A guide to health cover

What do you have in common with the President of the US? No, this is not a trick question. The answer is the rising cost of health care. It's something that is probably keeping Barack Obama up at night, and is something that's likely to give you premature grey hair. Like you, Obama too is looking for the cheapest and most comprehensive health cover; the only difference seems to be in scale. You want a cover for your family, while he's looking at a country. And while Obama has a battle on his hands to get his controversial healthcare bill passed, you have a relatively easy solution: health insurance.

Not that choosing a policy is easy, especially when the insurance industry is churning out new products by the month. Should you buy an all-inclusive plan? Or one that covers specific diseases? Do you want out-patient visits to be covered? Or do you want only the hospitalisation cover? Choices, choices... It's only going to get more difficult. Several new companies, including offshoots of life insurers and standalone health insurers, are set to launch services in the next few months. All come armed with even more innovations. For instance, life and non-life insurance policies are going to be merged. Till now, life insurance companies had been offering riders for accidental death and disability, surgical assistance and critical illness. The new two-in-one policies will offer these medical benefits as well as term life cover to the proposer.The new standalone health insurance companies hope to entice customers with policies for specific segments. Binay Agarwala, senior vice-president and head of health and corporate strategy, ICICI Prudential Life, is expecting plans especially designed to cover women, senior citizens and diseases such as AIDS. He also predicts newer ways of marketing policies, something that has already started with the popular 'Let's Uncomplicate' campaign launched by Apollo Munich in January this year.

A trend that clearly benefits customers is the bundling of preventive healthcare schemes with health insurance policies. For instance, ICICI Prudential is offering a wellness programme for its customers through camps and an interactive Website. Apollo Munich offers discount coupons for health checks and Star Health has tied up with doctors across metros, providing expert consultation to customers at nominal fees.

Critical Illness Prevalence
Disease	Incidence (per 1,000 people)	Treatment Cost (in Rs)
Cancer	0.09	2 lakh
Coronary artery disease	4	1.5 lakh
Cardiac valve replacement	1.16	1 lakh
Major organ failure & related transplant surgeries	Very low	4 lakh
Stroke & paralysis	2.03	5 lakh
Renal failure	7.85	5 lakh
Multiple sclerosis	Very low	1 lakh

 

What about group medical cover, once so popular with employers and employees alike? There's bad news on this front: premiums for these policies might increase in 2010. This will matter to you because employers might now ask employees to bear a part of the cost. "Another option is asking the employee to bear a portion of the cost, say, the initial Rs 20,000 of the claim, while the insurer pays the rest," says K.N. Murali, head, south, Bharti AXA General. Moreover, the employer's group health cover no longer offers the same sense of security as it did earlier. The job market may have stabilised, but the scars of the crisis run deep. What if you are laid off and need a health cover? What if you have to temporarily give up working? A group insurance policy will be useless in such circumstances. "People between the age group of 43 and 55 years have started worrying about health insurance coverage in case they lose their jobs or have to retire suddenly. This is why family healthcare covers are becoming popular," says S.S. Gopalrathnam, CEO, Chola MS General.

More confused than happy? Given the clutter, we don't blame you. But more choice is a good thing as long as you know what is best for you. Don't go just by the plan that has the lowest premium. Find out the types of polices that match your needs. The following classification of health insurance schemes should help you do just this.

Medical insurance
It might be sneered at as being plain vanilla, but remember, vanilla is also the most popular flavour. These basic covers are popular because of their simplicity: the insurer pays your medical expenses if you are hospitalised, irrespective of the number of claims in a year, as long as the total does not exceed the sum assured. The expenses covered include room charges, medication, tests, etc. They are reimbursed by the insurer, but you can opt for cashless settlement if the hospital is part of your TPA's network.

Suitable for: Everyone. These plans are a must-have whether or not you are covered by your employer's group health insurance. In case you want to cover only yourself, opt for an individual plan. Some offer discounts to family members as well. To cover your entire family, buy a floater policy that allows you to share the sum assured among all family members.

Caveat: These plans come with sub-limits of reimbursement. Check carefully to ensure that these limits are realistic. For instance, the plan should not restrict reimbursement of doctor's fee to only 0.5 per cent of the total sum assured. This works out to only Rs 500 a day for a cover of Rs 1 lakh.

