of covering increased medical costs.
Tip: So, if you compare two plans, always compare the premiums vis-à-vis their coverage. The plan with a wider coverage would charge a higher premium.
- Dependent members: Higher is the number of members in the coverage, higher would be the premium. The age of the oldest member and the total number of dependent, determine the overall premium of the plan. So, the premium of a policy covering yourself and your spouse would be lower than the premium of a policy covering yourself, your spouse, your parent, and dependent children.
- Additional benefits selected: Add-on to the original health plan increases the scope of health insurance coverage and so the premium also increases accordingly.
- Lifestyle habits: Smoking and drinking increase the risk of falling ill, and thus premium also rises.
- Policy discounts: Most common discounts would be:
- Buying the policy online
- Buying a long-term policy of 2 or 3 years
- Adding 2 or more family members to the policy, so that the individual coverage cost of the entire family reduces
- No-claim bonus discount if you did not make a claim in the last policy year
- Wellness Benefits are also provided sometimes, like a gym membership, wellness packages, and vouchers, full-body check-up, fitness app discounts, etc.
Health Insurance Claim Process
When you are hospitalised and such hospitalisation is covered under your health insurance policy, you can lodge a health insurance claim. The insurance company would cover the medical costs incurred on hospitalisation when you raise a claim on your policy, as per the terms and conditions of the policy.
Health insurance claims can be of two types –
- Cashless claims: The insurance company would settle your medical bills directly with the hospital, if you are hospitalised in a networked hospital
- Reimbursement claims: First, you pay for your medical expenses yourself and later on get the expenses reimbursed by the insurance company. If you are admitted to a non-networked hospital, your claim would be settled on a reimbursement basis
For example, if you are hospitalised and your medical bills amount to INR 3 lakhs, here’s how both the claims would be handled for a health insurance plan of INR 5 lakhs
|Cashless claims||Reimbursement claims|
· You pay the medical bill of INR 3 lakhs yourself
· After you are discharged, you file a claim with your insurance company
· The company reimburses upto INR 3 lakhs to your bank account for the medical bills that you paid for the accepted amount
There is a claim process which you should follow under both these claims.
Health Insurance Claim Process –
- For cashless claims
- Inform the insurance company immediately of your claim. This would allow the company to register your claim and generate a claim reference number. This number would be used for tracking and settlement of your claims.
- You would have to fill up and submit a pre-authorization form to get approval for cashless claims. This form can either be downloaded from the insurance company’s website or you can get the form from the Third Party Administrator (TPA) of the insurance company
- The pre-authorization form should be submitted to the insurance company at least 3-4 days before a planned hospitalisation. If, however, the hospitalisation is due to an emergency, the form should be submitted within 24 hours of hospitalisation
- Based on the pre-authorization form submitted, the insurance company would give its approval for cashless claims
- Once the approval is received, you can avail cashless treatments
- After you are treated and discharged, you need to file a claim form with the insurance company. This form should also be supported by relevant medical documents so that the claim can be settled
- For reimbursement claims
- Inform the insurance company of the claim and get it registered
- In case of an injury or illness, get hospitalised and avail the necessary medical treatments. Pay the hospital bills from your pocket
- After you are discharged, file the reimbursement claim form supported by the relevant medical documents
- The insurance company would verify the documents and reimburse you for the costs incurred
Documents for claim:
Under both cashless and reimbursement claims, you would have to provide the following documents to the insurance company for settlement of your claims –
- Claim form, duly filled and signed
- Discharge Summary or Certificate issued by the hospital
- Identity proof of the insured member for whom the claim has been made
- Policy document
- Doctor’s prescription which advised hospitalisation
- Original medical bills and investigation reports
- All the prescriptions of attending doctors and medical practitioners
- Original bills of medicine issued by the pharmacy
- All original bills issued by the hospital
- Police FIR or Medico Legal Certificate (MLC) in case of accidental hospitalisation
Best Health Insurance Plans in India
Here is a list of top ten health insurance plans in India which offer you a comprehensive scope of coverage –
|Name of the plan||What makes the plan special|
|Care Health Insurance(Care Plan)|
|HDFC Ergo Health Optima Restore|
|ManipalCigna ProHealth Insurance|
|Star Health Family Health Optima|
|ICICI Lombard Complete Health Insurance|
|Aditya Birla Activ Health Platinum|
|Max Bupa Health Premia|
Health Insurance Tax Benefits
Health insurance plans allow tax benefits. The premiums paid for the health insurance policy are allowed as a deduction from taxable income under Section 80D of Income Tax Act, 1961.
The limit of deduction is as follows –
|Premium paid for||Limit of deduction||Total deduction|
|Self and/or spouse and/or children if you are below 60 years||Up to INR 25,000||Up to INR 25,000|
|Self and/or spouse and/or children if you are 60 years and above||Up to INR 50,000||Up to INR 50,000|
Self and/or spouse and/or children if you are below 60 years
Dependent parents aged 60 years and above
Up to INR 25,000
Up to INR 50,000
|Up to INR 75,000|
Self and/or spouse and/or children if you are 60 years and above
Dependent parents aged 60 years and above
|Up to INR 50,000 + Up to INR 50,000||Up to INR 1 lakh|
Thus, a maximum deduction of INR 1 lakh can be claimed through health insurance premiums.
Let’s understand with an example:
Mr. A, aged 45 years, buys a family floater health insurance policy for his family, excluding dependent parents. The sum insured is INR 15 lakhs and the premium paid for the policy is INR 30,000. He buys an additional senior citizen policy for his dependent parents and the premium for the policy is INR 18,000.
The deduction which Mr. A can claim would be as follows –
|For the family floater health plan||INR 25,000 (maximum limit)|
|For the senior citizen policy||INR 18,000|
|Total deduction available||INR 43,000|
If Mr. A is in the 30% tax bracket, he can claim a deduction of INR 43, 000 from his taxable income and save a tax of INR 12,900 (30% of 43,000).
Hospitals which are tied-up with a health insurance company for providing cashless claims to its policyholders are called network hospitals. If you want your claims to be settled on a cashless basis, choose plans which have a wide range of networked hospitals. The wider the network, the easier it would be for you to locate a hospital near your locality which is tied-up with the insurance company and provides cashless treatments.
The list of networked hospitals of an insurance company can be checked on the insurance company’s website. You can also call the customer care department of the insurer to find the details of the networked hospitals in your city and/or locality at the time of claims.