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What is Health Insurance?

Good health is the foundation of happiness. But factors like smoking, alcohol consumption, climate change, increased population, etc. makes us more susceptible to health problems. What if you or your loved ones face a sudden medical emergency? What if you don't have enough funds to afford the treatment? That sounds pretty scary, doesn't it?

While no one likes thinking about the possibility of being injured or hospitalised, it is pertinent to be prepared for any scenario because the financial impact of these treatments can be huge. You should buy health insurance as soon as possible to protect yourself and your family. It acts as a cushion against these expenses.

Let’s have an in-depth look at what health insurance is.

What is covered under Health Insurance?

A health insurance plan is essentially a comprehensive cover for hospitalisation expenses. Here’s a quick look at what it covers -

  • In-patient Hospitalisation costs

    Expenses incurred during hospital stays are covered by health insurance policies. Hospitalisation costs include medical treatment expenses, room rent, ICU charges etc.

  • Pre & Post-hospitalization costs

    Pre-hospitalization costs are the costs incurred before undergoing treatment or getting admitted to a hospital. These include blood tests, X-rays, OPD consultations etc.

    Health insurance also covers the expenses you incur after you are discharged from the hospital, called post-hospitalization costs. These costs include follow-up visits to your doctor, diagnostic tests, rehabilitation, etc.

  • Organ Donor Hospitalisation

    During an organ transplant surgery, the organ donor may incur surgery costs and hospitalisation expenses. These costs are covered under most health insurance plans.

  • Daycare treatment expenses

    Some surgeries or treatments, such as gallbladder removal, hernia, chemotherapy etc., are completed in a few hours and don't require hospitalisation. The costs associated with these treatments are covered by health insurance.

  • Domiciliary Hospitalisation

    When you can’t move to the hospital due to non-availability of beds, an injury/illness where shifting is impossible, or any other reason - you can opt to receive the treatment at home. This is called Domiciliary Hospitalisation. A majority of health insurance policies cover expenses associated with domiciliary hospitalisation.

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Why should you purchase Health Insurance?

To combat lifestyle diseases

The changing lifestyle of the global population has led to an increase in diseases at a younger age. Fast-paced living, pollution, stress, and unhealthy habits all contribute to the occurrence of unexpected ailments. Health insurance is a guarantee of financial protection against medical expenses. And it’s best to invest in a plan as soon as possible, as there are stringent checks by insurers. They may decline to cover you, limit the benefits, or ask you to pay a higher premium as you grow older or contract a disease.

To fight healthcare inflation

Treatment costs rise along with medical technology improvements and disease outbreaks. If we factor in an inflation of 8%, a hospital bill of 3 Lakhs today will rise to 30 Lakhs in 30 years. Without proper financial planning, these costs may severely deplete your finances.

To get access to the best healthcare

During times of sickness, the last thing you need to worry about is how you're going to pay for your treatment. And, it’s natural to want the best possible healthcare for your family or yourself. Health insurance is something you can bank on for quality treatment and services.

To get Tax Benefits

To top it off, health insurance premiums are also eligible for tax benefits under Section 80D of the Income Tax Act, 1961. Investing in health insurance plans can get you a tax deduction of up to Rs. 50,000. If you buy health insurance for your elderly parents, you are entitled to receive an additional deduction of Rs. 50,000.

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When should you buy Health Insurance?

We all tend to believe that young people are not susceptible to severe diseases. But the bitter truth is that anyone can contract any disease or experience a sudden health crisis, no matter their age. Being financially prepared is extremely important, so you don’t burn off your savings and undergo even more mental stress.

As you grow old, the restrictions and conditions of insurers only increase. It is quite difficult for older people to get a health insurance cover - their request might either be denied or the premiums might be too expensive.

In short, you should be covered by health insurance for your entire lifetime. The earlier you buy a plan, the easier it is.

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Things to remember while purchasing Health Insurance

It's important to keep certain things in mind when buying health insurance to avoid any sort of difficulties later on. Let’s have a look -

Deciding the Sum Insure

The first and foremost thing to decide while purchasing health insurance is the sum insured. It is the maximum amount that the insurance company will pay in a particular year. Consider your needs and possible scenarios, so you are sufficiently covered for the entire duration and don’t have to upgrade later. Upgrading the policy if you have diseases in your medical history or when you cross the age of 50 may prove to be difficult.

