Basics of a Health Insurance Policy

You really want to get your health insured but you dread the claims processes, the kind of documentation required, the uncertainty associated with reimbursement, the complexities surrounding pre existing diseases and the endless waiting period associated with buying a health insurance policy. We simplify facts for you, and answer some of the most basic questions that have been troubling you….

What is Health Insurance?
Health Insurance is the medical insurance provided to you by an insurance company, wherein it reimburses the medical expenses you incur as a result of your valid hospitalization. All you do is to pay a certain amount (subject to conditions) once each year, known as premium, which keeps your health insurance policy active. So, health insurance helps you get a good medical treatment and a smooth hospitalization recovery.

Who needs Health Insurance?
Well, a better question would be, ‘Who does not need Health Insurance?’ and the answer is everybody needs it, but few are aware and realize its importance. While you may not suffer from any ailments and this may give you the impression that you may never need to be hospitalized, life may surprise you any moment with accidents and illnesses. And if you do get hospitalized, then over-the-top healthcare expenses may be difficult to pay from your own pocket.

What does Health Insurance cover and what does it exclude?
As health insurance in India is synonymous with “hospitalization”, your health insurance policy will mainly cover hospitalization expenses provided, you undergo treatment in the hospital for at least for 24 hours. The expenses for hospital bed, nursing, surgeon’s fees, consultant doctor’s fees, cost of blood, operation theatre charges are all covered. While, certain diseases that are specified under the policy’s terms and conditions may be excluded from coverage or may be covered only after one or two years of the policy issue date. Also, cosmetic treatments, and those that do not involve hospitalization, are not covered.
What are pre-existing diseases?
Pre-existing diseases are those that a person may have suffered from, or sought treatment for, or even such a disease which he may have had, but may not have been aware of, before the date of issue of the Health Insurance policy. Normally there is a waiting period of two to four years before which preexisting diseases are covered under health insurance policies.
What’s the difference between individual insurance policy and family floater policy and which one is better?
An individual health insurance policy means that a particular policy can cater to one particular individual only, namely the holder of the policy. So, in case the individual has taken a policy for a coverage amount of 1,00,000, then he will be covered for one lakh only, and in case the expenses go over this limit, he would have to pay by himself. As against this, with a family floater policy, if a family of three is covered for Rs 3,00,000 in all, then each member is eligible to use the entire amount of three lakhs as hospitalization expenses. Hence, a family floater policy gives you a benefit of additional coverage, which is absent in case of individual health policies.
The disadvantages of a family floater policy
The family floater plan offers flexibility in terms of utilizing the overall insurance coverage among the family as a group. However, there are certain clauses which you need to be aware of. First, the policy will be renewed only till the senior most member reaches the maximum age of renewability allowed by the particular insurance company, after which other family members will need to take a fresh policy without having the benefit of their claim history and pre-existing disease coverage that comes from continuous renewal of the policy. Second, children who reach 25 years of age, will need to buy a separate policy for themselves without the benefit of the earlier continuous coverage that they have got under the family floater plan. Third, in case of an accident or any kind of illness, where all the members have to hospitalized, the cover amount may be insufficient.
When is the right time to buy a health insurance policy?
It is better to be insured at an early age when your chances of being prone to ailments and diseases are less. This can be advantageous, if you buy health insurance at a time when you are healthy, your years will be claim free and you will be eligible for a discounts in premium rates, also your chances of getting stuck with a pre-existing disease and being denied claim, would be nil. Hence, it is advisable to buy a policy before you enter late 30s. Go for an independent health insurance policy even when you are covered by your employer, so that you’ll be sufficiently covered even if you change your job. Buying a health insurance policy, just when the disease strikes is a bad, irresponsible move, which may not even guarantee reimbursement.
What is cashless facility?
Cashless Service is a service through which all the medical bills are paid by the Insurance company directly to the hospital, and the insured has not to pay anything at all. Basically this service is only applicable in hospitals which are in the insurance company’s “network hospitals” list. Every insurance policy has a list of hospitals where the insured can avail of this service. The policy holder simply has to call the toll free number present on the Health Card and then the co-ordination between the hospital and the company takes place.
Does health insurance have a tax benefit?
The maximum deduction for an individual, spouse and children is Rs 15,000 per year. Senior citizens (65 years old or higher) get a tax exemption upto Rs 20,000. The premium is allowed as deduction from the total income of the assessed. Hence if you are paying medical premium for yourself, your family and parents you can get a tax benefit up to Rs. 35,000.
How do I claim Health insurance?
You can make a claim in two ways: Firstly, if the nursing home or the hospital you get treated in, is in the “network hospitals” list and provides cashless service, then you need to give details of your policy to the nursing home and the nursing home will claim the money directly from the insurance company. You, don’t need to pay the bills in this case.

But if the nursing home does not provide cashless service, then you need to pay the medical bills first and later get the money reimbursed from the insurance company by submitting the relevant documents and the original bills and receipts. The insurance company will then refund the money to you.
What are the different Waiting periods associated with a Health Insurance policy?
Firstly, there is a two-to-four year waiting period before which for pre existing diseases can be covered under the health insurance policy. Secondly there is a 30 day waiting period from the date of issue of the policy, within which you will not be reimbursed the hospitalization expenses, unless, the treatment refers to accidental injuries. Thirdly, certain specific diseases are not covered for certain periods of time, varying from policy to policy, for instance, hypertension may not be covered for two years from the date of policy, while joint replacement may not be covered before four years from the date of issue of the policy.