Reclaim Your Health

Sidhharth Barve (name changed on request), a middle-class person working in a private company in Mumbai, suffered a mild stroke while at his home at Nalla Sopara in Thane district. After subsequent medical check-ups, it was diagonised that there were a few  blockages in his coronary arteries which needed to be removed to avert the danger of a second severe and possibly fatal heart attack. Siddharth was informed that if needed, a bypass surgery may also be performed. Sidhharth got some of the blockages removed as well as underwent bypass surgery. The cost: Rs 3.5 lakh. He had savings of about Rs 2 lakh and somehow managed to raise the balance amount of Rs 1.50 lakh,, but the cost of his treatment almost broke him financially.

Getting Cover

There are thousands of others like Sidhharth who face medical emergencies and spend their life’s savings on medical treatment. But there is a way out and one can insure oneself from such a crippling financial blow by taking medical insurance policies. These are called the ‘mediclaim’ policies and are offered by insurance companies. Mediclaim policies will help you cover the medical expenses in case you have to undergo medical treatment or are hospitalized for some reason. Mediclaim takes care of medical expenses following hospitalization of the insured in case of sudden illness, an accident or any surgery required, for a disease that may arise during the policy period. An additional benefit of medical insurance plans is that the insured also becomes eligible for comprehensive preventive medical check-ups. A mediclaim policy basically provides a health cover of a certain amount of money and hence in case of any medical expenses incurred by the insured, the insurance company bears expenses upto a certain predefined limit. The quantum of money that the company reimburses to the person who has the mediclaim policy depends on the type of health cover. Hordes of companies offer mediclaim policies prominent among them being Tata AIG, Bajaj Allianz, ICICI Lombard, Reliance Life Insurance, SBI Life Insurance, HDFC Standard Life, Religare Aegon, and many more (see box: Health Insurance Policies).

It is crucial to go through and understand the terms and conditions of mediclaim policies. Mediclaim policies offer several advantages. From helping you tide an emotional and financial crisis and also taking care of any medical expenses that may be incurred due to injury, surgery or any other conditions to reimbursement of expenses incurred for hospitalization for certain injuries, illnesses, and/or diseases. It covers the expenses incurred during hospitalization as well as pre and post-hospitalization expenses.
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Cover for one and all

The mediclaim policy can be taken on an individual basis or for the entire family. The insurance premium charged by the insurance company will defer from company to company and will depend on whether the mediclaim policy has been taken for an individual or a group or whether the insurance policy is cashless or not. In specific cases the applicant(s) may be required to undergo a medical test. Mediclaim policies are available in various range wherein one can register their spouse and children as well as elders up to the age of 75.

There are different types of mediclaim policies available from various insurance companies. Let’s understand what each of the policies offer to the insured.

An individual policy means a separate policy for each of the family members. That means, if in a family of three members, each of the family member is covered for Rs 2 lakh, then eligible hospitalisation expenses incurred up to that limit for that particular individual only would be reimbursed.

In contrast, in a family floater plan, the limit can be utilised by any of the family member. If the same family takes a family floater plan for Rs 4 lakh and say eligible expenses incurred for one of the members was Rs 3 lakh, it will be fully reimbursed.

Choosing the right policy for oneself depends on the number of members in the family and their ages. Younger the family members more the benefits that will accrue.

Cashless hospitalization

The concept of cashless hospitalisation is fast catching on with mediclaim policies. Cashless policies reduce the hassles of paying cash upfront and then claiming a reimbursement for the same which usually takes a longer time. A cashless policy makes the policyholder eligible to avail himself of medical treatment at any of the network hospitals of the insurer without having to shell out cash at the time of treatment. Insurance companies have a panel of authorised Third Party Administrators (TPAs) who offer services across various cities.
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TPAs are the main contacts for the settlement of claims. In case of hospitalisation, the TPA settles the hospital dues by issuing a letter to the hospital, guaranteeing payment of dues for the treatment availed. Once the policyholder is discharged from the hospital, he is required to forward the relevant documents along with the bills to the TPA. There are two ways in which this is done. In the first case, the TPA examines the claim and sends it along with the relevant documents to the insurer. The insurer, in turn, makes the required payment to the TPA who then pays the hospital. In the second case, the TPA settles the hospital dues and then claims reimbursement from the insurer after necessary processing.