Floater Cover

In contrast to individual health insurance plans, floater plans cover the entire family under a single policy. This means that two or more people are covered under the same policy. An average family will rarely experience more than one major hospitalisation in a year. In such a case, the coverage will be provided entirely for that particular person. A floater cover offers the advantage of managing yourself and your family under a single policy. Make sure that the cover amount is the total of the individual coverage that you would have got for each member.

Room Rent Limit

The room rent limit is the amount up to which your insurance company will cover the costs of the room you are hospitalised in.

This cap is either -

A percentage of the Sum insured, i.e. 1% or 2%, or

Based on the type of the room

If you choose a hospital room that goes beyond this limit, you will have to pay the difference and a proportionate deduction on your bill!

Proportionate deduction = Room Rent Allowed / Actual Room Rent x 100

For example,

Raghav buys Health Insurance with a Sum Insured of Rs 5 Lakhs. Let's assume the room rent limit is Rs 5000 per day. He undergoes knee surgery, and the hospitalisation costs come around Rs 1 Lakh. He also chooses a deluxe room that costs around Rs 7000 per day.

Proportionate Deduction = Room Rent Allowed / Actual Room Rent x 100

= 5000/7000 = 71.4

Due to proportionate deduction,

The actual claim payable by the insurer = Proportionate Deduction x 5,00,000

= 71.4% of 5,00,000

= Rs 3,55,000

Hence, the remaining Rs. 1,45,000 will have to be paid by Raghav.

What are the Exclusions under Health Insurance?

Health insurance policies may not cover certain medical costs and treatments. These are known as exclusions. It is important to know what isn't covered under your policy in order to avoid any problems in the future.

Temporary Exclusions

Some conditions/diseases will not be covered for a certain period after the policy is issued. This is called the 'waiting period'. Once the waiting period is over, these temporary exclusions are removed, and you can claim for these conditions/diseases.

Condition Waiting Period
Accidents 0
Pre-existing conditions like diabetes etc. 2-4 years
New or previously unknown conditions like piles, fistula, cataract etc 2-4 years
Other illness 31 days from the date of policy issue

Permanent Exclusions

Your health insurance policy will never cover certain diseases or treatments. These include -

Diagnostic tests that are carried out for monitoring or to assess recovery.

Consultations with doctors or emergency room treatment that does not require hospitalisation are not covered.

Alcohol, drugs, or any other intoxicant induced illness or injury.

Maternity expenses. However, some insurers may cover maternity expenses after a certain waiting period.

Cosmetic surgeries.

Other non-medical expenses, for example, face masks, PPE kits, etc.

Internal Congenital illnesses - A health condition that is present since birth.

Suicide attempt or self-inflicted injuries resulting in illness or injuries.

exclusion of health insurance plans

Not Covered in Health Insurance

  1. Pre-existing Deceases for a Fixed Term
  2. Cosmetic Surgeries
  3. Injuries caused due to suicide attempts

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Health Insurance Claim Process

Our world today is prone to lifestyle diseases. Unhealthy diets, insufficient physical activity, tobacco use, and alcohol consumption are a few reasons behind the rise in non-communicable chronic conditions. To keep yourself and your family protected from unforeseen circumstances, you invest in health insurance. You duly pay the premiums and do everything needed to keep the policy running.

You also learn about the nuances of health insurance - the types, the benefits, the add-on options it provides, among others. But what happens at the most crucial time of making a claim under that plan? How do you figure that out?

Making a health insurance claim can be a technical and tedious process, more so when you are already going through so much. This is why it’s important to get it figured out beforehand. Worry not! We are here to take you through the entire process, step-by-step, in this article.

Types of Health Insurance Claims

We’ll begin by understanding the two most common methods of making a claim.

Cashless facility, claimed through the hospital

This process comes to the picture when you seek treatment in a networked hospital. A networked hospital is one which is tied-up with your insurance company. If the hospital you have chosen is on your insurer’s approved list of cashless hospitals, they will settle the medical bills directly with the hospital. It is a convenient process for you, as it saves you the trouble of tedious paperwork or paying cash upfront.

A reimbursement claim, filed directly with the insurer

Under this option, you are required to pay the hospital bill and the costs of medical treatment upfront. Then file for reimbursement claim directly with your insurer, and they’ll reimburse the cost as per the policy wordings. Such claims occur if you avail treatments at a non-networked hospital, or if your insurance company does not allow cashless claim settlements.

Two important steps to take when you realise a hospitalisation is required

Choosing the right hospital

When you meet with an emergency, you don’t have the luxury to choose the best hospital. But when you have enough time on your hands to decide, you can go for a planned hospitalisation. You can select a hospital with state-of-the-art facilities, medical equipments, and healthcare resources.

