According to Anthony Jacob - the chief executive officer, Apollo Munich Health Insurance, existing premiums can be reduced with co-payment and deductible options as they are means of sharing and the cost is controlled due responsible use of health insurance.
"In group health insurance policies, the co-payment clause is increasingly becoming a popular risk control measure by employers as it results in direct savings by reducing the value of claims. When employees are made to share a part of the burden of hospitalization costs, it is widely expected that they will ensure responsible use of the policy benefits and, therefore, control the claims costs," he stated.
Co Payments: Under this plan a fixed amount has to be paid by the insured initially, and then the insurer will settle the claims according to the policy limit. This is used for group health covers commonly as the employer provides cover for the employee and his immediate family. At times employers want co-payments for covering parents as the medical treatment for senior citizens is frequent and expensive.
Deductibles: This clause refers to a specified amount which is not covered by the insurer and it is only after the insured pays this, will the insurance company take over. The deductible can be applied on a pre-claim - where the insurance cover will become effective only after the claim crosses the deductible amount.
A healthy person who has a low risk of being hospitalized can think of a co-payment clause, though it could be a major disadvantage in case there was a large claim. It will be an advantage to a senior citizen as the cost of treatment is usually high and the insurer will have to make part of this.
When the insured is liable to make co-payments they will avoid unnecessary tests and check-ups, as a result the insurance company is more confident of processing and clearing claims. The risk to the insurance company is reduced.
Yashish Dahiya, co-founder and chief executive of PolicyBazaar.com feels, "Some amount of co-payment is a good thing, say 5 to 10 per cent. But a consumer should agree to bear only as much as s/he can without it putting a strain on his finances," Dahiya pointed out.
For those with pre-existing diseases like diabetes or blood pressure where hospitalization is high, a deductible plan is better as this would reduce the premium, according to Prakash Praharaj founder and chief financial planner for Max Secure Financial Planners. A deductible option is good when it is clubbed with a base plan as one can increase the cover at a reasonable cost.
A deductible plan is good for those looking for a high cover at a low premium. The policy amount will be collected only after the deductible is exhausted.
A co-pay or deductible will lower the premium and it can be added to a critical care cover. "The thumb rule is that health cover should be the amount of your annual income, up to a maximum of Rs 10 -15 lakh. Beyond that, it will be wise to take a critical illness cover. For instance, you don't need a cover of Rs 20 lakh if your claims are not likely to exceed Rs 50,000 on average. In such a case, take a deductible, since the premium will be lower," said Dahiya.
Hannah Punitha (IRDA Licence Number: 2710062)
Priya Nair, November 2013