What is Health Insurance?

Health insurance is a type of insurance policy that covers costs related to hospitalization resulting from illnesses, accidents, or injuries. It safeguards you against unforeseen medical expenditures, which could otherwise cause significant financial stress. It acts as a protective shield for savings and healthcare, allowing you and your family to live a happy and fulfilling life. 

How Does Health Insurance Work?

A health insurance policy offers coverage for medical expenses in exchange for regular payments, known as premiums. With a health insurance policy in place, you can make multiple claims in a policy year up to the cover amount. It, however, opens up to a full cover in a phased manner. 

For the initial 30 days, it does not cover any treatment for or related to any medical condition, except for accidents. For pre-existing diseases, i.e., any condition, ailment, injury, or disease diagnosed or treated by a doctor 48 months prior to the date of issue of your health insurance policy, there is a waiting period of 2-4 years applicable.  A waiting period of 24 to 48 months is also imposed on specific medical conditions and treatments.

Why Do You Need Health Insurance?

Here are 5 reasons why health insurance is absolutely necessary - 

⏩Medical costs are skyrocketing: 

• With advancements in medical technology and the onslaught of new diseases, medical expenses are only bound to increase. The only thing that can help us afford the increasing medical expenses is a health insurance policy.  

⏩Health conditions may need expensive long-term treatments: 

• It has become possible to cure diseases that were once considered incurable - all because of the developments in medical technology. But, the cost of such treatments is so high that it is almost impossible for a normal person to afford them. Health insurance is the only thing that will ensure financial protection in such situations.

⏩Your healthcare fund will not suffice: 

• Many people depend on their savings or a healthcare fund for medical treatments and emergencies. While such a fund definitely is useful, it shouldn’t be treated as a replacement for health insurance. The treatment and surgery costs today could cost a fortune and a healthcare fund will not be enough to deal with them.

⏩You may not get health insurance later: 

• The insurance company can require you to undergo certain medical tests when you apply for health insurance. For instance, insurance companies may ask you to undergo a medical checkup if you’re over 45 years old. The results of these tests will decide if you’ll get health insurance or not. Not to mention the fact that as you grow older, your vulnerability to health conditions rises. In turn, the probability of your health cover application being denied rises too. 

⏩Tax benefits: 

• Payments made towards health insurance premiums are eligible for tax deductions under Section 80D of the Income Tax Act. You can get deductions for the health insurance premium paid for yourself, your spouse, your dependent children, and your parents. 

When Should You Buy Health Insurance?

Well, you should get health insurance before you get into an accident or contract a serious health condition that necessitates a major hospitalization. Insurance companies find it risky to cover someone who has a lifestyle disease since this will lead to more hospitalizations, and hence, more claims. They may either charge an extra premium or levy some additional conditions. In a nutshell, you should be covered by health insurance as soon as you are born till you die - either through your parent's policy, employer's policy, spouse's policy, or your own policy.

What Does Health Insurance Cover?

Health insurance provides comprehensive coverage for hospitalization expenses. Here’s a quick overview of some of the expenses covered by a standard health insurance policy - 

⏩Inpatient hospitalization:

• Inpatient care refers to health care you get upon admission to a hospital. In order for health insurance to cover inpatient charges, the hospital stay must be longer than 24 hours. Any treatment needing less than a 24-hour hospital stay is not covered by health insurance unless it is included under Day-care treatments. Inpatient expenses include the room charges, ICU charges, doctor fees, specialist or consultant fees, costs of surgery, etc. payable to the hospital.

⏩Pre and post-hospitalization costs:

• Medical expenses like doctor consultations, medicines, and diagnostic tests incurred for the injury or illness before you are hospitalized are covered under health insurance. These are called pre-hospitalization expenses. Similarly, after being discharged from the hospital, any follow-up check-ups, consultations, medicines, etc. you undergo are called post-hospitalization expenses. These are covered too.

⏩Organ donor expenses:

• In the case of an organ transplant, the costs of hospitalization and the donor's surgery are covered by most health insurance policies.

⏩Domiciliary hospitalisation:

• Many health insurance policies also cover domiciliary hospitalization i.e. hospitalization at home, where a hospital cannot be used for treatment because of these reasons -
  • Non-availability of beds in the hospital
  • When the patient is so ill or injured that it is impossible to move them to the hospital 

⏩Day care treatment expenses

• These include treatments that are completed in less than 24 hours at a hospital or a day care centre under general or local anaesthesia. Health insurance plans cover the expenses of day care treatments too.

What Does Health Insurance Not Cover?

