- Date : 16/03/2017
- Read: 6 mins
At times, terms and conditions in a health insurance policy can be confusing. Not just an understanding of the term even the conditions attached with it need to be known for a better, evolved and an informed buying decision.
Here's a quick guide to help understand some of the common terms
A health insurance plan is supposed to reimburse the cost of hospitalisation and charges a premium for it. However, if the policyholder agrees to pay a certain percentage of the hospital bill, it is a case of co-payment. In doing so, insurer charges a lesser premium. Importantly, the sum insured remains the same and is not reduced.
A co-payment is therefore a cost-sharing requirement under a health insurance policy that provides that the policyholder will bear a specified percentage of the admissible costs.
It's not necessary that there will be a co-payment feature in all plans but in a senior citizen health insurance plan it could be a mandatory feature. In higher age groups as the premium rates are higher, a co-payment may provide some relief in term of affordability. Some plans, however, ask for as much as 20 per cent co-payment if the treatment is done at a non-network provider or in a city different from where the plan was bought.
Similar to co-payment is another term called 'deductible'. The only difference is that in case of the former, it's a percentage of the hospital cost that is shared by policyholder, while in the latter case, it is a fixed amount in rupee terms that is shared by policyholder. Insurers, however have to define whether the deductible is applicable per year, per life or per event.
Therefore, a deductible is a cost-sharing requirement under a health insurance policy that provides that the insurer will not be liable for a specified rupee amount of the covered expenses. Before the insurer pays the claim amount, the amount of deductible has to be deducted from the bill. It is the liability of policyholder to pay the contracted deductible amount to the hospital. Remember, like co-payment, there is no reduction of the sum insured even if there is a deductible in the policy.
Some health insurance plans include coverage of maternity related expenses but may have a waiting period as long as 48 months. Plans with lesser waiting period may come at higher premium. In most health insurance plans, maternity or childbirth related expense is usually a part of permanent exclusions.
Related: 5 Simple Things to Know About Maternity Insurance in India
In plans where it is covered and as far as coverage is concerned, the maternity treatment will include the medical expenses for a delivery (including complicated deliveries and caesarean sections) incurred during hospitalization and the lawful medical termination of pregnancy during the policy period. Also, included will be the pre and post-natal medical expenses incurred for delivery or termination.
Coverage to the new-born may not be there in most such plans covering maternity expenses. Most plans include coverage to new-born only after 91 days.
A policyholder may have issues (service concerns etc) regarding existing health insurance policy with an insurer. If he stops paying renewal premium and buys a fresh policy, the policyholder loses on certain benefits especially the time-bound exclusions. For example, say there is a 24 month waiting period for a specific ailment to be covered under the health insurance policy. If the policyholder buys a fresh policy from the 25th month, he has to wait another 24 months for the coverage of that specific ailment. By porting the policy to another insurer, this may be avoided.
Related: Know more about Health Insurance portability
Portability means the right accorded to an individual health insurance policy holder (including family cover) to transfer the credit gained by the insured for pre-existing conditions and time bound exclusions if the policyholder chooses to switch from one insurer to another insurer or from one plan to another plan of the same insurer, provided the previous policy has been maintained without any break.
One would have noticed the mention of 'reasonable charges' on a hospital bill. Insurers prefer paying claims which are reasonably charged by the hospital and not an exorbitant rate for any of the expense-head. The insurer makes this clear to the policyholder through its policy document that only reasonable charges would be reimbursed.
The basis of 'reasonability 'would primarily hinge on the charges prevalent in the geographical area for identical or similar services taking into account the nature of the illness involved. Cost of hospitalisation differs across cities and hospitals and therefore the amount of 'reasonable charges' will also differ.
Unlike in the past, health plans have started covering even pre-existing ailments provided the policy is continuously renewed with the same insurer and that too without any claims for a continuous period of four years. But, for a better claim experience, it's important to understand what a pre-existing disease is as defined by regulations.
Related: How pre existing medical conditions affect your health insurance
Pre-existing disease is defined as - Any condition, ailment or injury or related condition(s) for which you had signs or symptoms, and / or were diagnosed, and / or received medical advice / treatment within 48 months to prior to the first policy issued by the insurer.
Even though, pre-existing ailments will get coverage after a certain period, it is suggested to disclose any such existing ailment and ongoing medication, if any to the insurer. Non-disclosure may result in repudiation of the claim by the insurer.
Free Look Period
After having received the policy document, one may not want to continue with the policy. This could be if one is not satisfied with coverage or the terms and conditions of the policy.
The policyholder has the option to cancel the policy within 15 days of receiving it provided there is no claim. Remember, the 15-day period starts from the date when the policy document is received by the policyholder (by courier etc) and not from the date of issuance of the policy.
The free look period is applicable only in the initial year of purchase and not applicable on the renewal policies. To cancel, one has to communicate to the company in writing and return the policy document. The insurer refunds the premium after adjusting for proportionate risk premium for the period already covered, expenses incurred by the insurer on medical examination and stamp duty charges.
Grace period refers to the specified period of 15 days immediately following the premium due date during which a payment can be made to renew or continue a policy without loss of continuity benefits such as waiting periods and coverage of Pre-existing diseases. However, coverage is not available for the period by which the premium payment was delayed from the due date. .
Therefore, it's very important to keep renewing the health insurance policy as and when the premium is due. The waiting periods in health insurance policy range from 12-48 months depending on ailments. The continuity benefits will be lost if the policy is not renewed even within the grace period.
Source: Economic Times