Life’s uncertainties can disturb the rhythm and throw us off our balance. While we can’t predict the future, insurance planning can help us stay on the shore even during the times of tide. Health care is one of the important aspects that need to be covered through insurance. Health insurance covers the risk against sudden expenditure towards unseen medical expenditure. With surging medical costs and unhealthy lifestyles, a right health insurance policy is a boon.
How to choose the right health insurance plan?
With many organizations entering the insurance forte, deciding the best health insurance plan requires careful analysis. Apart from measuring the affordability from the premium payment perspective, there are other factors that help you arrive at an informed decision.
Claim payment mode
A claim is made on the occurrence of the event for which the insurance is obtained.
Cash less facility - A cash less scheme is one where treatment can be undergone in network hospitals, without paying the hospital during the treatment or stay. The insurance company settles the bills directly on behalf of the insured. To avail this benefit, the procedures and regulations laid down in the policy need to be adhered to.
Reimbursement facility - A reimbursement policy requires the insured to pay the dues to medical institution upfront, and then reimburse these costs from insurer after filing a claim.
IRDA, India has made it mandatory to provide both cashless and reimbursement options for all health insurers. If the treatment is pursued outside the network hospitals, the reimbursement option can be availed
Since the cash less mediclaim policies spare you from the stress of gathering cash during emergencies; it is preferred to ‘cash in’ on a ‘cashless policy’
Coverage and Network hospitals
A hospital or medical institution which has an agreement with the insurance company or TPA (Third Party Administrator) to provide cash less treatment, is a ‘network hospital’. Appraise yourself with the below information before deciding on the insurance plan:
Proximity of the network hospital from your place of residence or work. Opt for a provider who has more network hospitals in geographical locations where you are likely to need medical care.
Ensure that the facilities and repute of the hospitals in the network are worthy.
Policy exclusions:
Exclusions are medical conditions that are not covered by the mediclaim policy.
Exclusions are of 2 types
Permanent exclusions and temporary exclusions.
Ensure that you check the policy document for the following:
Coverage of pre-existing illness – Some specific illness like cataract or knee replacement surgery would be covered only after a period after 2 years. Majority of the policies have such temporary exclusions, hence awareness about such essential information is desirable
Fixed exclusions based on the policy – Few ailments are excluded from the purview of the policy, and no claim can be made even after the waiting period. Some of these permanent exclusions are - Dental treatment except arising out of accidents, Naturopathy, alternative medicine/treatments including acupressure and magneto-therapy etc
Waiting period
Waiting period is the initial time frame immediately after affecting the policy, when claims are not entertained. Points to consider regarding the waiting period are:
Initial waiting period timeline and insurer’s liability to process claim. Some admit accident claims during the waiting period
Policy renewal and waiting time. Ascertain if the waiting period is only a one time affair or if it gets repeated during every policy renewal
The time limit after which pre-existing illness gets covered Though the average norm for pre-existing illness coverage is 3 years, it varies from policy to policy
Coverage/Co-payment limits:
The sub limits define the maximum liability of the insurance company under various expense categories like room rent, doctors’ fees etc. It requires you to foot the medical expenses even if the bill amount is lesser than the insured value. Clarification of the below points with the insurance company can be of help:
List of various services where the insurance company does not pay the full amount
The percentage of cost sharing of these services between the insurer and insured
Co-payment - Applicable on both cashless and reimbursement schemes, co-payment requires the insured individual to pay a portion of the total medical cost. For instance, in a policy where the co-payment is set at 20%, and the medical expend is 100,000, the insurance company reimburses only 80,000.
Insurance is an integral part of any prudent individual’s financial planning. With the privatization of the insurance regime in India, there have been more options to the customer to choose the policy that would best fit his changing needs.
With splurging medical costs across the globe, a medical policy can help you stay more relaxed for finances during emergencies and also entitle you to impressive tax benefits. With some planning and careful analysis of the policy guidelines, you would soon realize that selecting a health insurance plan is not as daunting a task you thought it was!
The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Director and Chief Financial Planner of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in
CAclubindia
