AN OVERVIEW OF HEALTH INSURANCE by Dr. S.C.SIVASUNDARAM ANUSHAN, MBA, MCom, MPhil, PhD., Visiting Faculty MMHRC.COLLEGE, Madurai. Abstract Health insurance is gaining more market share in the insurance industry yet many donot know what it exactly is .This paper tries clear the doubts regarding health insurance byproviding an overview of it.1.1. Health Insurance Overview Health insurance (popularly known as Medical Insurance or Mediclaim) protects you andyour dependents against any financial constraints arising on account of a medical emergency. Itsometimes includes disability and long term medical needs. In Mediclaim, you pay a premiumand in return the insurer commits to pay a predetermined sum of money to meet the claims.Health insurance is new in Indian context and is slowly catching up with the consumers.Consumers understand the objective of health insurance and it’s offering to cover the ever risingmedical expenses. Health insurance is available to both individual and groups. However,premium for individual policy is costlier than that of the group policy. An individual is the ownerof his personal policy. Whereas in group plans, the sponsor is the owner of the policy and theregistered members are covered by the policy. You can take advantage of group health insuranceto overcome the shortage of your individual insurance. People with no policy or are uninsurabledue to one or the other reason can take good advantage of the group plans and be covered.However, before buying a health insurance policy, plan your requirements carefully. It will saveyou from buying a policy which might not be appropriate for you and can also be expensive.1.2. What is Health Insurance? The term health insurance (popularly known as Medical Insurance or Mediclaim) is a type ofinsurance that covers your medical expenses.The concept of health insurance is new in India butits awareness is growing fast. Health insurance comes in handy in case of severe emergencies.Life is unpredictable, insurance can make it safe and secure from bearing huge financial loss. Ahealth insurance policy is a contract between an insurance company and an individual.Sometimes it is associated with covering disability and custodial needs. The contract isrenewable annually.Health insurance is affordable and carries the assurance and freedom frominsecurities that threaten normalcy now and then. The type and amount of health care costs thatwill be covered by the health plan are specified in advance. Health plans are available in twoformats, individual and group plans. In an individual policy you are personally the owner of the
policy. While in a group plan, the sponsor owns the policy and the people covered under it arecalled its members.1.3. Why Health Insurance? Medical expenses are sky high these days. An appointment with a doctor might churn outbig bucks. The elaborate medical treatment expenses could eat into your savings meant for thefuture. Health insurance policy kicks in to ensure that you get the required treatment and yourpocket is still under control. Having health insurance is important because the coverage helpspeople get timely medical care and improve lives and health. It covers the risk of financialdifficulties in the event of long illness. The awareness has been enormous in the last couple ofyears. This must have been in response to the series of uncertainties people have observed inrecent times like the terror attacks. 1.3.1.BENEFITS: Benefit depends on the policy you choose and the coverage it provides. Here is a list of basic coverage provided by most of the health policies.1. It helps securing a better future by paying a fraction as an expense today called the premium.2. It reduces saving huge amount of financial losses, risk of financial breakdown in case ofexpensive medical and post-illness care.3. It definitely induces a sense of security to the insured.4. It provides financial security to the family members.5. It covers your hospitalization and medical bills.6. It also covers disability and custodial bills.7. You can avail tax benefits on the premium paid under section 80D of the Income Tax Act.8. The best factor, you can also opt for health insurance policies even after the age of 60.1.4. Types of Health Insurance Health care costs have seen a phenomenal rise in the recent times. This has led the customersto insure not only themselves but their family members also. It will cover future medicalexpenses and other related requirements if it ever arises. The need to insure has gained moreimportance amongst older generation who is either retired or will retire in the near future. Let usdiscuss the types of medical insurances available in the market.1.4.1. Medical Insurance This is typically a hospitalization cover and reimbursement of the medical expenses incurredin respect of covered disease or surgery while the insured was admitted in the hospital as apatient. Different types of medical insurances are available in the market like individual medicalinsurance, group medical insurance and overseas medical insurance. There are health policiesthat reimburse you the actual hospitalization cost for treatment of any disease and are offered bythe non-life insurers only. These policies are popularly called "Mediclaim" policies. Other typesof health insurances are provided by both the life and non-life insurers.1.4.2. Critical Illness Insurance
