9 important terminologies associated with Health Insurance:
Mr Siddhartha Mehra is a successful finance professional who works at a leading investment consultancy. He is a workaholic by nature. This hectic work & busy schedule makes him skip meals & leaves him with no time for exercise. He feels that this hectic life may soon take a toll on his health. He gets worried upon considering the gradually increasing health care costs and the impact these may cause on his financial health. To prevent his life from taking a backseat due to his illness and health care costs, he has decided to buy a health insurance plan. He does a primary research as to which health plan he should buy, in the process, he comes across so many technical terms which he is unable to decipher.
This article explains some of the important terminologies used in a health insurance prospectus and helps Mr Mehra & many others like him to get familiar with the terms to simplify the insurance purchase process.
Co-payment is a condition levied upon the policyholder to bear a certain percentage of the claim amount from his pocket, and the balance claim would be met by the health insurer. It is an important criterion while choosing a health insurance policy. The higher the percentage of co-payment, the higher would be the burden of expenditure on your shoulders. Ideally, you need to buy a policy which has a lower/nil co-payment limit. Usually, the minimum co-payment limit is 10%, and it may even be placed at a higher level by the insurer. Mostly, the insurer applies co-payment conditions on policies which are designed for the senior citizens. Such situation may also arise if the insured is covered by a lower premium plan but gets high-end treatment from a non-network hospital.
Suppose Mr Mehra is hospitalised for two days and his hospital bill comes to be Rs. 50,000. If he holds a health insurance plan which has 20% copayment condition, then he has to pay Rs. 10,000 and the remaining Rs. 40,000 will be borne by the insurer.
2. Pre-existing Diseases & Waiting Period
Pre-existing Diseases refers to any illness or condition incidental to the disease with which the insured is suffering from and has been treated for at the time of policy inception or within 48 months before the first policy issued by the insurer. A waiting period of 24-48 months is applied to cover the expenses owing to treatment of pre-existing diseases.
Suppose Mr Mehra suffers from hypertension at the time of taking health insurance & meets with brain haemorrhage after one year from the policy inception. So, the claim for the treatment of brain haemorrhage will not be reimbursed by the insurer as brain haemorrhage was incidental to a pre-existing disease i.e. hypertension and the contingency happened during the waiting period. If the same contingency had happened after the expiry of waiting period, then he could have got his expenditure covered by the insurer under the policy.
3. Cashless facility
If Mr Mehra gets medical treatment in any of the network hospitals then under the Cashless facility he need not undertake out-of-pocket expenses. This facility will allow his medical bills to be paid directly by the *Third Party Administrator (TPA) to the network hospital. If the treatment is outside the scope of policy or it exceeds the prescribed limits, then his bill may not be paid at that moment under the cashless facility. At that time, he needs to pay from his pocket and later he may get reimbursement from the insurer or Third Party Administrator.
4. Domiciliary Hospitalisation
Domiciliary Hospitalisation implies the insured getting medical treatment for any illness or injury at his home which in ordinary conditions should have been done at a hospital. It happens when the insured’s physical condition restricts him to be moved to a hospital, or he could not get a room in the hospital. Domiciliary Hospitalisation benefits are extended by the insurer under the health insurance policy but subject to certain limits and conditions. If Mr Mehra decides to get treatment of any disease at his home, then he should initially confirm the diseases for which domiciliary hospitalisation benefits are given and the ones that are excluded from the cover.
5. Grace Period
If Mr Mehra forgets to pay his health insurance premium on the due date, then he gets an extension of 15 days; which is known as Grace Period, to do so. Suppose the due date of premium payment is 1 July 2016, then he has to pay it by 16 July 2016 to renew or continue a policy in force without loss of continuity benefits, else his risk cover may lapse.
6. Congenital Anomaly
Congenital Anomaly refers to abnormalities of internal or external body parts concerning their form, structure or position which are present in the insured since the time of birth. It is a standard exclusion which you may find in most of the health insurance policies. If you suffer from any birth defects and want to get it treated, then you should understand that such expenses would not be covered by your health insurer. Such expenditures would have to be borne by yourself.
7. Network Hospitals
Network Hospitals are those hospitals or health care providers that are enlisted in the panel of the health insurer and Third Party Administrator to provide medical treatment to the insured on payment by a cashless facility. When you buy a health insurance policy, the insurer provides you with a list of network hospitals along with the policy. The list is regularly updated, and you will be informed about such modifications by the insurer. If you require medical treatment in a hospital under the cashless facility, then before getting admitted for the treatment in a particular hospital, you should check whether the hospital enlisted in the panel of your health insurance company or not. If you get treatment in a non-network hospital, then the insurer may refuse your claim under the cashless facility.
8. Free look period
Suppose Mr Mehra after purchasing the policy and within 15 days of receiving the policy document does not find it beneficial to continue the policy, then he may apply in writing to the insurer about his intentions to exit the policy along with reasons for such an exit. It can be done within 15 days from the date of receipt of policy document i.e. Free look period. Such an option is available only when no claim has been made by him, and the policy tenure is at least three years. Upon cancellation of the policy, the insurer refunds the premium after deduction of stamp duty, expenses incurred on medical check-up and proportionate risk premium for the said period.
Portability provides autonomy to the insured for switching from one health plan to another health plan of the same insurer or transferring the credit of the same health plan from one insurer to another insurer. It gives continued benefits to the insured on PED (Pre-existing diseases) waiting period, and other time-bound exclusions earned in the earlier health insurance policies.
Suppose Mr Mehra already holds a health plan having a sum insured of Rs. 3 Lakh, which is nearing renewal date, and wants to switch to another insurer for a higher sum insured of Rs. 5 lakh. He shall apply for the portability in writing to his current insurer 45 days before the policy renewal date. Upon portability, his health cover of Rs. 5 Lakh would begin only after completion of the waiting period levied by the new insurer. Until such time, he would remain insured for an amount of Rs 3 lakh.