Q. What is health insurance?
A. A health insurance policy pays for hospitalisation expenses including doctor’s fees, surgery costs, and room rent, up to the sum chosen by the customer at the time of buying the plan. The policy also pays for certain pre-hospitalisation and post-hospitalisation expenses.
Q. What is the difference between cashless claims and reimbursement?
A. A cashless claim covers the expenses of a policyholder who is hospitalised in a facility that is part of the insurer’s network. The insurance company pays the policyholder’s bills directly to the hospital.
In the case of reimbursement, which usually happens if the policyholder is admitted in a hospital that’s not part of the insurance company’s network, the policyholder first has to pay the bills and then submit the documents to the insurance company, which will reimburse the amount.
Q. Is there a limit on the number of claims that can be made?
A. There is no limit on the number of claims that can be made. However, the insurer will only pay claims up to the sum insured. Once the sum insured is exhausted, any hospitalisation expense will have to be borne by the customer. However, upon renewal of the policy, the customer can once again get the full benefit of the policy.
Q. What is sum insured in a health insurance policy?
A. The sum insured is the amount spent on health treatment that the insurer will cover annually.
Q. Is there a maximum duration for the validity of a health insurance policy?
A. Health insurance policies typically are annual contracts that can be renewed for life. Customers also have the option to buy longer duration policies of 3-5 years that can be renewed for life.
Q. What is the meaning of lifetime renewability of a health insurance policy?
A. Although health insurance contracts are of short durations, insurers are mandated to renew policies for the lifetime of a customer. In other words, as long as the health insurance premium is paid on time, the customer can enjoy the health insurance benefit for life.
Q. What is the meaning of a no-claim bonus?
A. Policyholders who don’t make a health insurance claim in a year get a free bump-up in their coverage in the following year. For every claim-free year, the insurer can increase the sum insured by 10-100 percent. However, many plans claw-back this free bump-up in the year a claim is made.
Q. What is the meaning of co-payment in health insurance?
A co-payment refers to the portion of the claim amount that the policyholder needs to pay. For example, the Arogya Sanjeevani Health Insurance Policy has a co-payment of 5 percent. This means the policyholder has to pay 5 percent of the claim amount.
Q. What is the meaning of a sub-limit in a health insurance policy?
A. A sub-limit is the cap on the sum insured for a defined procedure or condition. Capping room rent is a common example of a sub-limit. Here, the insurer sets a cap on the room rent. If the customer chooses a very expensive room, then the customer pays the amount that exceeds the cap.
This can turn out to be expensive because certain expenses such as the doctor’s fees and surgery costs are linked to the category of the room that a customer chooses. So a sub-limit on room rent means the customer will end up paying not only the difference in room rent but also other associated costs.
Q. What does room-rent limit mean and what are its implications?
A. Some health insurance policies restrict the amount you can claim on room rent. This restriction is typically expressed as a percentage of the sum assured. So, a 2 percent room rent cap in an insurance policy of Rs 5 lakh means that the insurer will pay only up to Rs 10,000 per day for the hospital room.
If you stay in a room that is more expensive than the limit, then you will need to bear the additional cost. Room rent also determines other costs involved in hospitalisation. Consider a surgeon’s fees. Ideally, this should not depend on the room you stay in, but hospitals routinely charge more from people in single rooms than those in shared rooms.
It is useful to get insurance that does not specify room-rent caps but allows stay in any single room.
Q. What is the meaning of waiting period in health insurance?
A. Retail health insurance policies in India don’t offer benefits right from day one. The policies come with a waiting period in order to avoid adverse selection of sick patients and potential fraud and abuse.
For example, most policies don’t pay for any hospital claims arising out of an illness in the first 30 days of purchasing the policy. However, in the case of an accident, the claim is admissible. Insurers also don’t cover pre-existing diseases in the initial years and then there are certain ailments, pre-existing in nature or not, that insurers will not usually cover in the first two years.
Q. What is the meaning of a pre-existing disease?
A. Pre-existing disease means any condition, ailment, injury or disease:
a) That is diagnosed by a physician in the 48 months prior to the effective date of the policy issued by the insurer or its reinstatement, or
b) For which medical advice or treatment was recommended by, or received from, a physician in the 48 months prior to the effective date of the policy issued by the insurer or its reinstatement.
This also means that a condition is considered a pre-existing disease if the customer is aware of the ailment. Insurers typically don’t cover pre-existing conditions from day one and have a waiting period for such cases, which could go up to four years.
Q. What is the difference between individual and family floater policies?
A. An individual health insurance policy covers only one person whereas a floater policy covers a family under one scheme. A floater policy considers the entire insured family as one unit – in other words, the sum insured floats on the entire family. If one member makes a claim, then the sum insured reduces by that much for the entire family for the remaining policy tenor.
Q. What are non-payable items in a health insurance policy?
A. Non-payable items are those that are not covered under the health insurance policy. The policyholder has to pay for these items, which include Wi-Fi, attendant’s charges, name tags and equipment such as arm slings and spirometers.
Q. What are OPD benefits?
A. Out-patient department (OPD) treatments are those that are carried out without requiring hospitalisation. A general check-up with the family physician or consultation with a doctor would typically take place in an OPD of a hospital. Medicines, tests and other diagnostics also typically fall under the OPD category.
Most insurance policies do not cover OPD expenses unless it can be clearly linked to an in-patient department treatment that you have had. However, this trend is changing and insurers are introducing products with OPD benefits. These are still in the nascent stage, but OPD benefits are expected to increase considerably over the years.
Q. What does wellness benefit mean?
A. Historically, medical insurance has been focused on costs incurred after you fall ill. However, recognition of wellness activities is growing. Wellness activities are those that are carried out to stay fit and prevent illness. Regular exercises, healthy diets, and meditation are examples of wellness activities.
Insurers have also begun to encourage policyholders to take up wellness activities. This can be in the form of reward points for wellness activities or an insurer organising wellness events for their clients. The benefits offered here are also at an early stage and we expect these features to become more relevant and sophisticated over the next few years.
Q. Can I get treated overseas and claim those expenses?
A. Most policies don’t cover expenses incurred on treatments or hospitalisation abroad. The treatment must be in India and in a registered hospital or clinic. However, there are some insurance policies that also cover overseas treatment costs. This is generally for more serious diseases. There may also be restrictions on where you can get treated and the process of getting the insurer’s approval.
Q. What is an insurance ombudsman?
A. The insurance ombudsman is an independent body that handles grievances of policyholders. The ombudsman looks at matters that involve amounts of less than Rs 30 lakh. The application is made online and the ombudsman requires you to have escalated the matter with the insurer first.
Ombudsmen tend to be policyholder friendly. The decisions they take are binding on insurers but not on you (policyholder). You can still go to the courts if you are not happy with the outcome. Most ombudsman hearings are online now but these can also take place in-person.