“Health is like money. We never have a true idea of its value until we lose it.”- Josh Billings
Thanks to our modern stressful life, we neglect our health in pursuit of wealth only to spend the same on lost health. It is health insurance that protects us from financial doom when illness takes over by storm.
Health insurance, also known as medical insurance or medi-claim, is a risk cover made to cover the costs of your medical and surgical expenses if any. Like all other types of insurance policies, the insured has to pay a fixed premium every year for the cover.
Due to increasing medical and hospitalization costs, and increased lifespan, even people with health insurance often find themselves in a tight spot. Though people sense a need to improve the health coverage, they are put off by the high cost of health policies. Also, it does not make sense to keep buying additional health plans, every time you feel the need to increase your health cover.
Most people rely on the group health cover provided by the employer, which is typically in the range of Rs.3 lakhs – 5 lakhs for the entire family. Well, a health cover of that range might not even be sufficient to cover, at least a one-time cost of a major surgery of one person in your family, if the need arises!
What is the alternative way to increase your Health Cover at minimal cost?
The answer is Top Up and Super Top Up policies!
What are Top Up and Super Top Up policies?
As the name suggests, these plans provide health cover over and above a threshold limit set in the policy. This threshold limit is known as ‘deductible limit’. The hospitalization expenses within the deductible limit can be paid by your pocket, or through an existing primary health insurance.
For example, a Top Up policy described as “Top Up Policy of 10 lakhs with a 3 lakhs deductible limit.” It means that the total health cover provided by the policy is Rs.10 lakhs and this health policy comes into force only when the hospitalization bill is above the deductible limit of Rs.3 lakhs.
Such policies are often referred to as ‘Stepney’ health cover as they are meant only to enhance your health insurance and should not be treated as regular health insurance policy. Though it is not mandatory for you to have a regular health cover to purchase these policies, the deductible limit is still applicable.
Because of the deduction limit clause, Top Up and Super Top Up policy premiums are cheaper. These policies are available as individual and family floater policies as well. Also, there is no mandate for you to buy regular health plans and Top Up/Super Top Up policies from the same insurer. Both the policies can be utilized for a single instance of hospitalization.
Often, the Top Up and Super Top Up policies are confused with health insurance riders like Hospital Cash or Critical Illness. It is important for you to know that these policies are regular indemnity policies and are similar to health insurance plans in every way except for the deductible limit. The premiums paid for these policies are eligible for tax deduction under Sec 80D of the Income Tax Act.
Top Up and Super Top Up policies are exclusive reimbursement plans, i.e. unlike regular plans, cashless hospitalization is not permitted by all insurers. You have to first settle the hospitalization bill in full, either by your money or by an existing health cover, and then submit reimbursement claims for the Top Up/Super Top Up plans over and above the deduction limit specified.
E.g.: If the hospitalization cost is Rs.5 lakhs and basic health cover is Rs.3 lakhs, then the primary/regular health cover will pay Rs.3 lakhs if you are hospitalized. You have to settle the additional bill of Rs.2 lakhs and then get it reimbursed from the Top Up and Super Top Up policy.
Unless you show sufficient proof of deductible limit paid to the hospital, no claim settlement will be done from these policies.
Now, let us understand how differently Top Up and Super Top Up Plans work.
Top Up Plans
In Top Up Plans, the deductible limit is applicable for each and every case of hospitalization in a year. The claims are admissible only if the cost of every instance of hospitalization in a year, exceeds the deductible limit.
Let us analyse few scenarios below to understand how a Top Up policy works. Consider Mr.Sameer who has an existing regular health policy of Rs.4 lakhs and a Top Up policy of Rs.10 lakhs with Rs.4 lakhs deductible limit.
Before you decide to buy a Top Up plan, never forget to check the single illness criteria. Many Top Up plans in the market, have different clauses for reimbursement of repeated hospitalizations in a year, for a single disease. Also, you should check the clauses for the waiting period of pre-existing diseases, coverage for pre- and post-hospitalization expenses and any other exclusions.
Super Top Up Plans
In Super Top Up Plans, the deductible limit is calculated as the aggregate of the total cost of all hospitalizations, in a given year i.e. the deductible limit is applied on the total cost of all hospitalizations in a particular year and NOT for each and every case of hospitalization.
For example, consider a person having a regular health cover of Rs.3 lakhs and Super Top Up policy of Rs.10 lakhs with Rs.3 lakhs deductible limit. If he gets hospitalized twice a year with the cost of the first hospitalization being Rs.1.5 lakhs and the second one being Rs.2 lakhs, then his regular health insurance pays the entire bill for the first hospitalization, and in the second instance, the regular health policy pays Rs.1.5 lakhs and Super Top Up policy pays Rs.50000.
The premiums of Super Top Up policies are higher than the Top Up policies as they consider aggregate hospitalization costs in a year. To understand these policies better, let us look at few scenarios arising from Mr. Sameer, if he has a has an existing primary health cover of Rs.4 lakhs and a Super Top Up policy of Rs.10 lakhs with Rs.4 lakhs deductible limit.
If you compare both, Super Top policies have a definite advantage over Top Up plans. However, like any other health cover, you should always check for clauses related to the waiting period of pre-existing diseases, coverage for pre- and post-hospitalization expenses and any other exclusions, before proceeding to buy a Super Top Up policy.
Important Points to consider before purchasing a Top Up/Super Top Up policy
1. Though it is not mandatory to have a primary health cover to buy a Top Up/Super Top policy, it would be futile to avoid a primary health cover. Even if you have a group health cover by your employer, a primary cover is needed in case of job loss or if a new employer provides very low group health cover for your family.
2. No Claim Bonus
Top Up/ Super Top Up policies will pay no-claim bonus as agreed in the policy, over and above the actual coverage amount mentioned.
3. On hospitalization, if the bills exceed the deductible limit of the Super Top Up/Top Up policies, all the costs above the deductible limit should be paid by your funds, as cashless facility are not available for most of the Top Up/Super Top Up plans.
Top Up policies are those for which deductible limit is applied to each and every case of hospitalization in a year and Super Top Up policies are those for which deductible limit is applied to the total cost of all hospitalizations in a year.
It would be prudent to have a combination of regular plus top up/super top up health plans as part of your risk management strategy