Did you know that approximately 55 million Indians were pushed into poverty because of medical debt, according to this 2019 report? Increased medical inflation, lack of well-maintained government hospitals, expensive medicines, disproportionate income, and very low health insurance penetration - all contribute to medical debts.
And, so, one of the first things you should do if you’re self-employed is get health insurance that covers you and your family to avoid devastating consequences. You are already investing your hard-earned money in your business and any unexpected medical expenses may alter your business plans for the worse. You will have to use up your savings and income, which is usually erratic if you own a business, to fund the treatment, tests, medicines, consultations, etc. Not to mention the days you will miss at work, causing even more financial loss.
So, what are the benefits of having health insurance if you are self-employed? How can you choose the right health insurance policy? In this article, we'll discuss all that and more.
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Health Insurance For Self-Employed Individuals
Health insurance for self-employed individuals provides an insurance cover for hospitalisation expenses to people who run their own company or business.
So, if you are self-employed, you can buy a comprehensive health insurance plan for yourself and your family. In case you or anyone in your family require hospitalisation, you will be protected from losing your hard-earned savings and income.
Types Of Health Insurance Plans For Self-Employed Individuals
Here are a few types of health insurance policies self-employed individuals can consider buying:
Individual Health Insurance
An individual health insurance policy covers the hospitalisation and medical expenses of a single individual up to the chosen sum insured and as per the policy T&Cs.
Family Floater Health Insurance
This type of health insurance covers both you and your family. The entire family shares the coverage amount.
These plans let you cover your family members under a single plan while ensuring individual coverage for each of them.
Top-Ups and Super Top-Ups
Top-ups and Super Top-ups act as extensions to your base health policy. They help you get a wider cover at a relatively low price. Both these plans come with a ‘deductible’ - the amount after which these plans begin to pay.
Please note that there are other types of health insurance plans for self-employed individuals available too - such as senior citizen health insurance plans, critical illness insurance plans, etc.
Benefits Of Buying Health Insurance For Self-Employed Individuals
If you are self-employed, it will be a good idea to purchase health insurance for the following reasons:
Coverage For Medical Expenses
Medical expenses, including hospitalisation costs, are covered by the insurance company, ensuring that you receive quality medical treatment in times of need.
Protects Yourself And Your Family
If you opt for a floater or multi-individual plan, they not only provide coverage for you but also for your family members. Plus, if you or your family requires medical treatment, the health insurance plan will save you from dipping into your savings and thereby, ensures that your family will be financially stable.
It serves as a safety net by protecting you against unplanned medical expenses, which can otherwise drain your business' earnings - if you don't have a proper financial plan in place.
Offers Cashless Facilities
You can claim on a cashless basis if you are admitted to an insurer's network hospital. The insurer will pay the amount of the approved medical bill directly to the hospital.
Offers Tax Benefits
Under Section 80D of the Income Tax Act 1961, you can avail of tax deductions on the premiums you pay every year.
Inclusions Of Health Insurance
Health insurance plans cover the following:
In-Patient Hospitalisation Expenses
Expenses incurred if you undergo continuous hospitalisation of 24 hours or more such as medical practitioner fees, costs of prescribed medicines and drugs, room rent, ICU charges, etc. are covered by health insurance policies.
Day Care Procedures
These are surgeries or treatments, such as eye surgery, hernia, chemotherapy etc., that take less than 24 hours to complete and don’t require hospitalisation. These treatments are covered by health insurance.
Pre-hospitalization costs are the costs incurred before you undergo hospitalisation for a treatment/surgery such as blood tests, X-rays, OPD consultations etc. Expenses incurred between 30-90 days before your hospitalisation are generally covered.
The post-hospitalization costs are the expenses incurred after you have been discharged from the hospital, such as follow-up appointments with your doctor, diagnostic tests, and rehabilitation. These costs are also covered by health insurance. Generally, expenses incurred 60-180 days after you are discharged from the hospital are covered.
Treatments that aren't part of conventional western medicine are called AYUSH treatments, also referred to as alternative treatments. These include Ayurveda, Unani, Siddha, Homoeopathy, Naturopathy, etc.
