How to meet out-of-pocket expenses with Daily Hospital Cash plans

One buys health insurance plans to meet the cost of hospitalisation. But is it enough?

How to meet out-of-pocket expenses with Daily Hospital Cash plans

One buys health insurance plans to meet the cost of hospitalisation. But life is full of surprises. When the hospital bill is handed over to you, you may get the shock of your life if the entire cost of hospitalization is not reimbursed. In such an event, someone not holding a Daily Hospital Cash (DHC) plan will have to pay out of pocket. Let's see how a DHC plan works and where does it fit into one's health insurance portfolio.

Out-of-pocket expenses
There may be several incidental expenses incurred during one's hospitalisation that would remain outside the ambit of hospital bills. These are certain non-admissible hospital expenses which the insurer does not pay up. There are some expenses which are generally excluded and are termed as non-admissible expenses in hospitalisation policies. One may have to incur certain other expenses related to eatables and conveyance of friends and relatives during hospitalisation. Further, there could be sub-limits of expenses, thus restricting the claim amount in the policy.

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How a DHC plan works
Different insurers may call a DHC plan by different names - Hospital Cash, Daily Hospital Cash or Hospital Cash Insurance, but all work in the same way. Such plans are different from a Mediclaim plan in the way they operate. While the Mediclaim plan reimburses the hospital bill, the DHC plan pays one on the basis of the number of days of hospitalisation. Irrespective of the actual amount of hospital expenses, that would include the cost of tests, doctor fees and room rent, amongst others, a DHC plan would merely look at the number of days of hospitalisation and pay up as per the policy terms and conditions. The payout in case of a DHC plan is not linked to the actual hospitalisation expenses. What's more, you can make your claim under both the DHC and Mediclaim policies simultaneously.

Unlike choosing the sum assured in a Mediclaim policy, in a DHC plan one has to choose the amount of daily benefits one wants. Most DHC plans have daily benefit amounts of Rs 500 / Rs 1,000 / Rs 1,500 / Rs 2,500 or Rs 3,000 to choose from. One can buy the plan for self or for the entire family members too. Usually, insurers give a discount of 5 percent on the premium when more than one family member is covered under the same policy. The actual payout under a DHC plan is based on the limit chosen but will depend on the nature of hospitalisation too. In case of any stay in the ICU, the payout may double while in case of surgeries, it may even be 5/20 times of the daily limit.

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Assuming someone holds a Mediclaim policy of Rs 2 lakh and also buys a DHC plan with Rs 3,000 as daily benefit. He is admitted for 4 days and the total hospitalisation bill amounts to Rs 34,000. While the hospital bill will get reimbursed through the Mediclaim policy, he gets Rs 12,000 (Rs 3,000 for 4 days stay) additionally.

Usually, most DHC plans double the amount in case of any stay in the ICU, i.e. in that case, Rs 24,000 (Rs 6,000 for 4 days stay) is paid. In case of a major surgery, the claim amount may total Rs 60,000 (if it is 20 times of the daily limit for a major surgery).

Advantage DHC
If one is holding both the Mediclaim and DHC plans, using the latter for making any claim may help one keep the no-claim bonus (NCB) intact in the Mediclaim plan. Say, there's 2-3 days of hospitalisation and the hospital bill is not huge. If you use your Mediclaim policy to pay for it, NCB will get impacted. In such a case, using the DHC plan might not only help you get the hospital bills cleared, but also keep your NCB intact.

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The working of DHC plans appears pretty simple but the features may vary a lot among different plans. For getting an informed decision related to choosing a plan, one also needs to understand such differentiation and the restrictions.

Number of days coverage: In one policy year, the maximum stay in a hospital may be capped at 30/40/60 days. Within this, stay in the ICU may be capped at, say, 10 days.

Benefits during ICU hospitalisation and major, minor surgeries: In most DHC plans, the daily benefit amount chosen is doubled if one gets hospitalised in the ICU. Further, in some plans, in case of major surgeries directly involving brain, heart, liver or lung, the benefit can be 20 times of the DHC chosen while in case of minor surgeries, the benefits can be five times.

Maximum benefit: The aggregate of all benefits payable in any one policy year may be capped at 150 times of the DHC benefit opted by the policyholder. Within this too, the cap, say, for surgical hospitalization could be 90 times of the limit.

Others: Similar to a Mediclaim policy that requires a minimum of 24 hours of hospitalisation, some DHC plans may require a minimum of 48 hours of hospitalisation Some DHC plans also reimburse hospital bills related to accidents.

Do not consider a DHC plan as a replacement of a Mediclaim policy. It should always be used as an add-on to supplement your medical insurance needs. The first ring of defence is always your Mediclaim (individual or Family Floater kind of plans) policy as it is a more comprehensive plan. Post that, buy a critical illness plan especially if you are around 40. Thereafter, consider buying a DHC plan to cover the incidental out-of-pocket costs incurred during hospitalization.

Source: Economic Times


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