According to a report by Ernst and Young, 70% of the healthcare spending in 2016 was out of pocket and 28% by the government. Only 2% was paid by insurers. This is expected to rise to 3.5% by 2021.
A-Z Explanation Of Medical Insurance Plans
Family Floater – These are plans that are meant to cover several members of the family. They are between 10-25% cheaper than buying individual plans for all members of the family. Medical insurance companies insist that the proposer of such a policy (the oldest member of the group) be no more than 60-65 years of age.
Co-pay – Some health insurance companies have the co-pay system in place. The insured bears about 20% of the cost of treatment. This massively reduces the stress of financing expensive medical treatment, particularly in a time where quality medical care comes at a hefty price.
Sub-limits – If the insured person has stay in the hospital for few days due to a medical problem, it’s obvious that there will be different kinds of expenses – bed, medicines, nursing, travel costs, etc. Medical insurance defines reasonable sub-limits. For instance, a policy could define that the daily rental for hospital room must not exceed 1-2% of the insured value.
Exclusions – Treatment for cosmetic medical problems is generally not covered by medical insurance companies. Also, some of these insurance policies do not cover optional medical procedures such as the cost of LASIK surgery, contact lenses, and eyeglasses.
Waiting Period – This is to prevent patients with known current medical problems from misusing the cover of the insurance. This clause is generally applicable for advanced medical procedures such as joint replacement, cataract surgery, and child delivery. The waiting period is between 1-4 years, and a full list is provided to the patient.
Network Hospitals – Network hospitals are those that have a tie-up with a particular TPA or third-party administrator. A third-party administrator is the actual administrator of the medical insurance policy. A network hospital can provide benefits of cashless hospitalisation and preapproved packages for cataract, child delivery, gallstone operation, angioplasty, joint replacement, and similar operations. A claim from a non-network hospital has to be paid in cash by the customer, and then the claim has to be submitted for approval with all relevant documents regarding treatment.
Domiciliary Hospitalisation – This is the treatment that would have required a hospital but carried out at home due to exceptional circumstances. It is usually availed by patients who are too sick to be transported to the hospital. Of course, it requires pre-approval and often a verification visit by TPA doctor.
Pre and Post Hospitalisation Costs – This would depend on the service provider. In the case of hospitalization, due to illness, there can be a claim for pre and post-hospitalization expenses. It can include the cost of medicine, doctor’s fees, oxygen, and in some cases cost of hiring an ambulance. Most providers provide 15 days of pre-hospitalisation benefits and 60-90 days of post-hospitalization benefits.
How Much Sum Insured is Enough
This is a tough question to answer, and much depends on the financial condition of the insured. The cost of insurance rises steeply after the age of 45. The price of an INR 2 lakh policy for a 46-year-old is approximately INR 5,000 (excluding taxes).
Ideally the minimum amount is about 5 lakhs and is derived from an average bed charge of INR 5,000 daily (5,000 is 1% of 5 lakhs).
This is a careful balancing act since, for a family of three, the cost of an INR 5 lakh family floater plan can be between INR 30-40,000 (with taxes).
Hence some may choose to insure for INR 3 lakhs and be ready to spend INR 2 lakhs more out of pocket if needed.
Conclusion
The amount of medical insurance that is purchased depends purely on the spending capacity of the individual. But everyone must have some amount of medical insurance, at least INR 3 lakhs.
It is essential to read the fine print and understand all the clauses. Medical insurance policies are long and spell out in detail which diseases are excluded and which have a waiting period.
Above all, shop around for the best deal. However, keep in mind that the cheapest insurance is not the best one. The companies with the highest payout percentages are the ones you should opt for.