Add-on covers

Mediclaim insurance, in addition to the basic cover, also provides for add-ons on payment of an extra premium. In some cases, pre-existing ailments are also covered and the cover may be enhanced to ailments not normally covered also. Some insurance companies provide cover for day-care and annual medical check-ups as well. However, one needs to read the terms and conditions carefully to understand what is covered and what is not and, depending on the inclusions and exclusions, one should decide which add-on covers to take and which not to take.

Tax Benefits

The premium paid for mediclaim policies is tax deductible. This is provided under Section 80D of the Income Tax Act. According to these provisions , premium paid towards a mediclaim insurance is deducted from the total income of an assessee. The deduction is available only to individuals and Hindu Undivided Family members. In case of an individual, the amount deductible includes any sum paid for insurance on his health, on the health of his spouse, dependent parents or dependent children. In case of a Hindu Undivided Family, the amount deductible includes any sum paid for insurance on the health of any member of the family.

In order to claim this deduction, the amount should have been paid by cheque out of income chargeable to tax in the relevant previous year. According to the Income Tax Act, Rs 15,000 is the limit eligible for deduction. An enhanced deduction of Rs 20,000 is allowed if the insured is a senior citizen. An additional deduction of Rs 15,000 is allowed to an individual on any payment made for an insurance on the health of his parents, irrespective of the fact whether they are dependent on him or not. This deduction would be in addition to the one on the insurance of the assessee himself, his wife or children.
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Expenses covered

Most of the mediclaim policies cover the following expenses: medical practitioner, anesthetist and consultant fees, expenses on anesthesia, blood, oxygen, operation theatre, surgical appliances, medicines and drugs, diagnostic materials and x-rays, dialysis, chemotherapy, radiotherapy, cost of pacemaker, artificial limbs, cost of organs, and other similar expenses. They also provide cover for pre-hospitalization (upto 30 days) and post-hospitalization (upto 60 or 90 days from date of discharge) expenses, provided they are related to the ailment/accident for which the insured was hospitalized.

Expenses not covered

Most of the health insurance providers do not cover diseases contracted within 30 days of insurance, but usually accident cover is available from day one. Mediclaim policies also do not cover pre-existing illnesses, but some of the insurance companies cover such pre-existing illnesses after two to four renewals. The mediclaim policies normally do not cover dental treatment (except arising out of accident), debility and general run down conditions, sexually transmitted diseases and HIV (AIDS), circumcision, cosmetic surgery, plastic surgery (unless required to treat injury or illness), vaccination and inoculation, pregnancy and child birth, war, act of foreign enemy, ionising radiation and nuclear weapon, treatment outside India, naturopathy, domiciliary treatment, experimental or unproven treatment, all external equipments such as contact lenses, cochlear implants, etc. Recently, Star Health & Allied Health Insurance launched a group insurance plan exclusively for HIV patients. However, the plan is just available in Karnataka and Tamil Nadu as of now.

The critical illness (CI) policy covers expenses related to treatment and hospitalization of many of the diseases not covered under mediclaim. Since mediclaim is an annual insurance contract, premiums are subject to change every year. But CI policy is a long-term contract and the premium fixed at the time of taking the policy would remain the same throughout the life of the policy.

Continuity essential

Some of the mediclaim policies offer a discount in premium, while others offer an increase in the benefit amount for every claim-free year. Hence, it is essential that the policyholder renews the policies continuously to avail of these benefits. Also, if there is a break in insurance, the insured would lose the benefits of insurance in the event of any contingency.
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The insured will be prevented from the benefits of ‘No Claim Bonus’ in a claim-free year. Moreover, he will not be covered for pre-existing diseases in the event of a gap in insurance cover due to non-renewal on time.

It is clear that medical insurance policies are absolutely essential for not just the physical well-being but also financial well-being of all the family members. The benefits pro-vided by these policies make them ‘lifeline’ of the families. So, go get this lifeline for you and your family!