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10 Facts About

Health Insurance
You Should Never Ignore

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10 Facts About Health Insurance You Should Never Ignore

ediclaim is a contract between the insurance company and the


insured. Buying mediclaim should be an informed decision based
on the numerous aspects of mediclaim. The devil lies in the fine
print. The more informed you are about your mediclaim policys clauses,
the easier it will be to get your claim paid when the time comes. You must
make every attempt to understand the intricacies of the contract, so that
you can fight for your right in case the insurer rejects any claims unfairly.
This ebook will discuss the ten most important facts about Mediclaim that
everyone should know before buying a policy.
This ebook is part of the finest knowledge base on personal finance in India which Moneylife group has developed since
2006. Moneylife Smart Savers is not a financial planner or distributor. We research and shortlist safe and smart products
for members. To know our unique ethical and commission-free model click here.

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10 Facts About Health Insurance You Should Never Ignore

Does mediclaim need 24-hour hospitalisation?

nsurance companies have been

have a valid point that surgeries

known to reject claims when

like laparoscopy are often more

hospitalisation for a treatment

expensive than conventional

is less than 24 hours. But today,

surgery. However, there can be

with technological advancement,

a limit up to which these can be

hospitals often do not need to keep reimbursed, instead of an outright


the insured for 24 hours in many

denial of the claim. Some insurers

cases. The Insurance Regulatory

are keeping up with the times and

Development Authority (IRDA)

have expanded the list of day-

should direct insurance companies

care procedures they cover. It is

to analyse claims realistically rather

important to evaluate the list of

than mechanically rejecting claims.

such day-care procedures before

Meanwhile, insurance companies

signing up for a mediclaim product.

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10 Facts About Health Insurance You Should Never Ignore

How does the room rent limit affect claims?

any hospitals charge

claim based on your room rent

different amounts

and the actual room you availed.

for doctors visits,

For example, if the room rent limit

investigation and other charges,

is 1% of the sum insured (SI) and

for different classes of rooms. If

assuming an SI of Rs1 lakh, your

you avail of a room that costs more

room rent limit would be Rs1,000

than what your cover allows, the

per day. In case you use a room

insurance company will not just

costing Rs2,000 in rent, your full

disallow the difference in room

claim amount will pro-rated to

rent, but also the differnece in

pay only half of the claim, and

the other charges. Some policies

the remaining half will have to be

specify that they will pro-rate the

borne by you.

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10 Facts About Health Insurance You Should Never Ignore

Cashless is better than reimbursement of claim

deally, you should apply

surgical procedure, you need to

for cashless hospitalisation

insist on cashless approval before

for pre-planned medical

hospitalisation, irrespective of

procedures. Even though cashless

what the TPA, agent or insurance

hospitalisation is in your interest,

company may tell you. Keep aside

the insurance company may

two or three days for the process of

try to push you to apply for

cashless approval for pre-planned

reimbursement. You may be told

procedures, to ensure all queries

that an application for cashless

are resolved. While some in-house

hospitalisation may be made only

claims processing departments of

on the day of the procedure. If

insurers may be open 24x7 and

you dont want to risk rejection

round the year, we cannot say the

for a planned and non-emergency

same about TPAs.

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10 Facts About Health Insurance You Should Never Ignore

TPA v/s In-house claims processing

t is better for customers to

claims, admissions and make

deal with insurance companies

recommendations about payments

which have their own in-house

to the insurer, provided that

claims processing team. The

detailed guidelines are given by

team can interact both with the

the insurer to the TPA for claims,

customers and hospitals directly

assessments and admissions. The

to ensure that policyholders

insurer will make direct payments

get prompt service. This helps

to the hospital and policyholder

address customer issues much

(not through the TPA). Cheques

faster. Based on the public-

will have to be written by the

interest litigation filed by Gaurang

insurer and sent to the hospital (for

Damani, a social activist, IRDA

cashless hospitalisation) and to the

has said that a TPA may handle

policyholder (for reimbursements).

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10 Facts About Health Insurance You Should Never Ignore

Saves Taxes on your Health Insurance Premium

f you want to take advantage of

than Rs10,000, you can get the

a preventive healthcare program

full benefit of the Rs5,000 limit for

(PHP), the government gives you

PHP. The limit of 80D for senior

tax deductions for expenditures

citizens is Rs20,000. So, in case you

upto Rs5,000. If you are in the

are paying mediclaim premium

highest tax bracket and spend

for your parents as well as for

Rs5,000 on PHP, you will effectively

yourself, spouse and children then

be spending only Rs3,500 due to

you can have upto Rs35,000 in

tax savings. Just ensure that you

tax deductions under Section 80D

do not cross the Section 80D limit

(Rs20,000 for senior citizen parents

of Rs15,000. For example, if your

and Rs15,000 for yourself and your

health insurance premium is less

family).

