Health Insurance Plans

Health Insurance vs Mediclaim Policy

• Those people who do not have much knowledge about health insurance often get confused between health insurance and mediclaim. Basically a mediclaim policy provides coverage for hospitalization expenses for a definite pre specified illness till a certain time as per the sum insured. Under mediclaim policy, the maximum limit for all claims is fixed at a definite amount. It works on the principle of indemnity in which hospitalization is a specific requirement to think about any claim. Even those people who are insured under a mediclaim policy need to pay hospitalization expenses from their pocket and the insurer will pay them later. Under a health insurance policy, policyholders will get the comprehensive coverage that will cover pre and post hospitalization as well.
  The insured can also get coverage on ambulance charges, compensation for lost income, etc, but that all depends upon the riders associated with the health insurance policy. The upper limit of a health insurance policy can go to as far as Rs 60 lakhs. Normally, health care policies also offer discounts on a regular basis over a definite period of time. There is also a difference between health insurance policy and mediclaim on the basis of tax deduction. Health insurance premium paid towards a health insurance policy provides a tax exemption under section 80D of Income Tax Act, the funds paid towards mediclaim premium paid for self or spouse or children are appropriate for tax exemption of Rs 15,000 under section 80D.

Health Insurance FAQs

Before buying health insurance, we are sure you must be having a lot many questions in your mind. Do not worry as we at PolicyX.com are here to help you figure out the best insurance policy for you.

1. What is health insurance?

As the name implies, health insurance is a type of insurance which covers your medical bills. It's also popularly known as mediclaim in India and is a contract between an insurer and a person or a group of individuals, where the insurer pledges to provide specific medical insurance cover, against a fixed amount of "premium", which is usually paid annually.

2. What forms of health insurance are available in India?

The most popular form of health insurance policy available in India is the one that covers expenses incurred in case of hospitalisation. However, several other products are available from various insurance companies that offer an exhaustive range of health covers, depending upon the choice and need of an individual. The insurer, in most cases, directly pays off the hospital (known as cashless facility). It may also reimburse the cost associated with injuries or illnesses or disburse a fixed amount on occurrence of an illness. The amount and type of healthcare costs to be provided by the insurer under the plan is specified in advance in the offer document.

3. Why is Medical insurance important?

Every individual must buy a health insurance policy for all the members of his/her family, according to need and capacity. Subscribing to Medical insurance will cover you from sudden and unexpected cost of hospitalisation, and other serious health issues, like critical illness. Not having a health insurance policy could hugely impact your income and household savings, and may even land you in debts.
All of us are exposed to different types of health hazards. Medical emergencies are known to strike sans any warning. Healthcare, at the same time, has become increasingly expensive. New procedures, technological development, and better medicines have triggered a rise in the cost of healthcare. These expenses are beyond the reach of most of us, and buying a health insurance policy is much more affordable, to pay off the medical bills.

4. What type of health insurance plans is available today?

Health insurance is available from as low as Rs5,000 sum insured in case of micro-insurance policies to as high as Rs50 lakhs or even more than that in case of some critical illnesses. Most insurance companies offer health covers between Rs1-5 lakhs sum insured. With cabin rent and other costs payable by insurance companies being increasingly linked to the sum insured, it's advisable to take an adequate cover as early as possible, especially because the sum insured may not be increased in the event of a claim. Besides, while most Medical insurance policies are for an one year duration, there are schemes that cover for up to five years as well. Longer duration policies are also available. A hospitalisation policy either covers partly or fully the treatment cost incurred because of hospital admission during the policy period.
There's also a wider coverage that includes expenses both before and after hospitalisation. Such policies are usually available on family floater basis, or personal sum insured basis. In the former, the sum insured is spread over the family members. Another scheme, the hospital daily cash benefit policy, extends a daily fixed sum of money for each day in hospital. There could also be a higher daily benefit cover for some specific illnesses or ICU admissions.
A critical illness policy extends a lumpsum amount when an individual is diagnosed of a particular illness. The amount is used to pay off several direct and indirect monetary consequences because of a critical illness. The plan ceases to be in operation once the lumpsum is paid off.

5. What is cashless mediclaim?

These days, most insurers have arrangements with various hospitals spread across the country as part of a network. An individual, if insured under a policy which offers cashless facility, can get treated in any hospital of the network without paying hospital bills because the same is paid directly by the third party administrator (TPA), on behalf of the insurer. However, all expenses beyond the sum insured or the ones not covered under the policy, have to be paid by the insured directly to the hospital. Cashless facility is not available if the hospital is not included in the network. In such cases, payment by the insurance company to the hospital, is usually carried out on reimbursement basis.