You also need to check whether the hospital you have shortlisted falls within the scope of your insurance coverage, i.e, whether it is listed with the insurance company.

For instance, Niket gets diagnosed with cardiomyopathy. He knows he needs to get hospitalised in the near future to undergo an open-heart surgery. Hence, he goes through the latest list of cashless hospitals on his insurer’s website and chooses one. He ensures a cashless arrangement right before his hospitalisation, so that when the difficult time arrives, his claims can get settled quickly.

Choosing the Room Category

Health insurance policies often have a room rent limit or category limits. The insurer mentions it in your policy document for your reference.

It can either be a specific amount, for example, Rs. 2000, or in percentage, i.e. 2% of the sum insured.

Try to go for a hospital room within these limits. Otherwise, if you choose a higher cost room/category, you might have to bear a proportionate cost of the expenses billed, in addition to the room cost difference.

Ask your hospital for an estimated cost of total treatment, including the room rents.

Read the fine-print in the policy document carefully.

Check the document and see which room rent limit is applicable. Make a decision accordingly.

If you have multiple health insurance policies, check if you can claim policies that don't have room rent limits first. This way, you will be free to select the room type as per your requirements and comfort.

Now that we are aware of the types of claims that can be made, let’s dive into the intricacies of their processes, one by one.

Cashless Claim Process

Here are the steps involved in availing a cashless claim settlement -

  • Reconfirm if the hospital you have chosen has a cashless arrangement with your insurance provider

    Some hospitals may have different arrangements for corporate policies and personal insurance policies - be aware of this difference.

    Carry a copy of your policy and take their confirmation of the same.

    Once confirmed, ask the hospital desk for a checklist of all the documents they will require of you for a smooth process.

    Further, check for any sub-limits for specific ailments in your policy. This will give you an idea of the additional costs you’d have to bear personally.

  • Submit a Pre-Authorization Request

    Pre-authorization is the process by which the insurer approves to pay for costs associated with your medical visit.

    Inform the insurance desk at the hospital about the policy you hold, and submit all the documents they demand.

    You will be asked to fill up and sign a claims form, a part of which will be later filled by the doctor/hospital staff.

    The insurance desk will take the process ahead with the Insurance company or Third-Party Administrator (TPA) - the agent of the health insurance corporation.

  • Keep emergency money handy

    In case your pre-authorization approval is delayed, or the treatment is urgent and cannot wait for the final approval, the hospital might ask you to make an advance payment.

    Always keep emergency money or an active payment method handy for such situations.

    This advance is later refunded (fully or partially) when the insurance company approves the cashless claim request.

  • Submit the required documents

    Policy copy or cashless card

    All past medical records leading to the hospitalisation

    KYC for the patient

    Police FIR (in case of accidents)

  • Take care of the following steps -

    Process the paperwork in advance

    In case of a planned hospitalisation, submit the form at least 3-4 days prior to the admission. If you are the patient, to prevent avoidable delays, send in a responsible family member to complete the paperwork before you get to the hospital. In case of emergency hospitalisation, submit the form within 24 hours of hospitalisation.

    Track the progress

    Upon submission of the pre-authorization form, you can track the progress on the TPA app or website. Answer all queries raised by the insurer at the earliest, which will ensure an uninterrupted claim settlement. An insurance company can delay or reject an authorization, if the documents are not submitted or the queries are not answered. In such a case, you will have to go for the reimbursement process.

    Keep copies of all documents submitted

    Ensure that you have a soft-copy (or at least photocopies) of every document you submit, as the insurer might ask for them later.

    Track the billing everyday

    With a clear picture of how much the final bills could be, you can then either inform the insurer of any additional charges, or use another policy if the current coverage is insufficient.

    Keep a record of all pre-hospitalization expenses

    Medical expenses incurred before the hospitalisation will have to be claimed separately with the insurer. Store all the original prescriptions, bills/receipts, reports (including films) that led to the hospitalisation, since these can be claimed separately. It is also important to have prescriptions from the first doctor you visited, with the problem that led to this hospitalisation. especially if they are from another hospital/clinic.

    Keep medicine bills after purchase

    If you purchase medications at the hospital counter, even before getting discharged, they too will get covered under cashless claim.

    Be prepared for the final billing

    Once the doctor finalises your discharge date, check with the hospital insurance desk, and submit the final paperwork (including the final bill and discharge summary) to the insurance company. Do this as early as possible.

