Everybody knows Insurance is not bought but it is sold. But there is one type of insurance, which is bought now a days and it is Health Insurance. We are forced to meet doctors very often and undergo the ‘essential tests’ for anything and everything. The modern stress life and junk food has created lot of young patients, who will be getting life style diseases at a young age. The inflation in health care expenses is much more than the general inflation, making health care unaffordable without a health insurance. Increase in longevity also makes health insurance a must for everybody
There are broadly 2 popular types of Health Insurance Cover:
Health Insurance – Individual Mediclaim
The simplest form of health insurance is the Individual Mediclaim policy. It covers the hospitalization expenses for an individual for up to the sum assured limit. The insurance premium is dependent on the sum assured and age group.
Example: If you have 4 family members you can get an individual cover of Rs 2 lakhs each. In this case each of you are covered for 2 lakhs, if 4 members face a need for hospitalization, all 4 of you can get expenses recovered upto Rs 2 lakhs. All the 4 policies are independent.
Health Insurance – Family Floater Policy
Family Floater Policies are improved version of the mediclaim policy. The sum assured value floats among the family members. i.e each opted family member comes under the policy, and it covers expenses for the entire family up to the sum assured limit. The premium for family floater plans is typically less than that for separate insurance cover for each family member.
Example: In this case if suppose there are 4 family members, you can take a Family floater policy for Rs 5lakhs. Now anyone can claim upto 5 lakhs in expenses, but then the cover will go down by that much amount for that year. So if one of the family members is hospitalized and the expenses are 3 lakhs, it will be paid and then the cover will be reduced to 2 lakhs for that particular year. Next year again it will start from fresh 5 lakhs. Family floater makes sense for a family because that way everybody in the family gets a big cover and probability of more than 1 getting hospitalized in same year is less. This policy is best suited for young families, where the probability of more than one hospitalization in a year is less.
Health Insurance – How much I should insure for?
What is the ideal health insurance cover requirement? There is no standard answer for this. One has to look at his lifestyle, health condition, age, life stage, family history of illnesses and affordability and decide the amount. Keep in mind that most insurance companies limit the sum assured to a maximum of 5 lakhs. Also note that many health insurance policies “provide additional covers” such as daily allowance, ambulance charges, etc. for hospitalization. Not only are such “covers” superfluous, they tend to drive the premiums higher. It is better to avoid such plans and stick to something basic and simple, if you are looking for value for money.
I am covered under the group mediclaim from my employer. Do I need a separate policy?
Yes, because, your cover will continue only upto your service with the employer. Your new employer may or may not have a mediclaim scheme. What will happen, if there is a claim in between the jobs? What about your health insurance after retirement? After the age of 45, most companies insist on medical tests for health insurance. Your chances of getting a new policy after retirement are remote. It is always better to have a separate policy in your personal capacity and it can be continued even after retirement, when you need insurance very badly. Most of the health policies have exclusions for certain diseases in the first 4 years of the policy. So, ensure that your policy is renewed without a break, to ensure cover. Go for policies which allow you for lifetime renewal.
Health Insurance Premium – Tax benefits
Under Sec 80D, you can get exemptions upto Rs. 15,000 in a year for health insurance premium paid for self, spouse and children. You can claim another Rs 15,000 as health insurance premium paid for Parents (Rs 20,000 if parents are senior citizens).This will bring the effective cost down.
Third Party administrators (TPA)
A TPA is a specialized health service provider rendering variety of services like networking with hospitals, arranging for hospitalization and claim processing and settlement. TPA is a middleman between the insurance company and the Customer. Customer can directly deal with TPA at the time of claim and TPA will help with all the process of claim settlement.
Services rendered by TPA include maintenance of database of policyholders, issue of identity card to policyholders, provide ambulance service, provide information to policyholders about hospitals, check various investigations and provide cashless service process claims etc.
There are 2 ways by which health insurance claims are settled
1. Cash less scheme:
In this, you need not settle the bill with the hospital. For availing cashless treatment (only at authorized network hospitals), the TPA has to be notified in advance (for planned hospitalization) or within the stipulated time limits (for emergencies). The insurance desk at hospitals usually helps with all paper work. The claim amount need to be approved by the TPA, and the hospital settles the amount with the TPA/ Insurer. If there is any exclusion then such amount will have to be settled directly at the hospital.
Reimbursement facility can be availed at both the network and non-network hospitals. Here the customer avails the treatment and settles the hospital bills directly at the hospital. The customer can then claim reimbursement by submitting relevant bills/ documents for the claimed amount to the TPA/Insurance Company.
With increase in longevity and with incidence of lifestyle diseases, we should not avoid health insurance of a decent value in order to manage our personal life in view of the huge health care inflation. Also mention all your current health problems in the proposal, to avoid any rejection in future. Life after retirement will be very difficult without a health insurance. But we may not get a policy, when we need it very badly.
So go for health insurance right now.