Hospitalisation cash
If someone asked you about the cost of hospitalisation for, say, three days, how will you calculate it? By referring to the hospital bills, of course. These include the cost of diagnostic tests, room rent, medication and treatment. Actually, this is not the total cost. You must also factor in the loss of your salary and that of your attendant's, the attendant's transport and food expenses for three days and other miscellaneous expenses related to your hospitalisation.

None of these costs are covered by the basic health insurance plan. This is where the hospitalisation cash benefit comes in handy. It pays you a fixed amount for each day spent in the hospital, which reduces your economic loss.

Suitable for: Again, everyone. More so for people who are remunerated according to the number of hours or days at work. You never know when you or a family member might have to spend a few nights at a hospital— it could be a simple operation for appendicitis or a road accident. Shore up your financial defences with these plans so that you can concentrate on other issues during a crisis.

Life insurance riders
These are additional benefits on your regular life insurance that you can enjoy on paying an extra premium for the entire term of the cover. You must opt for these riders at the start of the policy's tenure as adding them at a later stage is not an option. Also, all the riders cannot exceed 30 per cent of the premium for the life cover.

Major surgical benefit: This gives you a lump sum in case of a surgery. Usually, multiple claims are allowed subject to the total sum assured. Once the amount is exhausted, the rider is terminated and you no longer have to pay the extra premium, though the base plan continues to be active.

Accidental death and disability: A selfexplanatory rider, it kicks in if the beneficiary dies in an accident or suffers a temporary/permanent disability. In case of death, the nominees get a lump-sum payment in addition to the sum assured as in the base plan. If you suffer a disability, the insurer pays a fixed amount every year till you recover. Dismemberment is also covered by this policy. In case of a permanent disability, some insurers also offer to waive the extra premium for the rest of the tenure.

Suitable for: The first rider becomes more relevant as you grow old and the possibility of surgery increases. If your job requires you to be in hazardous situations, say, visiting mines, the accidental death and disability cover is a must.

Caveat: The riders will not cover surgeries required for any preexisting illness. So, the earlier you evaluate your health, the better it is. If you are at high risk, opt for a surgical rider.

Critical illness cover
Worried that the office stress will lead to a heart condition in the future? Get hold of a critical illness plan that covers a bouquet of diseases, including the one you are susceptible to.

Typically, these plans offer protection for a long period and cover all the expenses related to the listed ailments. You do not need to submit bills for reimbursement; a doctor’s prescription stating that you suffer from the ailment is enough. The payment is a lump sum and the policy lapses if the sum assured is exhausted. Life insurers find it easier to offer these policies as they provide long-term covers.

Quite a few variants of critical illness plans have sprung up. Some of these have a saving component similar to Ulips, while others go beyond lifethreatening diseases to cover trauma-related ailments as well as incapacitating medical conditions.

Suitable for: As in the case of the major surgical benefit rider, this plan becomes more useful as you grow old and are more likely to suffer from chronic diseases. If you fall in this category, do not rest assured because you have a basic health insurance policy. Its sum assured can be quickly wiped out by the regular expenses involved in your treatment. Moreover, it will only reimburse hospitalisation expenses, whereas a critical cover does not require any such bill.

Caveat: Make sure that the ailments you want covered are included in the list of critical illnesses as covered by the policy.

Claims, the right way
Most disputes in general insurance occur due to lack of clarity on what the policy actually covers. Here are some points to remember while making a claim:

Know the guidelines: Not only should you know about policy exclusions but also the process to follow while making a claim.

Dates and deadlines: All reimbursement claims must be submitted within a certain number of days of hospitalisation. For example, for a basic health insurance plan, it must be submitted within 30 days from the date of discharge from the hospital.

Claims without cashless facility: The claim should be filed with the TPA within 24 hours of hospitalisation. You must also submit a 'discharge summary' given by the hospital along with original bills, reports of labs, investigation reports, prescriptions and a doctor's letter stating that hospitalisation was necessary.

Reading the fine print

• Pre-existing diseases: Diseases that existed before the policy commences are not covered. Some insurers relax this requirement by reimbursing costs after four years of the policy.
• Cool-off period: Any medical expense incurred within 30 days of the policy coming into force.
• Treatments not covered: Expenses such as laser treatment of eyes, spectacles, dental treatments and even those through nonallopathic methods are usually not covered.
• Limits on room rent, ICU charges, doctors' fees: Insurers restrict certain discretionary costs associated with hospitalisation by introducing sub-limits for reimbursements.