    If any documents are still pending, the insurance company will notify you. Track the progress through the insurance company's online tracker, and submit the missing documents at the earliest. Once all the papers are submitted, it will usually take between 2 to 6 hours to receive an approval from the insurer.

    In case the final approval does not arrive or is delayed, you may have to wait at the hospital, or pay upfront and claim the amount later as reimbursement.

    Learn about the Claim Approval process

    As per the terms and conditions of your insurance plan, approved claims will show an account of the expenses approved and unapproved . You need to read through the claim settlement summary carefully. Expenses such as co-payment, proportionate deduction, exclusion for consumables, etc. need to be borne by you.

    For example, if your insurance policy has a co-pay (or co-insurance) clause of 15% and your medical expenditure has amounted to Rs.60,000, you will have to pay Rs. 4,000 out of your own pocket, and the insurer will cover the remaining Rs. 56,000.

    Hospitals may keep some deposit with them even after your discharge, as retention money, till they receive their payout from your insurer. Save this receipt and collect the refund once the payout has been made.

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Reimbursement Claim Process

Reimbursement can be made in three situations -

For the entire treatment: right from pre-hospitalization till post-hospitalization.

In case of cashless claims: every cashless claim has a reimbursement component - for pre-hospitalization and post-hospitalization expenses.

When one policy is used for a cashless claim and the remaining amount is claimed through reimbursement.

Whatever may be your situation, you need to go through the following steps -

  • Claim intimation

    In case of any situation where you need to redeem a claim amount, notify the insurance company first. Call them on their toll-free number, or send an email/SMS to inform them about the hospitalisation, within 24 hours of the admission.

    Enquire about the timeframe within which you can submit the reimbursement claim after discharge, so you are aware of the deadlines.

  • Collecting and maintaining the documents

    The speed and success of your claim entirely depends on how well you can document the process and keep the records.

    Ask your insurer for a list of all the documents you need to submit for a successful claim, and start putting them together.

    From the date of discovery to the time of recovery - ensure that all documentation is properly collected and maintained.

    Include all documents - from doctor consultations, prescriptions, bills, receipts, test reports (including X Ray or MRI films) to pharmacy bills - and everything else in a secure folder.

    To keep a track of all the medical expenses, create an Excel sheet and fill up all the costs incurred - from consultation fees to the final room rent and discharge bill.

    Fill up the claim form carefully after reading it, and provide all the details correctly.

  • Documents required to make a Reimbursement Claim

    Health card or policy copy.

    Photo ID of the insured person

    Claim form - filled and signed. A part of this form has to be filled by the hospital with the treating doctor’s sign.

    All prescriptions for medicines, medical tests including prescriptions from the first doctor you visited, with a complaint leading to this hospitalisation in original.

    All pharmacy bills in original.

    All test reports, including films & CDs (Xray, MRI) in original.

    Hospital bill with patient details, including itemised bill in original.

    Discharge summary from the hospital in original.

    All other original bills before the hospitalisation associated with your treatment. The bills for expenses after the hospitalisation can be claimed separately after 60 days or the time mentioned in the policy.

    Your bank details, which can be provided through a cancelled cheque for NEFT transfer of your reimbursement. Note that insurers do not send cheques, they only make online transfers.

    In case of an accident, an FIR or a medico-legal certificate or a summary of the accident may be required.

  • Make a duplicate copy of all the original documents you submit to the insurer, and retain them for your own record.

    If the insurance company raises queries, you can present the copies of the documents submitted.

    Track the claim status on the insurance company's portal or app regularly to be aware of such requirements, and address them at the earliest.

  • Claim Settlement

    Your insurer will credit the amount to the bank account you provided while submitting your claim.

    They will communicate with you about the summary of deductions made. Go through the mails/sms you receive, and understand the deductions well.

    In case you have any doubt, you can duly raise a query with the insurance company.

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It’s true that the final responsibility of claim settlement lies with the insurer, but as a policyholder, you can do your part to make things work out a bit faster and a lot smoother. It can be really overwhelming to take care of the claims process, especially if you are the patient. Therefore, sit with a family member, or a person you deeply trust, and go through the technicalities in advance. This article aims to be a helping hand and make the difficult times easier for you.

Summing Up!

Health insurance is a necessity at all costs. Now that you know the importance of health insurance and its benefits, you can go ahead and decide on the type of health insurance that is right for you and your family.

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