What is a Health Insurance Plan? An Overview
‘Health is wealth’ and there is no augmentative argument about that. We often try to enforce the maximum precautions related to our health by enrolling ourselves in a gym, consulting a nutritionist or the regular health checkups, but as we grow old, taking care of our health regime becomes more and more expensive, and may be due to the medical bills and any chronic disease to add. This is where insurance or health insurance in particular plays a gigantic role.
Health insurance is your savior in case of an injury, accident, or illness that saves you from expensive medical costs and ensures your financial security when you are not up on your feet. Let us find out how. In this article, we will explore the important details such as who, how, and why, that are related to the meaning of health insurance.
What is Health Insurance?
Health insurance is a type of insurance policy that helps you to cover your personal medical expenses, specifically expensive surgeries, prescription drugs or any other medical aid owing to any illness, accident, or injury. These can be for a specified term and help the insured to get reimbursed for the hefty medical bills.
Most corporations today include health insurance in employee pay packages. Such insurance entails many other benefits to the insured apart from medical coverage such as tax exemption, quality treatments, etc.
How does health insurance work?
Health insurance helps in dealing with financial repercussions caused during an emergency or accident.
Firstly, you have to apply to purchase a plan. Depending on the plan you wish to select and a few other related factors, premium quotes will be provided to you. In some cases, medical tests are suggested as well.
Upon finalizing the terms, the policy will be provided to you. The policy comes with a waiting period and during that time, you cannot make any non-emergency claims.
After the waiting period, suppose you had surgery and the treatment was in a network hospital, the insurance company will get in touch with the hospital and will directly settle your payments. You only have to pay for additional charges or for a volunteer co-play.
On the other hand, if your treatment was done in a non-network hospital, you will have to make all the payments and then file a reimbursement claim.
Why Buy A Health Insurance?
If we do a fact check then what we can see is that the healthcare market in the country has been estimated to be worth US$ 372 billion by the end of 2022. This implies the expense on your medical bills as well as the medical charges are certain to increase in India.
Understanding the requirements, it is said that approximately 73 million Indian citizens are diagnosed with type 2 diabetes, which is expected to grow at a staggering rate to about 34 million by the year 2025. Also, many people in the country are severely victims of diseases like hypertension and cardiac-related issues. These require extensive care and call for fat medical bills which may not be affordable for everyone.
Such nerve-breaking figures not only demonstrate to us the importance of availing a health insurance policy but also finding the right one at the right time to avoid any financial distress that may be caused due to the absence of one. These policies are known to offer extensive and full coverages for your healthcare expenses in return for periodic premium payments that may be made as per the convenience of the policyholders.
Benefits of A Health Insurance Plan
Hospital Expenses
The foremost advantage of any standard healthcare or medical insurance is covering the cost of hospitalization. If you have incurred a disease while your insurance plan has been active, you may procure the entire benefit of your coverage such as any treatment required for a critical illness or any accident-related hospital charges. An insured may also be protected in case the bills are higher than the sum insured if they have the extension policy in their cover. Such benefits help an insured to be the least worried about the financial expenses in case of any unfortunate circumstance.
Cover for Expensive Surgeries
A comprehensive health insurance policy helps the insured to obtain the cover for most complicated and expensive surgeries such as open-heart surgery. Other insurance providers may not provide to cover the entire expense for the same, but with health insurance, you may easily be available to mitigate the cost of the same.
Availing Premium Facilities
Through an upgraded cover in your health insurance policy, you may easily be able to avail yourself of quality treatment without any financial burden. This is because many health insurances provide the insured with add-on covers to be able to get treated in premium hospitals and not have to compromise on the quality of your treatment
No Claim Benefits
Most health insurance coverage, for any non-claim year, provides the insured with extended discounts or bonuses. It may also provide for a higher sum than the one that has been insured without any additional costs. Over the years this shall help the insured to minimize their charges that are payable for a premium annually.
No Co-payment
The health insurance coverage from most of the renowned insurance coverages extends the entire cost of the treatment. This nil co-payment facility helps the insured to be able to mitigate the financial burden that he may have to incur at the time of recovery. Most of the highly-recommended policies also provide for extended benefits on such coverages without any added cost.
Types of Health Insurance Plans in India
- Standard Health Insurance: Standard health insurance is usually provided for an individual. These health insurance policies cover the cost of the health-related bills of an insured. Such standard covers can also be extended or obtained to cover the expenses of medical bills of the parents or spouse and children of the insured.
- Family Health Insurance: This is different from that of a standard plan. In such policies, only one policy against the sum insured can cover the medical expenses and health cover of the entire family. Such plans can also be used for the treatment of a single person. In short, covering the benefits of a standard insurance policy as well. However, the premium of such policies is likely to be higher than the standard ones.
- Health Insurance for Senior Citizens: Generally, family health insurance does not cover the cost of medical expenses for senior citizens due to their complicated nature. In such a scenario a tailor-made policy to abide by all the medical expenses of individuals, above the age of 60 can save the day for them. These plans provide comprehensive coverage against the premium paid for all types of illnesses related to old age.
- Joint or Group Health Insurance: These are mostly availed by the corporates to extend it to the employees. The premium of these group insurances is paid by the employer. These health insurance policies are considered for their cost-effectiveness and are undertaken as a measure of employee retention
How to choose a health insurance plan?
