The last couple of years have shown the world the importance of having a solid health insurance policy. The trend has been visible in India as well with almost a 25 per cent increase in demand for health insurance policies in the country in FY22. With a high medical inflation rate of around 14 per cent, having a health insurance plan in India to cover an unforeseen health crisis is crucial. It is no longer an option but a necessity.
Data shows that the cost of treating critical illnesses in India could go up to as high as ₹25 lakh. Add to that unexpected and highly infectious health emergencies like Coronavirus, which can put entire families in the hospital simultaneously, it is almost impossible to cover the cost of treatment without a health insurance plan and without seriously compromising the family’s financial stability.
However, just having a health insurance plan may not be enough to completely protect you financially against a medical emergency. Out-of-pocket expenses may cause a serious dent in your savings if you do not choose your health coverage carefully.
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Out-of-pocket expenses are those which are not covered by your health insurance plan and, as the name suggests, you have to pay those out of your own pocket. So a genuine question is that why would one need to pay from their own pocket if they have got health insurance coverage. Well, if one reads the terms of their insurance policy carefully, they would realize that there are several exclusions, some of which may be common across policies and some which may vary from one policy to another.
For instance, the cost of consumables — that is medical aid and equipment that gets discarded after use — is not covered by most policies. Apart from that, OPD (Out Patient Department) expenses are also not covered in must health insurance plans.
Depending on your policy, there could also be other clauses which may result in some out-of-pocket expenses. For instance, if you have chosen a policy with deductibles, you need to pay a certain amount from your pocket before the policy kicks in.
Similarly, if you have opted for a co-payment clause, you need to pay a certain percentage of the total cost of treatment from your own pocket. Certain policies also come with sub-limits on various segments of the claim, like the room rent, ambulance cost, etc. If the cost of such segments exceeds the sub-limit, you would have to pay the extra amount even if the entire sum insured of your policy is not utilized.
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How to avoid out-of-pocket expenses?
Get OPD add-on cover: Since all health insurance plans require the patient to be hospitalized for a minimum of 24 hours for serving the claim, they do not cover those occasional visits to the doctor and cost of treatment that do not require hospitalisation. Moreover, most health insurance plans do not cover dental treatments, cost of hearing or visual aid equipment etc. So essentially, you need to pay those expenses out of your pocket.
However, you can opt for an OPD add-on cover which not only pays for the outpatient treatment, but also covers diagnostic tests and pharmacy expenses for investigations that do not require hospitalisation. Moreover, this add-on also covers the cost of dental procedures, hearing and visual aids like spectacles and contact lenses up to the specified limit.
Get consumables cover: As mentioned earlier, the cost of consumables is not covered by most health plans. The consumables include syringes, PPE kits, sutures, needles, catheters, cotton, bandages, medical gloves, masks, gowns, sanitisers etc. These costs can add up to a lot, especially in case of a long hospitalisation.
By opting for a consumables cover, you can ensure that your policy covers these costs as well and you do not pay for them yourself. Other expenses covered by a consumable cover include administrative charges like admission kit, cost of birth and death certificate, documentation expenses, charges for visitor’s pass, etc.
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Get hospital cash cover: Despite having comprehensive coverage for yourself and your family, there may be certain expenses which may be out of the purview of the health insurance policy. For instance, the family members may have to travel to and fro from the hospital. There may be expenses on food and other necessities for the attendants of the patient.
By opting for hospital cash benefits, the policyholder gets a daily cash allowance from the insurer to cover such costs. The policyholder, or the nominee, can use the cash to pay for overhead expenses or in any way they feel necessary.
Get higher sum insured: Often, the total cost of treatment exceeds the sum insured under the health insurance policy. In such cases, the difference has to be paid by the policyholder, or his/her family, out of their own pocket. To avoid such a scenario, it is always better to go for a higher sum insured. Today, one can even get a ₹1 crore plan at an affordable premium.
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Get plans without sub-limits: There are many instances where despite having a sufficient sum insured, one has to pay huge sums out-of-pocket because of the existence of sub-limits. Since all the expense heads involved in medical treatment are set in proportion to the room rent, exceeding the room rent can result in proportional reduction in claim under all those heads including doctor fee, ICU charges etc. So it is highly recommended that you should opt for a plan with no sub-limits, especially any cap on room rent.
By following these guidelines you can ensure that your out-of-pocket expenses on top of the health insurance are substantially reduced, if not completely eliminated.
Amit Chhabra, Head - Health and Travel Insurance, Policybazaar.com