6. What are the tax benefits of health insurance?

You can claim several tax benefits if you subscribe to a health insurance scheme. Such benefits are extended by section 80D of the Income Tax Act. Presently, subscribers to a health insurance, who purchased the policy by a payment mode other than cash, are eligible for Rs15,000 annual deduction from their taxable income for payment of health insurance premium for self, dependent children, or spouse. The deduction is higher for senior citizens at ?20,000. Also, since the 2008-09 financial year, an additional deduction of Rs15,000 can be claimed for mediclaim premium paid for parents. It's Rs20,000 if parents are senior citizens.

7. What factors affect the premium payable for a health insurance policy?

Age is the biggest factor which determines the premium payable. The older you are, the higher will be your premium, because you'll be more prone to illness. Your medical history is another factor that will go into determining the premium. If you don't have any medical history, the premium would be naturally lower. You are eligible for a discount on further premium payable for the years for which there has been no claim of the insurance money. Some insurance companies cover add-on benefits like free medical checkups and/or diagnostic tests in case of no claim.

8. What are the things not covered under a health insurance policy?

Read the offer document/prospectus and understand it fully before signing on the dotted lines. What's not included will be clearly written in the prospectus. Any pre-existing illness, usually, is not covered under a policy. But read the offer document to understand what the insurer means by pre-existing illness. Also, majority of the policies generally exclude certain types of diseases in the first year of coverage. A waiting period is also often imposed on such diseases. Some expenses not covered under most health insurance policies include cost of contact lenses, spectacles and hearing aids, dental surgery (unless it requires hospitalisation), general debility, convalescence, venereal disease, congenital external defects, use of drugs and alcohol, intentional self-injury, expenses for diagnosis, AIDS, X-ray and/or laboratory tests not connected with the illness requiring hospitalisation, treatment related to pregnancy or childbirth, including C-section, naturopathy treatment and others as deemed exclusive by the insurer.

9. What about the waiting period?

As already said, there is usually a 30-day waiting period when you buy a new policy, starting from the day you enrolled in the health insurance scheme. During this period, the insurance company won't pay any hospitalisation charges. But this is not applicable in case of an emergency hospitalisation arising out of an accident. The waiting period is not applicable for renewal of the policy for subsequent years.

10. What is a pre-existing condition?

It's a medical condition or an ailment that existed before you took the health insurance policy. This is a significant point in all policies because insurers don't cover such conditions within 48 months prior to taking the first policy. It means a pre-existing condition may be considered for payment, only after the completion of 48 months of continuous insurance cover.

11. If I don't renew my policy before the expiry date, can I be denied renewal?

The policy can be renewed if you pay your premium within the grace period, which is usually 15 days from the date of expiry of the polciy for most insurance companies. However, you will not be entitled to any coverage for the period during which the insurance company did not receive any premium. Also, the policy would lapse if premium is not paid within the grace period.

12. Is my health insurance policy transferable, sans losing renewal benefits?

Yes. According to a circular issued by the Insurance Regulatory and Development Authority (IRDA), with effect from 1 October, 2011, the insured can transfer a policy from one insurer to another, and also from one plan to another. The insured will lose no renewal credit for pre-existing health conditions which he/she enjoyed in the incumbent policy. But the credit would be limited to sum insured and the bonus eligible under the present policy. Check with your insurance company for the detailed clauses in this regard.

13. What happens to the coverage amount when a claim is filed?

Once an insurance claim is filed and settled, the coverage gets reduced by the amount paid on settlement. For instance, if you take a Rs5 lakh mediclaim policy in January, and in April, the insurance company pays ?3 lakhs towards your hospitalisation and treatment, then you will be eligible for the balance Rs2 lakhs as coverage for the remaining duration i.e. May to December

14. What about "any one illness"?

This means a continued period of illness and includes relapse within a specified number of days, subject to the terms and conditions written in the policy. It's usually 45 days.

15. How many claims are allowed in a year?

There's no limit to the number of claims in a single year, unless there's a specific cap laid down in the policy. The sum insured, however, is the maximum claimable limit under the mediclaim policy.

16. What is a family floater?

In a family floater scheme, a single policy covers the hospitalisation expenses of the entire family. Such a policy has only one sum insured which can be utilised by a single or all members collectively in the family. The limit of coverage is capped at the sum assured. Family floater plans are considered better than buying a separate health policy for each member of the family. It takes care of all medical expenses including surgeries, sudden illness and accidents.

17. What is a health checkup facility?

Some insurance companies reimburse general health checkup expenses usually once in every four years.