Several types of costs aren’t covered by a standard health insurance policy. Let’s have a look - 

⏩Permanent Exclusions:

• The insurance company will NEVER cover these costs. These are of the following types: 
  • Standard Permanent Exclusions: These are listed by the IRDAI and must be imposed by every insurance company. These include - 
    
    • Investigation and evaluation: Admission to a hospital only for observation or monitoring purposes. 
    • Rest cure, rehabilitation and respite care: Expenses incurred for admission to any facility primarily for bed rest - where no active treatment is carried out.
    • Obesity/weight control: Any treatment or surgery done for weight control or obesity. 
    • Change of gender treatment: Treatment carried out to change the characteristics of the body to those of the opposite sex.
    • Plastic/cosmetic surgery: Any treatment/surgery carried out to alter body characteristics or your appearance.  
    • Profession in hazardous or adventure sport: Any treatment expenses incurred while you’re working as a professional in adventure activities like river rafting, mountaineering, scuba diving, horse racing, etc. 
    • Breach of law: Expenses incurred towards the treatment of a person who has committed or has attempted to commit a breach of law with criminal intent.
    • Excluded providers: Getting treatment from a medical practitioner or in a hospital that is excluded by the insurance company. 
    • Unproven treatments: Surgeries, medical procedures, or treatments undergone that are not proven to be effective.
    • Narcotics: Any treatment conducted for addictive conditions like alcohol addiction, drug usage, etc.  
    • Maternity expenses: Pre/post-natal costs, hospitalisation expenses incurred during childbirth, etc. 
  • Additional Permanent Exclusions: The insurance company may also impose certain additional exclusions, which are permanent, if you have a history of certain diseases and it finds them risky to cover. However, insurers are limited to a list of illnesses listed by the Insurance Regulatory and Development Authority of India (IRDAI) for which they can apply a permanent exclusion. They cannot apply permanent exclusions to illnesses or diseases outside this list.
  • Temporary Exclusions/Waiting Periods: The health insurance policy will not cover all health conditions from day one. You’ll have to wait for a specified period of time to avail of coverage for the same. This span of time is known as a ‘waiting period’. The main types of waiting periods include - 
    • Initial waiting period: All medical conditions except accidents are excluded for the first 30 days after the policy is issued. Meaning, you won’t be able to make a claim for any hospitalisation for 30 days - except in case of accidents. 
    • Pre-existing disease waiting period: A pre-existing condition is any medical condition or illness that you have had in the 48 months (4 years) before issuance of the policy. There is a standard waiting period of 2-4 years for pre-existing conditions. The policy will not cover any expenses related to your pre-existing condition during this period. 
    • Specified disease/ procedure waiting period: Every insurer will provide a specific list of medical conditions (apart from your pre-existing diseases) that will have a waiting period of around 2-4 years. This waiting period will be applied regardless of whether or not you have had those diseases in the past. This is based entirely on the insurer and not on your health. 

What Are The Types of Health Insurance?

Health insurance plans can be of the following kinds - 

⏩Individual Health Insurance

• Individual health insurance covers one person under a single policy. One of the biggest pros of individual health insurance is it shields one family member's coverage from another, ensuring that a claim by one member will not impact the coverage of other members.  

⏩Family Floater Plans

• A family floater covers your multiple family members under the same plan. The cover amount essentially 'floats' among all members covered under the floater plan, and is available to any and all of them! This makes them less complicated and easier to manage.

⏩Multi-Individual Health Insurance

• This plan gives you the best of both worlds - a family floater and an individual health cover. You can insure multiple family members under the same plan while retaining individual coverages for all of them. 

⏩Senior Citizen Health Insurance

• These plans are specifically curated for people who are above the age of 60. They usually may not require medical tests but can come with many limitations and restrictions like copays, room rent limits, etc. 

⏩Critical Illness Insurance

• Critical illness insurance helps you and your family deal with the financial impact of a severe disease. It pays a fixed sum of money if you're diagnosed with an illness that is listed in the policy. This money can be used to take care of the additional expenses that you may have to incur as a result of the disease.

⏩Group Health Insurance

• These health insurance plans cover groups of people, generally with a common purpose, like account holders of a bank, employees of an organization, registered users of a mobile app, etc. They come with less documentation and typically no medical tests. However, they may have lots of limitations and will be valid till you’re a part of the group. 

⏩Topup and Super Topup Plans

• These are basically extensions to your base health insurance plan. They come with deductibles i.e. an amount after which the topup/super topup kicks in.
  • A topup plan’s deductible is calculated on every single hospitalisation. So, it becomes active and starts paying only if the expenditure on one hospitalisation crosses the deductible limit. 
  • A Super Topup’s deductible, on the other hand, is calculated based on the sum total of all hospitalisation expenses incurred during the year. 

