A health insurance plan plays a major role in providing you financial stability in case of various health issues. This is because by it your insurance provider gives you legal assurance to offer you financial help in different cases of health issues.

Health insurance is a safety net that takes care of your financial wellbeing in case of a medical emergency. A health insurance policy covers medical expenses you might incur due to accidents, illness or injury.

Technically, it is a contract between you and your health insurance company. It means the insurer will bear some or all medical expenses you incur against a certain fee (premium) you will pay.  There are generally two ways through which the insurer pays for your medical expenses:

  • Take a cashless treatment where you don’t have to pay. The insurance company pays the hospital directly.
  • You can pay your medical expenses first and then later ask for reimbursement from the insurance company.

Key contents of this article:-

  • Why you need health insurance
  • How to choose good health insurance
  • Benefits of health insurance
  • Types of health insurance
  • Tax benefits
  • Basic Key term of health insurance
  • Reasons for rejection of claims           
  • Bottom line

Why you need health insurance:-

No one can predict the future. Buying a health insurance policy is not something that most people willingly do, until it is too late. While the awareness and intent to buy health insurance has increased, it is still not seen as a priority. There is still a big lag between the intent and actual buying.

A medical emergency can come knocking anytime. If you are young, chances of falling ill are low but not zero and accidents can also happen. The medical expenses associated with such situations could make a big hole in your pocket. A good health insurance plan can protect you from this financial blow to your savings and provide you the much-needed cushion to bear the costs towards doctor’s visits, tests, medicines and other procedures.

Healthcare expenses are increasing at a rate higher than medical inflation; health insurance helps you to get the required treatment without cutting any corners for the lack of funds.

In short, health insurance:

  • Enables you to get quality medical treatment without the worry of high costs.
  • Adds a cushion against the shock of medical inflation.
  • Protect your savings during medical emergencies.
  • Provides tax benefits.
  • Most importantly, it allows you to take care of yours and your loved ones’ health instead of worrying about hefty medical bills.
  • Evolutions of modern and advanced treatments.

How to choose a good health insurance plan?

Here are some important parameters for you to consider while choosing your health insurance plan. Remember to invest in a health insurance plan that is comprehensive and best suited for you and your family.

  • Protection against a large number of critical illnesses
  • Flexibility to choose your health cover
  • No increase in premiums during the policy term even if your health condition changes
  • Long policy term that covers you even in your old age
  • Large hospital network for easy access to medical treatment

Benefits of health insurance:-

Some of the most important benefits of availing health insurance are as follows:

1. Covers all medical expenses:-Health insurance covers most, if not, all the medical expenses right from pre hospitalization to post hospitalization. As mentioned above, it shifts the burden of paying the medical bills from your shoulders to that of the insurance providers’ shoulders. This ensures that you give yourself the best care required to recover.

2. Cashless Claim benefits:-Many insurance providers offer cashless claim facilities. You do not have to make any out-of-pocket payments and all medical bills are settled between the hospital and the insurer. There are few conditions that need to be fulfilled and forms that have to be submitted directly at the hospital’s insurance. Such a process is very easy to follow and complete.

3. Tax Benefits:-Health insurance provides you with tax benefits. The premium paid towards the health insurance policy is eligible for tax deductions under Section 80D of the Income Tax Act, 1961.

Types of Health Insurance Policies:-

There are basically two types of health insurance plans you can choose from — individual plan and family floater plan. Both policies can be described in a few words: a family floater as “one plan to cover them all” and Individual cover as “different strokes for different folks”. Your choice will depend entirely on factors such as your age, your kids’ ages, medical history, and budget.

It is important for you to thoroughly understand both types and make a smart decision that works best for you and your family.

Individual cover

An individual health insurance policy is issued in the name of a single person. This means the sum insured is dedicated to the insured in its entirety. For example, if you are the policyholder and find yourself in need of hospitalization, the insurer will cover your expenses up to the sum insured. Any leftover amount will remain available for use during the rest of the policy period.

Family floater cover

This plan covers the entire family under one umbrella policy. As opposed to individual health insurance, floaters require all the insured members to share the sum insured.

For example, if you purchase a plan for yourself, your spouse and child, for a sum insured sum of INR 4 lakh, all three of you will be covered by the insurer within that sum, regardless of who is hospitalized. The age of only the most senior family member is considered when the premium is calculated. If you’re a young parent with small children, this could work in your favour. You’ll be able to get cover for your loved ones for a very affordable price.

Remember: If you’re looking to insure your elderly parents, instead of buying a family floater, choose separate plans for yourself and your parents as it will prove more affordable. Under the family floater option, the premium usually gets pegged to the oldest person in the family and therefore with your parents in the same plan, the premium for all of you will likely be higher.