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10 Facts About Health Insurance You Should Never Ignore

Rules governing No-Claim-Bonus (NCB)

nsurers may offer cumulative

claims free year, with a maximum

bonuses on indemnity-based

of a 50% NCB. This means that

health insurance policies. If a

every claims free year will increase

claim is made, the cumulative

the insurance cover by 5%, but the

bonus accrued may be reduced by

premium will be charged only for

the same rate at which it is accrued. the base sum insured. If your base
Earlier customers would avoid

sum insured (SI) is Rs2 lakh then

claiming small amounts because

after 10 claims free years, the NCB

that would reset the NCB to zero.

will give a benefit of an additional

For instance, many mediclaim

50% of the base SI, which is Rs1

policies offer a 5% NCB for every

lakh.

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10 Facts About Health Insurance You Should Never Ignore

Intimate the time of hospitalisation and claims

nsurers have been getting

used as an excuse for rejecting

strict about intimation of

genuine cases. Moreover, only in a

hospitalisation and deadlines for

few cases, the insurance company

claims. For example, United India

follows-up with the hospital to

expects the policyholder or family

verify if hospitalisation has actually

to intimate TPAs within 24 hours

taken place. Insurers are taking

of hospitalisation and the claim

a close look at the fine print

must be filed within seven days of

whenever there is a claim. Since

being discharged from hospital.

consumer courts or ombudsmen

They assume that chances of fraud

take a long time to provide relief,

are higher if the claim is submitted

insurers tend to reject claims in

a long time after discharge. While

borderline cases. So, make sure

this is a valid concern, it may be

you stick to the insurers timeline.

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10 Facts About Health Insurance You Should Never Ignore

Family floater is fine for a young family

ost floater policies cover

lakh will be partially covered. But, if

the husband, wife and a

your family had a Rs6 lakh floater,

couple of children; some

the big claim of Rs6 lakh would be

floaters may cover the parents too.

covered (if there is no other claim

The coverage for the entire family

for the family during the year).

is limited to the sum insured. The

Therefore, a family floater makes

premium for family floater plans is

more sense for a young family

typically less than what would be

because each one in a family gets

incurred if one bought separate

a higher cover and the probability

insurance policies for each family

of more than one family member

member. If you have mediclaim of

getting hospitalised in the same

Rs3 lakh for two, a big claim of Rs6

year is relatively low.

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10 Facts About Health Insurance You Should Never Ignore

Corporate mediclaim is Great But...

nsurers still bend over backwards hospitals that are part of their
for group insurance policies for

preferred provider network (PPN).

companies. Members of the

Some retail mediclaim products

group enjoy perks like maternity,

cover maternity, except after a

post-natal care, pre-existing

waiting period of 3-4 years. Those

diseases (PED) without the usual

part of a group mediclaim may

four-year waiting period, dental

like to avoid a separate cover. This

and ophthalmic care, and so on.

may not be wise. The employers

Plus, continuous coverage of

group mediclaim ceases, once you

cashless facility even at high-end

switch jobs or retire. Retirees dont

hospitals. Retail mediclaim from

have that option. Worse, it would

government insurers are offered

be difficult to obtain an individual

cashless facility only at the few

cover at an advanced age.

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10 Facts About Health Insurance You Should Never Ignore

Benefit of a Super top-up

top-up plan, provides

Rs3 lakh, the top-up amount will

additional cover to add

pay only for expenses above Rs3

to your existing cover in

lakh and upto Rs10 lakh. Super top-

an economical way. The thing to

up is also like a top-up policy. The

note here is an amount called the

difference: in the case of a top-up,

threshold level, also known as the

the expenses for a single treatment

compulsory deductible amount.

should be over a threshold,

This is the level above which the

whereas in a super top-up the total

top-up can be utilised to pay for

expenses in a year must be above

the expenses. For example, for a

the threshold level. Between a

top-up amount of Rs10 lakh and a

top-up and super top-up, the super

compulsory deductible amount of

top-up is more beneficial.

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