Standard Health Insurance Plan: Arogya Sanjeevani 

The IRDAI has mandated every insurance company to offer Arogya Sanjeevani, a basic and standard indemnity health insurance plan for both individuals and families. It was launched by the IRDAI on 1st April 2020. The main motive behind introducing this plan was to make health insurance more accessible, easy on the pockets, and less confusing for buyers. Here’s how it works - 

⏩Type of plan:

• The Arogya Sanjeevani Plan can be bought as an individual cover or a family floater.

⏩Sum insured: 

• This varies across insurers. Typically, it ranges from Rs 50,000 to Rs 10,00,000.

⏩Policy term:

• The policy span lasts for one year max.

⏩Entry age:

• Adults - 18 to 65 years.
• Children - 3 months to 25 years. Children between 3 months to 18 years can be covered under a family floater only. Children between the ages of 18-25 years can take the cover either on an individual or a floater basis.

⏩Who can be covered?

• Yourself, your spouse, dependent children, parents, and parents-in-law. The total number of members you can cover under one policy may vary across insurance companies.

How Much Health Insurance Should You Buy?

Remember that health insurance is a protective shield for a life time of medical expenses. Therefore, it should be enough for today and also for the future. If you're less than 40 years old, remember that you are pre-booking a good product today, that may not be available later in the same shape or form, due to age or health-related reasons later. 

But can’t you upgrade later? Well, it gets tricky when you're older, around 55 or 60. If you've had a health issue or someone in your family got sick, your chances of upgrading your insurance drop a lot – from 90% to about 20%. Leaving this decision for the future doesn't really make sense. So, how much health insurance should you really buy?

So, taking linear medical inflation of 6%, if 3 lakh rupees seems like a good amount to have for medical expenses right now, you would actually need at least 16 lakh rupees in 30 years. If you're getting a health insurance plan that covers both you and your partner, you should think about getting coverage worth 30 lakh rupees – that's double the individual amount. 

Things To Keep In Mind Before Buying Health Insurance

Here are 8 things you should be mindful of when investing in a health insurance plan - 

⏩Have enough coverage for your old age: 

• Owing to rapid medical inflation, the cover amount you feel might suffice today will not be enough for the future, when you’re older and more susceptible to health problems. It might also get difficult to upgrade your cover because of these reasons.

⏩Steer clear of room rent limits:

• Most health insurance plans with a cover of less than Rs 5 Lakhs come with room rent limits. If you choose a hospital room with a rent that is more than what you’re eligible for, the insurer will deduct the difference in room charges and proportionately deduct all associated medical costs.

⏩Avoid limits on specific treatments/procedures: 

• Some insurance companies may levy limits on specific diseases or treatments. If you buy a policy with such limits, you may have to pay a large amount of money yourself, despite having an adequate cover amount. 

⏩Avoid copayment clauses:  

• A copayment is essentially a cost-sharing aspect, where you bear a percentage of the approved claim amount, while the insurer takes care of the rest. Such clauses can lead to big out-of-pocket expenses. 

⏩Ensure that all day care procedures: 

• These are medical procedures or surgeries that required a long stay at the hospital but can now be completed in less than 24 hours because of advancements in medical technology - are covered under the policy.

⏩Make sure that organ transplant costs are covered since these can get pretty high:

• Health insurance will cover the organ receiver’s hospitalisation expenses if you ever require an organ donation in the future. But, it won’t cover the organ donor’s expenses and you may have to pay for all these expenses out of your pocket. If you opt for an organ donor cover with your health insurance that covers the expenses of the donor as well, these out-of-pocket expenses can be avoided. 

⏩Restoration Benefit:

• Medical costs are on the rise and a single major hospitalisation can exhaust a huge chunk, if not all, of your cover amount. This is especially worrisome if your loved ones are covered by a family floater. You can replenish your cover with the restoration benefit. Just make sure -
  • It triggers on partial exhaustion of the cover, not just complete exhaustion.
  • It is inbuilt with your base plan, so you don’t have to pay extra.
  • It kicks in for both related and unrelated conditions. 
  • The restoration is up to your base cover and not just the claim amount you’ve used.

⏩Coverage for non-medical expenses:

• Make sure that non-medical expenses like gloves, syringes, cotton swabs, gauze, bandages, etc. are covered by the plan or by an add-on. Even though these seem like ancillary costs, they can add up very quickly and become a huge expense. 

How To Make A Claim Under Health Insurance?

Health insurance claims are of two types -

⏩Cashless Claims: 

• These can be made if you get treated at a network hospital. The insurer/TPA settles the bills with the hospital and you don’t have to pay money upfront.