Critical Illness plan insures you against the risk of serious illnesses in return of a premium youare required to pay. This gives you the same security of knowing that a guaranteed cash sum willbe paid if the unexpected happens and you are diagnosed with any one of the critical illness.Sometimes a critical illness can change your lifestyle in addition to help within the home or thefamily. In this type of health insurance plan, the insured receives a lump sum amount within afew days of diagnosing critical illness. Once this lump sum is paid, the plan ceases to remain inforce. Typically, a critical illness plan would provide cover for the illnesses mentioned below.1. Aorta graft surgery2. Cancer3. Coronary artery bypass surgery4. First heart attack5. Kidney failure6. Major organ transplant7. Multiple sclerosis8. Paralysis9. Primary pulmonary arterial hypertension10. Stroke1.5. What does your Health Insurance Cover? Health is an important aspect of our lives. Right from ages we had been cautious andconcerned about our health and the risks involved in it. Today the awareness is rising and theresponse is positive. More people are interested in owning health insurance. Each year newillnesses and disorders are discovered by the researchers. This means our health is at constantrisk and is wise to get insured. Health Insurance is a necessity and a measure which helpsovercome huge losses. It might be an expense today, for a safe and insured tomorrow. These arethe coverage we can broadly define:Basic Coverage - A health insurance plan should provide cover for hospital rooms, doctor orsurgeon fees, medical tests, medicines and related expenses. It provides you with essentialprotection plus a range of optional extensions that can be selected to suit your specific insurancerequirements.Specific Health Plans - It provides covers for critical illnesses or diseases such as heart attack,kidney failure, etc; most insurers offer critical illness plans. Another set of specific insuranceplans target ailments such as diabetes and cancer. These plans offer cash on hospitalization,reimbursement for expenses incurred on surgical treatments, and such like.Critical Illness Plan - Critical illness insurance is designed to provide financial assistance in theform of a lump sum, tax-free payout to help you overcome the financial stress and difficultiesassociated with diagnosis of a serious illness. Critical illness insurance plans supplements
mediclaim, which reimburses the hospitalization and medical expenses. Critical illness insuranceplans are benefit plans that pay the amount equal to sum assured, if the critical illness strikes,irrespective of expenses incurred on treatment.1.6. Factors affecting premium of Health Insurance Like any other insurance, the premium for Health insurance also depends on some factorswhich determine the amount we pay out. At times we generalize paying out the premium as anexpense, but remember it is only a precaution for a secure future! It can save us huge loss if thecoverage is planned carefully. 1. Age is a major factor that determines the premium, the older you are the premium cost will be higher because you are more prone to illnesses. 2. Previous medical history is another major factor that determines the premium. If no prior medical history exists, premium will automatically be lower. However, if you had suffered from specific illness the premium may turn out to be expensive. 3. The premium cost also depends on the work environment of the insurance buyer. Supposedly the premium of a pilot will be more expensive than that of a teacher, or premium of a miner will be expensive. This is because the job of a pilot and a miner are more hazardous, thus they are more prone to disorders and risks than a teacher. 4. Term of the policy helps in determining the premium, the longer the term the cheaper is the premium and vice versa. 5. Claim free years can also be a factor in determining the cost of the premium as it might benefit you with certain percentage of discount. This will automatically help you reduce your premium. Coinsurance is the portion of the health plan that requires you to pay a percentage of thecoverage meaning that you will essentially be splitting the cost of your healthcare with yourinsurance provider. For instance, if your health plan has an 80/20 co-insurance rate, yourinsurance plan pays for 80% of your eligible medical expenses and you are responsible to coverthe remaining 20% of the expenses. Copay is available on many individual health insuranceplans. This is the amount you pay for a visit to the doctor or for a prescription. Insurancecompanies use copayments to share health care costs.1.7. Tips to choose the right health insurance plan 1. Compare prices and features before buying. One policy can cost over 3 times the other! 2. If you have a family, go for a Family floater policy. It is more economical and gives higher coverage for each member of the family. In addition it provides the flexibility that any member can use any proportion of the floater. This is helpful because in most cases one individual gets seriously ill, rather than the entire family.
