The awareness around the importance of health insurance has been on a rise after the pandemic. The unanticipated COVID catastrophe gave further impetus to this trend. Today, it is a common understanding among the masses that with the rising cost of medical care, it is financially strenuous, if not unviable, to pay for treatment out of your own pocket. This is where a health insurance policy comes in, offering support to individuals and their families in times of a medical crisis.
The importance of this life raft became even more apparent when several families caught the COVID-19 virus when it was at its peak and had to seek emergency medical care. As per reports, the cost of COVID ICU treatment amounted to seven months’ pay for an average Indian. So it is only natural to seek a health insurance policy with sufficient coverage to cover such huge expenses. However, before buying insurance, it is imperative to understand that the restrictions that may apply vary from individual to individual or policy to policy.
Here are some key restrictions in health insurance policies that you need to know about:
When you buy a health insurance policy, your coverage doesn’t start immediately. This is a restriction to protect insurance companies from misuse of such policies to cover pre-existing ailments and pre-anticipated immediate medical costs. However, even during this period, medical costs due to accidents are covered. Apart from that, your coverage against most other illnesses starts after a waiting period of 30 days.
Moreover, coverage of some pre-existing ailments, like diabetes, hypertension or heart diseases, can come with a waiting period of up to three years, depending on the policy you choose. This may be a cause of concern for those with one or the other pre-existing ailment, but the good news is that many insurers have now come up with specially-designed plans that offer coverage against pre-existing diseases with a waiting period as low as 30-90 days, or even from day one.
Another important restriction that often catches policyholders unaware is the sub-limits clause in their policies. A sub-limit clause in a health insurance policy caps the benefits for specified conditions. For example, while your sum insured as per the policy could be ₹5 lakh, there may be a sub-limit on the room rent in case of hospitalisation, say 1 percent of the sum assured. In such a case, your entire sum assured would not be available to cover the room renta cost and you may only be able to choose a shared room instead of a private room, lest you pay the difference from your own pocket.
Similarly, the cap could be there for other expense heads as well like ambulance charges, doctor fees, etc. It is better to choose a policy that covers all benefits up to the sum assured, and many policies come with this benefit.
To offer cheaper premiums to the policyholders, many insurance policies come with a co-payment clause wherein the policyholder has to pay a portion of the medical bill while making a claim. Co-pay is that part of the bill that the policyholder has to bear as an out-of-pocket expense. While this brings the premium down making the policy affordable, it puts an additional burden while making a claim.
For instance, if a policy has a 20 percent co-pay clause, and the total cost of medical treatment comes to ₹2 lakh, then the insured will have to pay ₹40,000 while the balance of ₹1.6 lakh will be paid by the insurer. While this may work for some policyholders, especially senior citizens whose premium is too high, it may not work for others. It is often better to go for a policy without a co-pay clause if one can afford it.
Every health insurance company has a tie-up with specific hospitals in multiple locations in the country, which they prefer over other hospitals when it comes to settling claims. These insurance companies also prefer, and advise, policyholders, to choose one of these hospitals for their treatment for a hassle-free claim process. These hospitals are called network hospitals and every insurer publishes an entire list of network hospitals where one can avail medical treatment. While one can also avail treatment in a non-network hospital, but the claim process in such cases will not be as smooth.
Moreover, one can also opt for cashless claim settlement in the network hospitals where the medical bill would be directly paid by the insurance company. However, such a facility is not available in a non-network hospital where the policyholder has to make the entire payment from his or her own pocket first and then file a claim with the insurer for reimbursement. It is always better and wiser to get medical treatment in a network hospital, especially in case of a pre-planned hospitalisation. A non-network hospital should be considered as an option only in case of unavoidable emergencies.
Knowing these key restrictions, you can make a wise choice when opting for a health insurance plan, making sure you are not caught unaware even after investing to get health coverage. To sum it up, choose a policy with a shorter waiting period, avoid sub-limits and co-payment clauses and make sure your preferred hospital is on the list of network hospitals of the insurer you choose. By making smart decisions, your claims process becomes smoother and hassle-free.
Amit Chhabra, Head - Health and Travel Insurance, Policybazaar.com