Health Insurance Tax Benefits:-If you avail a health insurance policy, you can avail tax benefits under Section 80D of the Income Tax Act, 1961. The table below illustrates the break-up of tax exemptions on your health insurance policy:

ELIGIBILITY                                                                                            EXEMPTION LIMIT

1. For self, and family (spouse, dependent children)                               – Up to ₹25,000

2. For self, family + parents (below 60 years of age)                – Up to (₹25,000 + ₹25,000) = ₹50,000

3. For self and family (where the eldest member is                     – Up to (₹25,000 + ₹50,000) = ₹75,000

 Below 60 years of age) + parents (above 60 years)            

4. For self and family (eldest member is above 60 years              –  Up to (₹50,000 + ₹50,000) = ₹1,00,000

Of age) + parents (above 60 years of age) 

Basic key terms of health insurance:-

Claim: The payment request filed by the insured person to the Insurance Company, for payment of Medical Expenses.

Co-payment: Co-payment is a cost-sharing requirement under a health insurance policy. In certain cases, the policyholder agrees to bear a certain percentage of the hospital bill, as per the conditions of the policy it is called co-payment. In doing so, insurer charges a lesser premium. It’s important to note that the sum insured in such cases remains the same and is not reduced. This feature is more likely to figure in a senior citizen health insurance plan.

Cumulative Bonus: Cumulative bonus is similar to NCB (No Claim Bonus). For every claim free year, the sum insured increases by a fixed percentage as per policy, but cannot exceed 50 per cent of the Main Sum Insured and is admissible only if the policy was renewed continuously.

Deductible: More the deductible amount, lesser the premium. A deductible is a cost-sharing requirement under a health insurance policy, which can be a fixed amount or a percentage of the claim amount. Under this provision, the insurance company will not be liable to pay for that fixed or percentage amount of the covered expenses. It is the liability of policyholder to pay the contracted deductible amount to the hospital.

Dependents: Spouse and/or unmarried children (whether natural, adopted or step) of an insured.

Exclusions: Conditions or circumstances for which there will be no benefit in the policy.

Grace Period: The specified period of 15 days immediately after expiry of the due date of premium payment. During this period the payment can be made to renew or continue a policy without loss of continuity benefits such as waiting periods and coverage of Pre-existing diseases. However, coverage will not available for the delayed period from the due date. Therefore, it’s very important to keep renewing the health insurance as and when the premium is due. The waiting periods in health insurance policy range from 12-48 months depending on ailments. The continuity benefits are lost, where policy is not renewed even within the grace period.

Pre-existing disease: Pre-existing disease is, any condition, ailment or injury or related condition(s) for which insured had symptoms, and / or was diagnosed, and / or received medical advice / treatment within 48 months to prior to the first policy issued by the insurer. Although the pre-existing ailments get covered by the policy after a certain period, it is advisable to disclose any such existing ailment and ongoing medication, if any to the insurer. Non-disclosure may result in rejection of the claim by the insurer. Now, many health plans have started covering even pre-existing ailments provided the policy is continuously renewed with the same insurer and that too without any claims for a continuous period of four years.

Network: A group of doctors, hospitals and other health care providers, who are part of the contract under the policy and who are obligated to provide services to insured persons at lower charges than their normal fees.

Sum Insured: Sum insured is the pay-out amount that the Insurance Company is liable to pay to the insured in case of an eventuality. It works on the principle of indemnity. For instance, where the sum insured is Rs3 Lakh under health insurance and the hospitalization expenses are Rs.2 Lakh, the company is liable to pay R 2 Lakh, towards the claim.

Waiting period: The period during which certain benefits of the policy will not be available to the insured, when a new health insurance policy is taken. This is usually a fixed period of time from the date of commencement of policy, after the completion of which, certain specific benefits of the policy take effect. For example, the usual waiting period for pre-existing conditions is 4 years.

Pre-hospitalization Expenses: Pre-hospitalization expenses include various charges related to medical tests before an individual gets hospitalized. Doctors/physicians conduct a slew of tests to accurately diagnose the medical condition of a patient before prescribing treatment. It is important to note that the number of days which are covered, tends to vary depending upon the type of health insurance provider. However, in most cases, charges incurred by an individual 30 days prior to his or her admission to any hospital fall within the ambit of pre hospitalization expenses. For instance, several tests such as blood test, urine test and X-ray among others are categorized as pre-hospitalization expenses.

Post hospitalization Expenses: Post hospitalization expenses include all expenses or charges incurred by an individual after he or she is hospitalized. For instance, the consulting physician may prescribe certain tests to ascertain the progress or recovery of a patient. It is important to note that the number of days which are covered tends to vary depending upon the type of. However, in most cases, charges incurred by an individual for 60 days from the discharge date comes under the ambit of post hospitalization expenses. Expenses related to various therapies, namely, acupuncture and naturopathy are not included by insurance providers in the category of post hospitalization expenses. However, diagnostic charges, consulting fees and medicine costs are covered.

