Guide to Health Insurance

Health insurance is a requirement for most of us, especially for age-related ailments. We present an expert guide on how to go about it.

Seventy one year old Mrs Jain had been suffering from knee-related ailments for a long time. Her movements were restricted and the doctor’s constant advice was that her knees were in want of a replacement. After much thought, she decided to undergo a knee replacement surgery but to her dismay, found that she needed to shell out as much as Rs. 4 lakhs to get it done at one of the leading private hospitals in Bangalore.

Having been a government employee in her hometown Delhi, Mrs Jain could have got her surgery done there for Rs. 2 lakhs by utilising her ex-government employee privileges, however, even that was a major amount. Garnering financial resources was a major dampener and she decided to postpone her surgery.

Health insurance could take care of medical costs for seniors

This can happen to anyone of us, with the cost of medical treatments rising, often not in conjunction with our personal finances. So what could be the solution? One is to save and invest really well for a rainy day and the other is to buy a health insurance plan at the earliest. Financial experts suggest that the latter may be a more feasible option, given that savings and investments in today’s volatile market could prove to be tricky.

In the past, insurers have enjoyed autonomy in extending a health insurance plan to senior citizens and more often than not have rejected them on insufficient grounds. With the health insurance market opening up, majority of health insurance products cover people up to the age of 65.

What exactly is health insurance and how does it help? What should you look for when buying health insurance and what are the options available for senior citizens? We bring you a guide to health insurance, with expert advice from Sheenu Sehgal, Associate Vice President – General Insurance, Bajaj Capital Insurance Broking Ltd.

Sheenu Sehgal

What is health insurance?

In simple layman terms, Health insurance or Mediclaim, as public sector insurer’s health insurance products are called, is an insurance policy that will cover your pre-hospitalization, post-hospitalization and hospitalization expenses, if you are hospitalized for a minimum of 24 hours. Given the advancement of medicine some day care procedures are covered too.

Without hospitalization, the expenses incurred on a treatment are treated as OPD expenses which only 3-4 insurers allow as an admissible expense. These days most insurers provide for a cashless treatment which means the insurer will pay the hospital directly if admitted in one of their network hospitals.

What is the best age to get a health cover?

Sooner the better as with age, the premiums also rise. “Most of us tend to believe that we are healthy and do not need a health cover or we are covered by our company, hence do not need another health insurance cover. This is the most common mistake. As we grow old, age related ailments are likely to set in and once they do, one may find it increasingly difficult to find a health insurance cover or may end up shelling out a higher premium. Hence, sooner the better,” says Mr Sehgal.

Why do I need a health cover?

A health insurance cover is advised for following reasons –

1. Rising medical costs – Medical treatment is getting expensive by the day. Doctor’s fee for a regular consultation itself is about Rs. 300. Imagine how expensive can a rigorous treatment be! In the event of such a contingency, a health cover will help you wade through these expenses with relative ease.
2. Security – In case you are a senior staying away from children, a health insurance policy will offer you and your spouse the security of getting your medical treatment done at one of the network hospitals of the insurer without any hassles and also enjoy the cashless facility without having to worry about arranging money.
3. Age-related illnesses – All of us are likely to suffer from age-related ailments and may need medical treatment at some stage of our life. Hence, taking a health plan before any ailments set in may be beneficial for reasons explained earlier.
4. Tax benefits – Tax deduction to the extent of Rs. 20,000 in case of senior citizens and Rs. 15,000 in case of others, is available under Section 80D of Income Tax Act, 1961.

Make your silver years healthy and happy

How do I choose a health insurance plan?

Not many options are available if you are above 65 years of age but if you are below 65 years, you may have lots of options available. But before you choose one, Mr. Sehgal suggests, one must look at the following terms and conditions –

1. Coverage of pre and post hospitalization expenses – Most of the insurance policies provide for a 30 and 60 day coverage of pre and post hospitalization expenses, respectively. However, few insurers cover a 60 and 90 days period too for pre and post-hospitalization expenses, respectively.
2. Capping and sub-limits – Most health insurance plans have caps or sub-limits in place for how much you can spend on room rent, doctors’ fees, medicines etc. For example – A health cover of Rs. 1 lac may have a cap of Rs. 1,000 per day for room rent, which can be quite impractical in today’s date. Largely, most health insurance policies have such caps or sub-limits in place.
3. Coverage of pre-existing illnesses – Insurers usually have a waiting period in place before you can claim expenses related to any pre-existing ailments, that one may have at the time of buying a health insurance policy. This waiting period may vary from 2-4 years.
4. Co-payment – Under this clause, the insured is also required to bear a certain percentage of expenses incurred on illness/disease while hospitalized, either conditionally or under certain conditions. Few Insurers insist on co-payment once one crosses 60 years of age. The co-payment may range from 10 per cent to 30 per cent.
5. Loading – An insurer may charge a higher premium for at the time of renewing the policy if a claim has been made in a certain year. This is called loading and something that you should look out for when buying a policy. The increase depends on company’s terms and rules and can range from 5 per cent to 100 per cent.
6. Age/ term limits – As you grow older, you may find it difficult to purchase a health cover. Most insurers have a maximum entry age in place, i.e., the maximum age at which the company will issue you a policy. They have such age-limits even for renewals, i.e., after a certain age, insurers will not renew your policy. For example – Apollo Munich has maximum entry age as 65 years and a lifelong renewal whereas Max Bupa has no age limit for enrollment.
7. Hospital network – Last but not the least, one must evaluate the network of hospitals that the insurer has tie-ups with for cashless hospitalization. Most public sector insurers have a limited network of hospitals. This may be a critical factor in the long run, when medical emergency arises. Do remember to inform the hospital authorities at the time of admission that your cover extends cashless facility at that hospital.
8. Compulsory medical examination – Post 45 years of age, most insurers insist on getting a medical examination done before they enroll you for a policy. The thing to look out for is who bears the cost of these medical tests. Most insurers specify what all tests you need to undergo and also ask you to bear the related expenses. Only one or two players in the market cover these expenses.

Which are the schemes available in the market?

Multiple health insurance schemes are available in the market. To name a few, Max Bupa’s Heart Beat, Bajaj Allianz’s Silver Health, Star Health’s Red Carpet, Apollo Munich’s Easy Health and National Insurance’s Varishtha.

How does one go about getting a health cover?

“A client may buy a cover directly from the insurer or may buy it through an agent or a broker,” says Mr. Sehgal. He further explains “An agent acts on behalf of the insurance company and his job is to enrol as many people as possible for an insurance policy of that insurance company. On the other hand, a broker acts on the behalf of an insured and can offer many benefits/health insurance plans after analysing the client’s need. From helping you choose the right policy, filling up forms, negotiating with the insurer (may be needed in case of pre-existing ailments) to claims management and processing, the broker can help you at all stages of an insurance policy life cycle. A broker does not charge the client for the services rendered. Bajaj Capital Insurance Broking Ltd is one such example.

A client may go for an individual plan or for a family floater. Family floater is beneficial if covering for spouse or kids as well, as for a reasonable premium you can cover all your family members.

On a closing note Mr. Sehgal says, “A health insurance cover is a must for everyone. Now with portability of health insurance policies allowed by IRDA from 1st October 2011, whereby a client can transfer his health insurance policy with all its renewal benefits to any insurer, there is more penetration and transparency likely to be seen in future.”

Sheenu Sehgal spoke to Nidhi Chawla Manoj