3. Compare the terms of the policy so you do not get a shock later. A broker will be able to provide the best advice since he is largely independent. 4. Do not always adopt a policy with a cashless tie up with a hospital nearby. All good hospitals can be empanelled by insurance companies. Rather look for a policy that fulfils your requirements adequately. 5. Find out all the hospitals that your insurance company has empanelled with and understand what their specialization is, so if you are in need you can use the appropriate hospital, rather than just one all the time. 6. Always it is advisable to buy from a broker, ask for their license number, and check if the details provided are correct from the IRDA website. These brokers are independent and are paid for every policy they sell, so they are not inclined to push one over the other. An agent on the other hand sells for one company only and hence will generally push that company and its benefits. 7. Be truthful and accurate in your declarations on the proposal form. That will only ensure payment when you have a genuine claim. 8. Exercise regularly and follow healthy eating habits. Avoid smoking or drinking in excess. Over time all your efforts will definitely reduce your premium while covering the risk. 9. If you already suffer from a disease, take the necessary precautions. Always act as if you are uninsured, even though you may be insured. This will always control your habits and will benefit you in the long run.1.8. Saving on Health Insurance PremiumsNobody likes paying more than its worth. Getting the most appropriate and affordable Healthinsurance is dependent on a few aspects like your choices, capability to choose and of course thehealth conditions of the policy buyer. But by following a few steps you can save a good lot onyour health insurance premium.1. Smoker’s health is always at risk, so people with smoking habits will end up paying morepremium than a non smoker. So in order to reduce the premium, one has to quit smoking.2. High blood pressure is not a good sign and is advisable to keep it under control. Keepingcontrol on high blood pressure can help you reduce the premium cost.3. If you are in good health, then automatically your premium cost will be lower than the peoplewhose have health problems.4. Avail your no claim benefits. Discounts on claim free years will also help reducing thepremium at the time of renewal.5. Comparing the quotes from various insurers is an important aspect to save on healthinsurance premium. Though you need to shop for a while to have an idea. Make sure you getsome affordable online health insurance quotes.
6. Compare the benefits of various health insurance plans. Perform deep research to find outwhat discounts you can avail for in various appropriate policies.7. Make your choices for cover very carefully, take only the coverage you require. Yourrandom selection might end you up paying out more than actually required. So a right decisionmaking is important.1.9. How to file a health insurance claimTaking health insurance and paying premium is one story and filing for claim is another.Claiming benefits can be quiet tricky at times so you have to be smart and careful while filing forthe claim. To file a Health Insurance claim with your Insurance company one has to keep thefollowing things in mind. 1. Claim form duly filled and signed by the claimant. 2. Discharge Certificate from the hospital 3. All documents pertaining to the illness starting from the date it was first detected i.e. Doctors consultation reports/history 4. Bills, Receipts, Cash Memos from hospital supported by proper prescription. 5. Receipt and diagnostic test report supported by a note from the attending medical practitioner/surgeon justifying such diagnostics. 6. Attending doctor’s certificate stating the nature of the operation performed, bill and receipt. Attending consultants / specialists / anesthetists bill and receipt, and certificate regarding diagnosis. 7. Certificate from the attending medical practitioner / surgeon that the patient is fully cured. 8. Details of previous policies if the details are not already with TPA except in the case of accidents.1.10. Recent Government Incentives The Chief Ministers Comprehensive Health Insurance Scheme, aimed at benefiting 1.34crore families, was launched recently. To mark the inauguration, Chief Minister Jayalalithaadistributed identity cards and approval letter for treatment to seven beneficiaries at theSecretariat here. She also handed over a cheque for Rs. 183.64 crore to G. Srinivasan, Chairmanand Managing Director of the United India Insurance Company [which has been chosen for theimplementation of the scheme] towards the quarterly payment of premium. The annual allocationwould be Rs. 750 crore. Under the scheme, the sum assured for each family would be Rs.1 lakhevery year for a total period of four years and for a total value of Rs. 4 lakh. In the case of certainprocedures, the ceiling would be raised to Rs.1.5 lakh per annum. No fewer than 250 hospitalswould be empanelled under the scheme. At least six hospitals in each district would be covered.There would be more hospitals in cities such as Chennai, Coimbatore and Madurai. The newscheme would cover 1,016 procedures, 113 follow up procedures and 23 diagnostic procedures.
The cost of tests required for treatment would also be part of the insurance cover. M. Elango,deputy general manager of the UII, told reporters that the annual income limit for beneficiariesshould be Rs. 72,000 and this should have been verified by Village Administrative Officers. Thebeneficiaries should possess family cards. An official release stated that the insurance scheme,executed by the previous government, was not beneficial to all. The insured amount of Rs. 1 lakhwas not adequate for certain major surgeries.1.11. Conclusion I feel this discussion would have given a clear overview of the health insurance sector.Reference1. Policybazar.com2. Insurance digest3. The HINDU.