Some important factors that you should consider while choosing a health insurance plan are as follows
- Check the insured sum: Most insurance providers have a limit on the insured sum you can choose. You need to look for health policies that cover what you have been looking for. The general thumb rule is to cover six times your salary. If you wish to start a family soon, it is important to ensure that maternity benefits are covered as well.
- Inspect the network hospitals: different insurance companies include different hospitals in their network. Make sure your preferred hospital is available in the network.
- Read the fine print: Understanding the fine print of the documents is crucial while choosing the health insurance plan. Understand the coverage provided and limit the expenses.
- Additional benefits: Check for no-claim bonuses, restoration of the sum insured and other additional benefits while choosing the plan
- Thorough examination: It is important to understand different exclusion scenarios, co-pay clauses and waiting period situations before making the final decision.
Eligibility Criteria
People under the age of 45 years are not required to undergo mandatory health checkups, however, they do need to disclose whether they are diagnosed with hypertension or diabetes. It is therefore advised to purchase health insurance while young to pay less premium.
Documents Required
Mentioned down below are documents required
- Age proof ( birth certificate, 10th/ 12th mark sheet, driving license, passport, voter card, etc)
- Identity proof (driving licence, passport, voter card, PAN card, Adhaar Card)
- Address proof (Electricity bill, telephone bill, ration card, driving licence, passport)
- Medical Checkups for individuals above 45 years of age
- Passport size photograph
While availing of health insurance there are times when the estimated cost of your treatment shall be higher than the sum insured. In these situations, you can avail a top-up facility on your existing cover. This shall save you from incurring the extra cost and the hassle of purchasing a separate policy.
Health insurance plans are highly beneficial to mitigating the cost of healthcare in your lifetime. These are therefore significantly different from what life insurance plans provide you with. Also, benefits like daily cash allowances that are provided by the most stipulated institutions have the ability for the individuals to make up for times of no pay due to hospitalization. Given the sanctity and demand of a situation, health insurance is a must to lead a stress-free life from the medical bills.
Mediclaim Plan VS Critical Illness Insurance Plan
Also known as indemnity plans, mediclaim plans provide payouts against actual medical bills and costs whereas critical illness insurance plans provide a hefty amount once when you are diagnosed with a covered critical illness.
Issues from accidents to surgeries, and mediclaim plans cover a range of issues but critical insurance plans only provide money for specific critical illnesses.
You can need both for future scenarios, however, it is always advised to choose a regular mediclaim policy with an additional critical insurance plan.
Health Insurance VS Life Insurance
Skim through the following table to understand the difference between health insurance and life insurance
| Health Insurance | Life Insurance | |
| Aim | Covers all medical expenses (treatment and recovery) if diagnosed with covered ailments | Provides financial protection in case of untimely death to the immediate family |
| Payable amount | Sum insured | Death benefits and provision of lump-sum amount payout on maturity |
| Tax benefits | Benefits up to INR 1 Lakh | Benefits up to INR 1.5 Lakhs |
Health Insurance Tax Benefits
Under Section 80D of the Income Tax Act 1961, one can avail of tax benefits upon availing of a health insurance plan
| Eligibility | Exemption Limit |
| Self and family (spouse and dependent children) | Upto INR 25,000 |
| Self, family+ parents (below 60 years of age) | Upto INR 50,000 (25,000+ 25,000) |
| Self and family (eldest member below 60 years of age) + parents (above 60 years of age) | Upto INR 75,000 (25,000 + 50,000) |
| Self and family (eldest member above 60 year of age)+ parents ( above 60 years of age) | Upto INR 1,00,000 (50,000+ 50,000) |
Health Insurance Claim Process
Understanding the claim process plays a significant role. There are two ways for the individual to initiate the claim process i.e., through a cashless claim process and a reimbursement claim process.
In the first process, upon providing necessary insurance details to hospitals, the individual begins to receive treatment. The hospital forwards the bills to the company and payments are settled through auditing and providing the required amount.
On the other hand, through the reimbursement claim process, the insured individual will pay for the entire treatments until discharged, upon discharge, hospitalization bills will be sent to the insurer company along with the reimbursement claim. The company will audit the documents and decide whether to accept or reject the claim. If accepted, the claim will be made to the policyholder and if rejected, the individual will be notified of the same.
How much does health care insurance cost in India?
The premium amount or cost of health insurance in India may vary depending upon the factors such as age and type of insurance cover. Generally, a 5 lakh individual health insurance plan may cost a premium of between 3000-5000 for a person between the age of 30-35.
How many times can we claim health insurance in a year?
An insured person can claim for medical expenses through health insurance multiple times in a year. This can be obtained up to the sum insured by the individual for him or his family.
How should I choose medical insurance?
To obtain a viable health insurance policy, the individual must take into consideration various factors such as the market reputation of the chosen insurance company, the sum insured against the premium, and terms and conditions for availing the benefits of the insurance. One must also check for added benefits such as upgradation of the plan or availability for routine medical check-ups.
What is the waiting period for pre-existing conditions?
Generally, most health insurance companies have a waiting period of 12 months for pre-existing conditions. Such conditions can be defined as an illness or maybe an ailment for which an individual had the symptoms in the last six months before availing of health insurance or the renewal of the same.