Auto Restoration:-Restore benefit, as the name suggests, restores or replenishes your sum insured after it has been exhausted along with the accrued Cumulative Bonus, within a calendar year due to an ailment or hospitalization.

Auto Recharge:-  Automatic recharge means reinstatement of the sum insured under health insurance during the policy year if the claim is payable.

No claim bonus:-No claim bonus or NCB in health insurance is bonus money added in the sum insured for every claim free year. It is like a reward that policyholder receives for not claiming on his health insurance.

Day care: – Now days there are various treatments available where a patient does not need to admit for the 24 hours he discharged the same day after surgery called a day care treatment.

Non payables: – Certain items which are not payable by the insurance company there are almost 199 such kind of items mostly are Non-medical items i.e administration charges, documents charges, face mask etc.

Reasons Why Your Health Insurance Claim Could be Rejected:-

Many of us have the habit of ignoring the fine print of a health insurance policy. This happens due to lack of seriousness and awareness of the consequences. Your laxity towards health insurance can get your claim rejected. This might sound less severe for those who don’t really understand the gravity of the situation. However, the people, whose claims were denied, would find the experience quite exhaustive and punitive.

So, it is crucial to know the reasons for which a claim can be rejected. At the same time, it is also important to understand preventive measures. There is a popular saying that “prevention is better than cure”. Similarly, in the insurance sector, it is better to avoid rejection than taking the remedial measures later on.

An insurance company can entertain your claim post rejection, provided you are able to convince the insurer that your claim is genuine. However, you first need to know why it was rejected and then take corrective measures. There are many reasons for denying your claim. These could be due to getting admitted to a non-network hospital, ignoring exclusions, etc. So, let us elaborate on the 4 reasons because of which your claim can be rejected.

1. Going beyond the Sum Insured:-Have you heard of something called Sum Insured? When you opt for a health insurance policy or a personal accident policy, there is an insured sum involved – whether it is a family floater or an individual health cover. Depending upon the chosen plan, the sum insured is the amount available to you or your family on a yearly basis. Assuming that you have utilized your entire sum for a particular year, your subsequent cashless claims will get rejected. However, if a part of your sum assured is still intact, the insurer might provide you with reimbursement at a later stage.

2. Ignoring the exclusions:-There are several diseases for which coverage is not there in most of the health insurance plans. These are specifically mentioned in the policies as being ‘not covered’. These are essentially diseases for which you can’t file a claim and are generally referred to as exclusions. However, if certain plans or policies provide coverage for any such disease, then a waiting period will be there for the same. So, if you file a cashless claim for one such disease/medical condition that is excluded, then rejection is obvious.

3. Suppression, misrepresentation of facts:-Some common causes for claims being rejected are non-disclosures, partial disclosures and wrong disclosures of important details such as age, nature of occupation, income, current insurance plans, major ailments or pre-existing medical conditions. Coverage is provided on the basis of the information given by the proposer on the proposal form, so any discrepancy between the declaration and the reality during the

Time of filing claims can easily lead to rejection. The only solution to this problem is to be prompt and specific while filling forms.

4. Exceeding the time limit:-

In a health insurance policy, you are required to apply for reimbursement within a certain period of time. As for emergency admission, the time given is 24 hours after the patient has been admitted, and in other cases, it can change according to the type of policy you have opted for

and the treatment being availed by you. If you don’t apply within the time specified, your claim can be rejected.

It can be easily concluded that in order to avoid cashless claim rejection, you should have a good understanding of your health insurance policy, ideally from the time of its purchase. Then, you need to compare health insurance plans online to understand what is on offer and choose a policy that best meets your requirements. It is also pertinent to maintain a record of all your documents – pre and post hospitalization expenses, hospitalization records, diagnostic tests, discharge summary, investigation reports, etc. These documents can be extremely crucial if your insurer needs clarifications.

Bottom Line:-

You may have heard that health is wealth but given the unpredictability of life, beyond good habits and lifestyle, you also need some wealth or money to ensure good health. And health insurance can make it a lot easier to access that money when you need it most.

FAQs about Health Insurance in India:-

1. How much does a health insurance policy cost for one person per month?

The cost of health insurance policies for one person can vary between insurance providers. Digit Insurance is providing a sum insured of Rs. 5 Lakh for a 1-year at a premium payment of around ₹3700.

2. What is the claim process for health insurance policies?

You can either opt for reimbursement or cashless claims under your health insurance policy. For cashless claims, the insurance provider settles your claim directly with the hospital where you or your family member were seeking treatment In case of reimbursement claims, the insurance provider reimburses you with the treatment costs incurred in due course.

Rtn. Er. Bhanu Pratap Jain, CFPCM |CII (Award) UK| CFGP The author is a computer science engineer by qualification and a certified financial planner by profession. He helps professionals and businessmen with personal finances and help them retire early. His firm manages wealth for 700 families since last 50 years with assets under management and advisory of more than 200 Crores . He can be reached at ceo@financialarchitect.in

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