You might have been told that purchasing a health insurance scheme is one of the best investments you will ever make. But, what exactly is it and how does it work? Simply put, healthcare policy is a legal contract between you – the insured and the insurance provider.
And like all contracts, both parties have to adhere to certain terms and conditions. Rest assured both the insurer and the insured benefit from it.
How do you stand to gain from a healthcare policy?
A health insurance policy offers you an impressive list of benefits-
It covers a wide range of diseases. If you are hospitalized because of any one of them, you can register a claim and your insurance policy will take care of all the bills within your insured amount.
Health policies cover the following:
- Doctors’ and nurses’ fees
- Pre and post hospitalization costs
- Room rent
- Diagnostic Tests
- Surgery and prosthetic devices
Out-Patient department coverage
These days most health insurance schemes include Out Patient Department coverage. So if you come down with minor ailments, you will no longer have to pay for your treatment from out of your pocket. Insurers also do not require you to stay in a hospital for 24 hours as a prerequisite for filing a claim.
No Claim Bonus or NCB
A very useful perk a healthcare policy offers is the No Claim Bonus. If you do not make a claim on your policy for a whole year, your insurer rewards you with the NCB. You have the option of accumulating NCBs and then utilizing them for either as an increase in the sum insured or a discount on the premium.
And, if you want to switch to another insurer, you can transfer the NCBs to the new policy.
All insurance companies work in tandem with reputed hospitals to bring you the benefit of cashless treatment. If you seek treatment in one of the hospitals your insurer has tied up with, you will not have to pay your bills first and then seek reimbursement later. The insurer will settle the payments directly with the hospital once your doctor discharges you.
Almost all health insurance policies come with maternity benefits. It’s a boon for all young couples as it covers the expenses of running neonatal tests, ascertaining the health of both mother and baby, and vaccinations.
Section 80D of the Income Tax Act exempts the sum insured from being taxed. Because the government does not consider it as a source of income.
What do you have to pay for these benefits?
Nothing comes free and this is where insurers benefit. They charge you a premium. Insures decide how much you have to pay through a process of underwriting. They do a risk analysis based on your age and medical history. If you have a clean chit, it means you are not very likely to fall gravely sick. Which means there are fewer chances of you making a claim. So, a healthy person pays the lowest quantum of premium. Note that you have to pay the premium on a regular basis or your policy could lapse.
Conversely, if you are elderly and have suffered from a number of ailments, you will have to pay a higher premium. Insurers may ask you to undergo health tests to gauge the risk factor.
If you are already suffering from an illness when you decide to purchase a policy, insurers might refuse to sell you one if they think the risk outweighs the gains.
Some other facets of healthcare policies you should know of:
This is another means that insurers rely on to reduce the risk factor. Many health insurance policies require you to pay a portion of your health care costs. Your policy pays the rest. This also discourages people from making flippant claims.
Third Party Administrators act as mediators between the insurer and the insured. They help with claim processing, disbursing payments and collecting premiums, providing ambulance services, preauthorization with network hospitals etc. TPAs are the backbone of the health insurance industry.
You need to peruse the list of exclusions meticulously. These are scenarios that your health insurance policy will not cover. Sometimes it could be something as vital as eye or dental check-ups. Some other exclusions include joint replacement surgeries, cosmetic procedures to enhance appearance and treatment for self-inflicted injuries.
There is also a stipulation that states that if you are opting for non-conventional treatments like Ayurveda or homeopathy, you need to seek it from a government hospital or your policy will not cover it.
Health insurance policies should be an instrumental part of your budget, especially now that healthcare costs have soared and even the simplest treatments can burn a hole through your pocket.