Road Ambulance Charges
The cost of transportation from the place of the incident to a nearby hospital, as well as from one hospital to another for better treatment, is covered by health insurance.
Organ Donor Expenses
If you customise your health insurance plan with an organ donor cover, it will cover the expenses of the organ donor, like -
- Organ screening costs
- Pre-hospitalisation tests
- Surgery costs
- Post-hospitalisation recovery costs, etc.
Note:The coverage available under health insurance varies from one plan to another. Hence, read the policy's terms and conditions before opting for it.
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Exclusions Of Health Insurance
Generally, health insurance plans do not cover the following medical expenses:
- Costs incurred in admission to the hospital for only diagnosis and observation.
- Treatment primarily for obesity or to control your weight
- Treatment for injuries/illnesses resulting from intoxicants, such as alcohol and drugs.
- Change of gender treatment.
- Cosmetic or plastic surgery.
- Infertility treatment, etc.
- Treatments or surgeries for any illness or injury that is not yet proven
Note: The list of exclusions is indicative and can vary from one policy to another. Hence, please read the policy's terms and conditions before opting for it.
How To Choose The Best Health Insurance For Self-Employed Individuals?
As a self-employed individual, you may have an erratic income. You may never know what the future holds for you. If you are unable to pay your premiums in the future, you may lose your policy. Due to the unpredictable nature of cash flow, you must choose a health insurance plan that strikes the right balance between your needs and budget.
To help you make a well-informed decision, we've compiled a list of factors to keep in mind -
While choosing a health plan make sure it offers you wide coverage. Always compare the inclusions and exclusions of various policies to find the one that best suits your needs. Don't settle for mediocre coverage just because the premiums are lower. This may result in more out-of-pocket expenses in the future.
Adequate Sum Insured
Having a lesser sum insured than required is as bad as not having one. A lower coverage level can increase your out-of-pocket costs. Make sure to factor inflation in your calculation too, so you still have adequate coverage if costs rise in the future.
While it is important to buy a health plan that meets your needs, it is equally important to make sure it works for your budget as well. Compare the premiums offered by the top-rated health insurance plans. Ensure the plan you choose offers you the coverage you need at a price you are comfortable with.
Health insurance plans offer a variety of add-ons. Add-ons are additional benefits that you can add to your base coverage at a certain extra cost. If you want to enhance your coverage, you can include add-ons - thereby ensuring all-rounded protection. For instance, if your policy has a room rent limit, you can choose a Room Rent waiver add-on that removes the limit.
Go for a plan that offers lifetime renewals. This will eliminate the need for you to look for another health insurance plan later in life.
Some health insurance plans may have a co-payment clause. A copay is a specific percentage of the approved claim amount that you need to pay from your end before your insurer steps in to pay the rest. As far as possible, make sure you choose a health insurance plan that doesn't have a co-payment clause.
A deductible is an amount you have to pay out of pocket before the insurance company starts paying out - during a claim. You should check whether your health insurance plan has a compulsory deductible. As far as possible, try to buy a plan without a deductible, and make sure you do not enrol in a plan that has a high deductible.
Network Hospital List
Check whether your preferred hospitals are included in the insurance company's hospital network. Always go for an insurance provider that has a wide network of hospitals, so you can avail of cashless claims more easily.
Claim Settlement Ratio
Be sure to check the claim settlement ratio of each company. The claim settlement ratio is calculated as the number of claims settled by the insurer divided by the number of claims received in a particular financial year.
Claim Settlement Ratio = Number of claims settled/Number of claims received X 100
Generally, the higher the ratio, the better the insurer. If an insurance company has a high CSR, it shows that a greater number of claims are being settled by the insurance company. Hence, consider purchasing health insurance from an insurance provider with a high claim settlement ratio.
We've reached the end. Please note that no special health insurance for self-employed people is available on the market. Health plans are the same for all customers irrespective of their occupation. Ensure you read the policy wording carefully before choosing any health insurance plan - so you don't run into any problems in the future.