Buying Mediclaim Health Insurance in India

One of the important topics to cover while building a financial plan is around buying Mediclaim / health insurance in India. Health insurance will protect you and your family against any financial risks arising due to a medical emergency. Buying a proper health plan would help you in saving your hard earned savings and other assets.

While this article is meant to assist you in purchasing health insurance, please don’t get stuck in analysis paralysis (see what it means in the image below). Most important take away is to GET MEDICAL Coverage / Protection as soon as possible. Don’t delay your buying decision, Fix a deadline for yourself and ACT right away. You might get declined for medical coverage later if you cross certain age limit or you are diagnosed with certain illness/diseases.

 

Buying Mediclaim Health Insurance India

Here are the main points that need to be considered while buying health insurance is as follows :

Amount of insurance coverage: 

Talk about Health Insurance and “How Much Insurance Coverage will be required?” is the first question that runs through the mind and the second question that immediately pops up is – “Whether that Amount will be Adequate?. Let’s tackle both these questions. 

“How much insurance coverage?” really depends on an individual and following points should be considered

  • Ability to pay insurance premium on yearly basis
  • Percentage of income you are willing to spend
  • Number of family members you wish to cover – Premium depends on the number of insured members
  • Family history
  • Age of members to be insured – Premiums are lower for younger buyers
  • Cost of hospitalisation in your city.

As a general rule, my suggestion is INR 5 lacs for a person below 40 years and 10 Lacs for 41-60 years. 

Look, if coverage is too low – then the benefit of taking the insurance is lost and if you take too high a coverage then your money is getting wasted.

Coming to the second question – “Whether that Amount will be Adequate?”-  Now don’t worry too much about whether the amount is sufficient, you can start will an X amount and increase the amount in subsequent years if you feel that the initial coverage amount is not sufficient. Please Don’t delay your buying decision over thinking, start with an amount and get going. As I said above Risk and Cost of Inaction is higher – You might get declined for medical coverage later if you cross certain age limit or you are diagnosed with certain illness/diseases.

Other Important Points that you should know:

Co-pay:

Co-pay is your share of hospital and medical bills. It is the fixed percent that you have to bear of the total medical bill when you make claims. Most of the times, it is in range of 10-25%. Let me explain with an example – if as per your policy,  your copay is 10 % and your medical bill is Rs 50,000 then you will have to bear the cost of  Rs 5,000 while the insurance company will pay remaining 45, 000. Best is to opt for a NO CO-PAY plan so you don’t have to shell out any money for the claims. 

Coverage for Pre-existing diseases: 

As the name suggests Pre-existing diseases are those diseases/conditions that a person has before buying health insurance. Pre-existing diseases aren’t covered from the beginning of buying the policy. If you or a family member is suffering from any existing disease then make sure of time taken to cover pre-existing diseases in your policy. Because the time taken to cover pre-existing diseases will vary from company to company and from policy to policy. It usually ranges from 3 years to 4 years.

Renewability:

Duration of coverage is another important point that you need to consider. As you grow old, your dependability on this insurance would increase. Always choose a plan whose renewability is for Lifetime

Pre and post hospitalization expenses cover:

In case of major surgery for treatment of illness, there are many associated tests that need to done in before the surgery. Similarly, the patient would be advised for complete bed rest when he/she will need the assistance of a Nurse at home. The patient would also need follow-up visits to the specialist after the surgery. All these are covered under Pre and Post hospitalization expenses cover. These are usually expressed in the number of days before and after hospitalisation. Most policies range from 30 to 60 days PRE hospitalization and 60 to 180 days POST hospitalization. One of my friends recently fell from the bike and broke his hip bone. After getting discharged from the hospital, he was told to do complete bed rest as only that would heal his fracture. He could not move for full 3 months. All his daily activities were done on the bed with help of a Nurse. Thanks to this coverage in his policy he was completely reimbursed by Insurance Policy for ALL expenses for Nurse services along with Physio Therapy. doctor follow up visits and medicines.

Room Rent:

Most hospitals have few different categories of Room starting from General Ward to Semi Private to Deluxe. Costs differ for each of them. Further, your entire treatment costs vary depending on your choice of Room. Costlier room means overall higher treatment charges too. So make this selection carefully. Also, the room rent will impact your premium as well.

Network and Non-Network:

Network Hospitals are those hospitals, which have an agreement with the Insurance company for providing Cashless treatment, are referred to as a ‘Network Hospital’. Cashless facility is provided ONLY at the network hospitals. And Non-Network hospitals are those hospitals that do not form part of the company’s network list. The bills are settled by you and the relevant documents and bills are subsequently submitted to the company. After verification of authenticity of the claim, the final amount is reimbursed to you. Make sure that you have Network Hospitals within travelling distance of your home.

Ignorable Features:

Features such as Ambulance, Domiciliary, Daily Hospital Cash, and other benefits are really more of a marketing gimmick than any real impact. Ambulance cost is not more than 1000-2000 and would have little cost impact on the overall scheme of things that I ignore these to focus on more important aspects such as Room Rent, Network Hospitals, etc

Tax Benefits of Health Insurance:

The Government recognises the benefits of Health Insurance coverage to an Individual and provides tax incentives to those who buy it. One can avail the tax deductions under Section 80D of the Act. According to this section, Tax deductions are given for health insurance policies for self, spouse and children. You can also get the deduction under section 80D for dependent parents.

The total deductions you can claim under Section 80D is as follows:

DescriptionSelf, Spouse & Dependent ChildrenParents (whether dependent or not)Total Deduction u/s 80D
No one has attained the age of 60 yrsRs. 25,000Rs. 25,000Rs. 50,000
Assessee and his family is LESS than 60 years & Parents are above 60 years of ageRs. 25,000Rs. 30,000Rs. 55,000
BOTH Assessee and his parents have attained the age of 60 years and aboveRs. 30,000Rs. 30,000Rs. 60,000

 

Other Points:

  • There are usually no medical checkups required for people under 45 years of Age.
  • Medical Health Insurance covers all diagnostic test like X- ray, MRI, blood tests etc as long they are associated with the patients’ hospital stay for at least 24 hours. Any diagnostic tests that do not lead to treatment or which have been prescribed as Outpatient are generally NOT covered.
  • Go for Super-Topup – I will cover this in more detail post later but in short Super-Topup policy helps you save money on Insurance.
  • Go through Policy brochure – Simply google & look for “<health insurance policy name here> + “brochure pdf” and you will find the policy document online. Go through it and understand it in detail.
  • Most insurance companies offer a Free Look Period of 15 Days. This is done to enable you to review the terms and conditions of the policy in detail. 15 Days start from the date of receipt of the policy is available to you for such a review. If you don’t like the terms and conditions of the policy, then you can cancel it and get the refund of premium paid.

As I mentioned in the beginning that buying mediclaim health insurance India is one of the topics to address while building a financial plan – Read this Guide to Financial Planning to build a complete plan.

Posted in Financial Planning, Insurance.