Since the past two decades, there has been a phenomenal surge in acceleration of healthcare costs. This has compelled individuals to have a re-look on their actual monthly expenditures, spending patterns and simultaneously allocate a proportion of their income towards personal healthcare. This has resulted in individuals availing healthcare insurance coverage not only for themselves but also for their family members including their dependants. In short, healthcare insurance provides a cushion against medical emergencies. The concept of insurance is closely concerned with security. Insurance acts as a shield against risks and unforeseen circumstances. In general, by and large, Indians are traditionally risk-averse rather than risk lovers by nature.
Some major health insurance companies in India include National Insurance Company, New India Assurance, United India Insurance, ICICI Lombard, Tata AIG, Royal Sundaram, Star Allied Health Insurance, Cholamandalam DBS, Bajaj Allianz Apollo, AG Health Insurance Company among others.
Indian Health Insurance is primarily classified into 2 categories:
• Cashless Hospitalization
• Medical Reimbursement
a) Cashless Hospitalization
Cashless hospitalization is a specialized service provided by an insurer wherein an individual is not required to pay the hospitalization expenses at the time of discharge from the concerned hospital. The settlement is done directly by the insurance company (or insurer). However, prior approval is a must from the TPA (Third Party Administrator) before availing the benefits under this option.
Cashless hospitalization can be of two types:
• Planned hospitalization: This is a planned hospitalization wherein the insured is aware of the hospitalization in advance. This duration period may vary from case to case. Examples include: FTND (Full Term Normal Delivery), Chemotherapy treatment for carcinoma (cancer), for cataract surgery, tonsillectomy (removal of tonsils).
• Emergency hospitalization: It is a sudden hospitalization that may be either an emergency or due to unforeseen circumstances. In short, hospitalization is not anticipated in advance. Examples include RTA (Road Traffic Accident), Myocardial infarction (heart attack), Acute Appendicitis.
b) Medical Reimbursement
Re-imbursement means to repay or to compensate. Thus, Medical Re-imbursement means to repay the products/services availed during hospitalization and more importantly after the completion of the treatment.
Under this procedure, the insured has to bear the entire expenses incurred during hospitalization. After getting discharged from hospital, the insured/policy holder can claim medical reimbursement. For availing benefits under this option, the insured has to approach the concerned TPA under which he/she is covered, fill the requisite form and satisfy all the requirements as mentioned. This includes submission of TPA card, policy paper, discharge summary, prescriptions, diagnostic laboratory reports, OPD treatment details etc. A sum is granted as reimbursement for treatment expenses.
A recent survey conducted in 2008 showed that only 3% of the entire Indian population has availed some sort of insurance policy and enjoys benefits included under its coverage. This miniscule percentage constitutes both – PSUs (Public Sector Undertakings) and Private insurance companies. Since, the general public are by and large ignorant about the benefits of availing healthcare insurance policies, there lies an urgent need to educate the masses regarding the importance of Healthcare Insurance and the benefits derived on account of it.
There are numerous reasons for not availing health insurance. There is a lack of knowledge regarding the existing insurance products/services in the markets. On top of it, there are numerous misconceptions about Insurance prevalent in the Indian Markets. Also there are numerous fly-by-night agents out to fleece the gullible Indian public.
In India, public funded healthcare is available only to a miniscule section of BPL (Below Poverty Line) groups, low-income groups and to government employees. The Indian Government has formulated Employee State Insurance Scheme (ESIS) that focuses on the public healthcare policy for low-income groups. The government employees can avail Central Government Health Scheme (CGHS) that offers medical treatment at a subsidized cost.
With the opening up of insurance sector for private participation, numerous players have entered the healthcare segment, but inspite of the entry of private sector, penetration of insurance coverage in India is abysmally low. Recently a legislature has been passed in the Indian Parliament allowing 49% of FDI in insurance industry.
Essential Guidelines for Availing individual Health Insurance Policy:
The following points should be borne in mind while purchasing an individual health policy:
• Understanding the policy coverage: The policyholder should be able to clearly comprehend the extent of medical coverage being offered under the particular health insurance policy before opting for it. The individual should check whether pre-existing diseases and its resultant complications are covered or not, as well as the extent of the coverage under that particular policy.
• Keeping an eye for medical expenses that are not covered/re-imbursable under the policy: Before availing a particular health insurance policy, the prospective policyholder should note the medical expenses not covered under that Insurance policy. It is important to note that deductibles are a part and parcel of any insurance coverage and the expenses incurred as part of the medical treatment need to be borne by the individual. Generally this list includes aprons, sterilization charges, gloves, Dettol, gloves etc.
• To understand whether it is a co-insurance policy: Before availing a health policy, the prospective customer should understand whether it is a co-insurance policy or not. It is advisable to get an individual health insurance policy with a co-insurance payment option. The maximum amount does not exceed 15% of the entire medical coverage for a particular disease.
• Understanding and updating oneself about expiry period regarding the policy cover: An individual health insurance cover entails regular premium payments on a monthly, half yearly or annual basis before the expiry of a particular policy. Non-payment of premium within the stipulated time results in the lapsing of the policy with subsequent break in the policy coverage of the concerned individual. Even though the concerned individual holds policy with an Insurance company for many years together, a break in the policy coverage (which generally does not exceed more than 15 days) is treated as a fresh policy cover.
Importance of Health Insurance
The importance of Health Insurance can never be undervalued for the following reasons:
• Provides security to human life which is of prime importance to any individual.
• Closely bonds Insurance Companies, Hospitals, Policyholders and TPAs together for the benefit of Indian masses.
• An answer to the solution of uncertainties and risks that are prevalent and ever-pervading in human life.
• Prevention and minimization of unforeseen losses.
• Access to quality healthcare.
• Means of savings and a safe investment option.
• Provides financial stability in life.
• A tax-saving instrument that significantly contributes in reduction of tax deductions.
• Reduces tensions and stress caused on account of hospitalization.
• Greatly contributes in leading a stress-free life.