⏩Reimbursement Claims: 

• You pay the medical bills upfront and then claim the same from the insurer.

When you know that hospitalisation is on the cards, choose a hospital (preferably one that is on your insurer’s network and offers cashless claims) and choose a room based on the room rent limit mentioned in your plan.

Cashless Claim Process

• Confirm that the hospital offers cashless claims because dynamics can change. It’s best to be completely sure about such aspects.
• Get a list of the documents you’ll need to submit. Also, check if there are any sub-limits in your policy to assess the out-of-pocket expenses you’ll incur.
• Take pre-authorization from the insurance company. This is the initial approval of your medical costs. For this, you need to inform the hospital insurance desk about the plan you own, submit any relevant documents (policy copy, KYC, medical reports, etc.), and fill up and sign a claims form. The hospital’s insurance desk will take this ahead with the insurer/TPA.
• Keep in mind that the insurance desk may not work 24x7. So, depending on these circumstances you might need to pay an advance to get the admission or delay the discharge if the final approval is delayed. Some hospitals may ask for a deposit even in cases where cashless is approved. Keep emergency money handy always.
• If the treatment cannot wait for pre-authorization, the hospital might ask for an advance payment. This advance is later refunded (fully or partially) when the insurance company approves the cashless claim request.
• Make sure you process the paperwork 3-4 days in advance in case of planned treatment. If it’s an emergency, have it done within 24 hours of hospitalization.
• Once the pre-authorization form is submitted, you’ll be able to track the progress. Do this dedicatedly. Answer all questions posed by the insurer promptly.
• Keep soft copies of your documents since the insurance company may ask for the originals. 
• Track your billing every day and bring up any discrepancies. Also, keep a thorough record of pre-hospitalisation expenses as these will have to be claimed separately. Choose to buy medicines at the hospital counter since they’ll be covered under cashless too.
• Once the discharge process is done, follow up with the hospital desk for your final paperwork submission (including the final bill and discharge summary). You may be asked to also submit any pending documents.
• The claim process will move ahead once you get the final approval from the insurance company, which can take around 2-6 hours.
• The insurer’s final communication will either be an approval or rejection of the claim in the form of a claim settlement summary. This will contain all details of the claim settlement.
• If your claim is approved, it will have an account of the approved and unapproved expenses.
• Read the summary carefully to understand what’s not approved. You may have to take care of copays, proportionate deductions, consumables, etc.
• Don’t forget - 
  • To get your initial advance adjusted in this calculation.
  • Any deposits that you may have made to the hospital can be claimed as a refund later.
  • If your claim had deductions due to a shortage of the available sum insured or limits/exclusions or co-pays in the policy, you can claim the remaining amount from another health insurance policy on a reimbursement basis.
  • Every cashless claim has a reimbursement component for pre-hospitalization and post-hospitalization expenses. Claim these expenses.

Reimbursement Claim Process

Reimbursement can be for the entire treatment, only pre and post-hospitalization expenses in case of cashless, or when one policy is used for a cashless claim and the remaining unclaimed amount is claimed through reimbursement.

• Inform the insurer about the hospitalization within 24 hours of the admission. Ask them about the timeline for claiming the reimbursement and the documents you will need to submit. Start gathering them.
• The most important bit of the claim process is the documentation. 
  • Keep all documents from the date of diagnosis to recovery, including doctor consultations, prescriptions, bills, receipts, reports (including films), X-Ray or MRI films, pharmacy bills, and everything else in a secure folder.
  • Create an Excel sheet of all the medical expenses, right from the first doctor consultation to medical tests, hospital bills, medical test reports, doctor prescriptions after discharge, receipts, and medicine bills throughout.
  • Organize and number these documents for ease of submitting them.
  • Fill up the claim form carefully after reading what is asked and providing all the details correctly.
• You will need to submit documents such as -
  • Health card or policy copy
  • Photo ID of the insured
  • Claim form, filled and signed. 
  • All prescriptions for medicines, medical tests including prescriptions from the first doctor you visited.
  • All original pharmacy bills 
  • All original test reports, including films & CDs 
  • Original hospital bill with patient details including an itemized bill
  • Original discharge summary from the hospital 
  • All other original bills before the hospitalization associated with your treatment.
  • Bank account details of the policyholder which can be provided through a cancelled cheque for NEFT transfer of your reimbursement.
  • FIR or a medico-legal certificate or a summary of how the accident happened may be required in case of an accident.
• Make sure you keep copies of all the documents you submit to the insurer.
• The insurer may have additional requirements or que