Health Insurance comes as a financial saviour at the time when a person is in a dire state of health and needs medical treatment and care. But lack of understanding of terms and conditions in one’s health insurance policy can lead to some out-of-pocket expenses despite having a health insurance policy.
Buying health insurance is important today where the sum insured plays a key role in deciding the premiums you pay to your health insurer. We have got many enquiries where people come to us with a certain budget in their mind for buying health insurance. The biggest mistake they do is not first look at their own requirements, health conditions and other priorities before deciding on the budget for buying health insurance.
We understand that affordability can be an issue for many, but one must not restrict himself in terms of budget even before exploring the options available in the market. And we will try to see how this impacts the choices they make further in this article.
When looking for health insurance, people usually get connected with insurance agents or sales professionals. These are sales people who are eager to close the deal and hence suggest plans depending on what the customer is willing to pay. If one cuts back on benefits and features, plan becomes pocket-friendly and it gets easy to close the deal. As there is a big lack of awareness among people, they buy such plans and suffer when the claim arises. Let’s understand each of these conditions one-by-one with few examples.
Firstly, let’s consider deductible which is on top of the list. Deductible is an upfront cost you pay before health insurance covers you. For example, if you have bought a health cover of ₹ 10 Lakh with a deductible of ₹ 1 Lakh, then you have to first pay ₹ 1 Lakh out of your own pocket every policy year before your policy starts covering you. Deductible can be used to lower your premium and make your policy look affordable, but its dark sides are seen when the hospital bill arrives and brings financial stress if you haven’t planned for this payment well. To tackle this financial stress, it is advised to take health insurance which covers you with no such condition attached. If you still need to add deductible, then keep some emergency fund aside before opting for it.
Next one is copayment commonly known as copay. It is a fixed percentage of the claim that you agree to pay from your own pocket irrespective of the claim amount. Generally, it is 10%, 20% or 30% of the claim amount. Many health insurance buyers opt for a copayment without understanding the real meaning of it. And when the claim arises and they have to pay a huge amount themselves, they think that they have been cheated by their insurer. This is the reason why we don’t recommend this copay option as it leaves much to be desired.
In some cases, health insurers insist to have a copay in the policy. This usually happens in cases where fresh policies are issued to senior citizens. But we suggest that if you have an option to reduce your copay by paying an extra premium, please go ahead and do it if you can afford it.
Another aspect which we need to look into in sub-limits in the policy. This can be in the form of disease wise limits or capping on the daily room rent. If there is a room rent capping in your health insurance policy, then you need to stay in a room which is covered under your policy to avoid having out of pocket expenses.
We have seen many of the cases where people upgrade their room, to get better facilities and at the time of discharge had to pay more than what they expected themselves to pay. To understand this concept, let’s assume that your health insurance covers a room only up to ₹ 5000/day. At the time of hospitalisation, you stay in a better room which costs ₹ 10000/day. You might be assuming that for a 5-day hospital stay, you need to pay only the difference in the room rent which is ₹ 25000 for 5 days out of your own pocket. But in reality, your hospital bill including all other charges will also double up since you upgraded the room from a limit of ₹ 5000/day to ₹ 10000/day. Your policy will only pay all the other charges such as doctor’s fee, nursing charges, surgery cost etc. corresponding to the room rent limit you are eligible for.
What you will end up paying on your own will blow your mind. In this case, if your total hospital bill comes to ₹ 3 Lakh, you might end up paying ₹ 1.5 Lakh on your own. So, it is very important to bear these two things in mind. Either buy a policy which has no room rent restriction or stay in a room which is fully covered under your health insurance policy.
Copays, deductibles, and room rent limits are few key components of health insurance plans that determine your financial responsibility while you avail treatment in a hospital. Understanding these clauses and how they are used in your insurance plan can help you make an informed decision about your health insurance policy and budget for potential out of pocket expenses.
