Health Care Insurance
Healthcare Insurance Awareness in India
Insurance may be defined as the concept of pooling together of risk. Suppose there are 100 people, and each has a risk of 1% of contracting a disease over a one year period. These 100 people come together, each pays 1.15% (say) of the sum insured . Thus the insurance company has collected 115% of the sum insured, with the probability that over a one year period, it will have to pay 100% of the sum insured. This, at a very simple and basic level, is the concept of insurance. It is the aggregation of risk.
Over the last few years, there has been an explosive increase in healthcare costs. While the quality of healthcare has improved dramatically, there has been extreme inflation of medical care costs. Private hospitals with state of the art facilities have come up, but where a room night would cost not less than Rs 5000. Medical procedures have become expensive. The number of medical procedures done for a routine checkup has become far higher. Medical emergency and hospitalization costs can be financially crippling if one does not have medical insurance. Given such a situation, and the fact that we Indians are typically risk averse people, the demand for medical insurance is on the rise.
The following are the health insurance companies in India: Bajaj Allianz, ICICI Lombard, Iffco Tokio, National Insurance, New India Assurance, Oriental Insurance, United India Insurance, Reliance General Insurance, Bharti Axa general Insurance, Apollo, Star, Royal Sundaram, Tata AIG, Cholamandalam, HDFC Ergo, Future Generali, SBI Insurance and Max Bupa.
The coverage is typically categorized under:
a) Cashless Hospitalization
Under cashless, the insured patient does not need to pay the hospital bills but the bills are directly settled by the insurance company with the hospital. It is a great benefit as the insured does not have to go through the hassles of submitting a claim, and waiting endlessly for the claim settlement. However, prior approval from the TPA (Third Party Administrator) is a must before availing the benefits under this option.
There are two types of Cashless hospitalisation:
• Planned hospitalization: In this, the insured is aware about when the hospitalization would occur . For example, if one is going to go through a gall bladder removal surgery, in most cases the date for the surgery would be fixed with the surgeon beforehand.
• Emergency hospitalization: Any unplanned hospitalization arising out of a medical emergency is under this category.
b) Medical Reimbursement
Under medical reimbursement, the expenses incurred during hospitalization are initially paid by the patient and are later claimed by the insured from the insurance company.
Under this procedure, the insured has to bear the expenses incurred during hospitalization which can sometimes be quote a drain on one’s financial situation. Also sometimes the claims take inordinately long to be reimbursed. However, these days, most insurance companies offer cashless hospitalization.
A 2008 survey showed that only 3% of the population had some sort of insurance , but that number is changing rapidly today. Health insurance is projected to grow at a double digit CAGR over the next decade. With a number of specialized health insurance companies setting up shop in India, this is most likely to happen.
We can find many reasons for the low penetration of health insurance in India. One is that there is very little knowledge about the features and benefits of health insurance. The other is the smug belief that falling ill is only something that happens to people one knows, but never to oneself. The third is the point that people see health insurance as an expense without return.
With the insurance sector opening up for private participation, numerous players have entered the healthcare segment, but inspite of the entry of private sector, penetration of insurance coverage in India is abysmally low. The govt has been considering for a long time that they would increase FDI in insurance to 49%, but somehow it seems to get stuck every time.
Essential Guidelines for Availing individual Health Insurance Policy:
The following points should be borne in mind while purchasing an individual health policy:
• Understanding the policy coverage: The insured should have a very clear idea about the sum insured that he is opting for. He should also check whether pre-existing diseases and its resultant complications are covered or not
• Have a very clear idea about the exclusions under the policy. The longer the list of exclusions, the more careful the policyholder needs to be. Some insurance companies employ the trick of reducing the premium, but at the same time increase the number of exclusions.
• To understand whether it is a co-insurance policy: It is better to get an individual health insurance policy with a co-insurance payment option. The maximum amount does not exceed 15% of the entire medical coverage for a particular disease.
• Understanding what is the maximum age for health insurance cover to be eligible: While selecting the health insurance company, one should look at what is the maximum age of the policyholder that the insurance company permits. The higher the maximum allowed age , the better it is. This ensures that you can be covered under a health insurance plan till a late age.
Importance of Health Insurance
The following are the key important reasons for health insurance :
• Provides financial security during medical emergencies. Sometimes, medical emergencies may be financially crippling and have been known to bankrupt entire families.
• Helps one lead one’s day to day life with fewer worries
• Also helps the policyholder to save tax on his income
• Ensures that one does not become a burden on one’s children during old age
• Provides access to quality medical treatment.
• Reduces tensions and stress caused on account of hospitalization.