10 Facts About Health Insurance You Should Never Ignore

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10 Facts About

You Should Never IgnoreHealth Insurance
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10 Facts About Health Insurance You Should Never Ignore

Mediclaim is a contract between the insurance company and the

insured. Buying mediclaim should be an informed decision based

on the numerous aspects of mediclaim. The devil lies in the ne

print. The more informed you are about your mediclaim policys clauses,

the easier it will be to get your claim paid when the time comes. You mustmake every attempt to understand the intricacies of the contract, so that

you can ght for your right in case the insurer rejects any claims unfairly.

This ebook will discuss the ten most important facts about Mediclaim that

everyone should know before buying a policy.

This ebook is part of the nest knowledge base on personal nance in India which Moneylife group has developed since

2006. Moneylife Smart Savers is not a nancial planner or distributor. We research and shortlist safe and smart products

for members. To know our unique ethical and commission-free model click here.
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Does mediclaim need 24-hour hospitalisation?

I

nsurance companies have been

known to reject claims when

hospitalisation for a treatment

is less than 24 hours. But today,

with technological advancement,

hospitals often do not need to keep

the insured for 24 hours in many

cases. The Insurance Regulatory

Development Authority (IRDA)

should direct insurance companies

to analyse claims realistically rather

than mechanically rejecting claims.

Meanwhile, insurance companies

have a valid point that surgeries

like laparoscopy are often more

expensive than conventional

surgery. However, there can be

a limit up to which these can be

reimbursed, instead of an outright

denial of the claim. Some insurers

are keeping up with the times and

have expanded the list of day-

care procedures they cover. It is

important to evaluate the list of

such day-care procedures before

signing up for a mediclaim product.
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How does the room rent limit aect claims?

M

any hospitals charge

dierent amounts

for doctors visits,

investigation and other charges,

for dierent classes of rooms. If

you avail of a room that costs more

than what your cover allows, the

insurance company will not just

disallow the dierence in room

rent, but also the diernece in

the other charges. Some policies

specify that they will pro-rate the

claim based on your room rent

and the actual room you availed.

For example, if the room rent limit

is 1% of the sum insured (SI) and

assuming an SI of Rs1 lakh, your

room rent limit would be Rs1,000

per day. In case you use a room

costing Rs2,000 in rent, your full

claim amount will pro-rated to

pay only half of the claim, and

the remaining half will have to be

borne by you.


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Cashless is better than reimbursement of claim

I

deally, you should apply

for cashless hospitalisation

for pre-planned medical

procedures. Even though cashless

hospitalisation is in your interest,

the insurance company may

try to push you to apply for

reimbursement. You may be told

that an application for cashless

hospitalisation may be made only

on the day of the procedure. If

you dont want to risk rejection

for a planned and non-emergency

surgical procedure, you need to

insist on cashless approval before

hospitalisation, irrespective of

what the TPA, agent or insurance

company may tell you. Keep aside

two or three days for the process of

cashless approval for pre-planned

procedures, to ensure all queries

are resolved. While some in-house

claims processing departments of

insurers may be open 24x7 and

round the year, we cannot say the

same about TPAs.


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TPA v/s In-house claims processing

I

t is better for customers to

deal with insurance companies

which have their own in-house

claims processing team. The

team can interact both with the

customers and hospitals directly

to ensure that policyholders

get prompt service. This helps

address customer issues much

faster. Based on the public-

interest litigation led by Gaurang

Damani, a social activist, IRDA

has said that a TPA may handle

claims, admissions and make

recommendations about payments

to the insurer, provided that

detailed guidelines are given by

the insurer to the TPA for claims,

assessments and admissions. The

insurer will make direct payments

to the hospital and policyholder

(not through the TPA). Cheques

will have to be written by the

insurer and sent to the hospital (for

cashless hospitalisation) and to the

policyholder (for reimbursements).


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Saves Taxes on your Health Insurance Premium

I

f you want to take advantage of

a preventive healthcare program

(PHP), the government gives you

tax deductions for expenditures

upto Rs5,000. If you are in the

highest tax bracket and spend

Rs5,000 on PHP, you will eectively

be spending only Rs3,500 due to

tax savings. Just ensure that you

do not cross the Section 80D limit

of Rs15,000. For example, if your

health insurance premium is less

than Rs10,000, you can get the

full benet of the Rs5,000 limit for

PHP. The limit of 80D for senior

citizens is Rs20,000. So, in case you

are paying mediclaim premium

for your parents as well as for

yourself, spouse and children then

you can have upto Rs35,000 in

tax deductions under Section 80D

(Rs20,000 for senior citizen parents

and Rs15,000 for yourself and your

family).


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Rules governing No-Claim-Bonus (NCB)

I

nsurers may oer cumulative

bonuses on indemnity-based

health insurance policies. If a

claim is made, the cumulative

bonus accrued may be reduced by

the same rate at which it is accrued.

Earlier customers would avoid

claiming small amounts because

that would reset the NCB to zero.

For instance, many mediclaim

policies oer a 5% NCB for every

claims free year, with a maximum

of a 50% NCB. This means that

every claims free year will increase

the insurance cover by 5%, but the

premium will be charged only for

the base sum insured. If your base

sum insured (SI) is Rs2 lakh then

after 10 claims free years, the NCB

will give a benet of an additional

50% of the base SI, which is Rs1

lakh.


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Intimate the time of hospitalisation and claims

I

nsurers have been getting

strict about intimation of

hospitalisation and deadlines for

claims. For example, United India

expects the policyholder or family

to intimate TPAs within 24 hours

of hospitalisation and the claim

must be led within seven days of

being discharged from hospital.

They assume that chances of fraud

are higher if the claim is submitted

a long time after discharge. While

this is a valid concern, it may be

used as an excuse for rejecting

genuine cases. Moreover, only in a

few cases, the insurance company

follows-up with the hospital to

verify if hospitalisation has actually

taken place. Insurers are taking

a close look at the ne print

whenever there is a claim. Since

consumer courts or ombudsmen

take a long time to provide relief,

insurers tend to reject claims in

borderline cases. So, make sure

you stick to the insurers timeline.


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Family oater is ne for a young family

M

ost oater policies cover

the husband, wife and a

couple of children; some

oaters may cover the parents too.

The coverage for the entire family

is limited to the sum insured. The

premium for family oater plans is

typically less than what would be

incurred if one bought separate

insurance policies for each family

member. If you have mediclaim of

Rs3 lakh for two, a big claim of Rs6

lakh will be partially covered. But, if

your family had a Rs6 lakh oater,

the big claim of Rs6 lakh would be

covered (if there is no other claim

for the family during the year).

Therefore, a family oater makes

more sense for a young family

because each one in a family gets

a higher cover and the probability

of more than one family member

getting hospitalised in the same

year is relatively low.


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Benet of a Super top-up

A

top-up plan, provides

additional cover to add

to your existing cover in

an economical way. The thing to

note here is an amount called the

threshold level, also known as the

compulsory deductible amount.

This is the level above which the

top-up can be utilised to pay for

the expenses. For example, for a

top-up amount of Rs10 lakh and a

compulsory deductible amount of

Rs3 lakh, the top-up amount will

pay only for expenses above Rs3

lakh and upto Rs10 lakh. Super top-

up is also like a top-up policy. The

dierence: in the case of a top-up,

the expenses for a single treatment

should be over a threshold,

whereas in a super top-up the total

expenses in a year must be above

the threshold level. Between a

top-up and super top-up, the super

top-up is more benecial.

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10 Facts About Health Insurance You Should Never Ignore