Jagoinvestor

August 4, 2011

11 Health Insurance Myths which you thought were True

Health Insurance sector is such a new thing in India that a lot of people have dozens of health insurance myths regarding various things and because of that they feel that this whole thing is so complicated. Today I will burst some of your long-term medical insurance myths which will help you choose right products and also build right expectations from health insurance policies.

 24 hours Hospitalization is necessary for making a Health Insurance Claim.

This clause always reminds me of an incident. A little over a year ago, we were having our weekly meetings, when a doctor friend who owns a hospital in Mumbai frantically called us. A woman was making a ruckus in this friend’s hospital, insisting doctors continue hospitalization of her son and discharge only after 24 hours, as her “advisor” had informed her that they would get the claim only if the hospitalization is over 24 hours. This incident brought to light the magnitude and the level of fallacies customers have about Health Insurance. Advisors, Representatives, Telemarketers, and even hospitals and customers have frazzled their throats out on the 24 hours clause, while explaining or even using the product.

Though, the policy does mention this as one of the clauses, the 24 number in real world of claims holds lesser importance. The clause, in spirit, requires the hospitalization to be “necessary” more than it to exceed “24 hours”. This was purely from the general understanding that most hospitalizations less than 24 hours are treated under “Out-patient” (treatment at the Doctor’s Dispensary) not covered under a Standard Mediclaim. Hospitalizations (like Cataract), though required 2-3 days earlier, which are now possible due to advancement in medical science in less than 24 hours are covered, while, hospitalization by an insured for more than 24 hours for getting his routine diagnostic tests done, while no active treatments are being carried out, would not be payable under Mediclaim.

Conclusion

The thumb rule of a whether a claim is payable is not 24 hrs hospitalization but whether the hospitalization was medically “necessary” or not?

You must compare Pre-existing waiting period, always.

This is a clause that most people looking for a Mediclaim are confused about (17 Most asked questions in Health Insurance). I speak to many customers whose requirement with mediclaim is that they do not want a waiting period for pre-existing ailments. This, in spite of their entire family being completely fit, without any ailment, whatsoever. Somehow, the clause again being so popular has brought in its own confusions for customers. In reality, the 4 year Pre-existing exclusion on ailments is applicable to ailments existing at the time of applying for the policy, and not any other ailments. If you do not have any ailments or conditions, you have no pre-existing waiting period.

Conclusion

When applying for a Mediclaim, if you are completely healthy, the Pre-existing exclusion clause is not applicable to you

Cashless is an on-call Emergency Service.

Ever since it was introduced as a value addition to Mediclaim, Cashless has remained a buzz word. To a level, that for a lot of people, Cashless became a prefix, or, even synonymous to Mediclaim. The reason for the cashless concept getting popular was obvious; it was a great value add, which helped customers tide away the burden of large payments on their bank account, documentation and of course, the stress of waiting for the claim cheque. Yes, Cashless can do all this, but expecting it to work when there are emergency funds required for Hospitalization is asking for too much.

You should understand the Cashless mechanism as a concept to know why it cannot be depended on at the time of emergencies. Cashless is an arrangement between the Health Insurance Company/TPA and the Hospital where, the Hospital agrees, under contract, to grant credit facility to the Insurance Company/TPA against authorized claims. Such an arrangement is only for authorized Claims, and not for all claims. TPAs/Insurance Companies, hence, need to assess every claim received, against the policy terms and conditions, to authorize payment. Such an authorization could require additional information as well as documents and hence can take anywhere for 4 hours to 2 days of time. In their role, the TPA or the Claims Team at the Insurance Company would have to do its job of evaluation of the claim, irrespective of how urgent the medical admission or treatment is. Cashless will help you save the burden of processing a reimbursement claim, but it cannot provide you the convenience of on-call emergency funds.

Moreover, one should also note, unlike the hospital cashier, Insurance Desks in hospitals (which coordinate for cashless claims) have fixed work-hours from 10.00 AM to 7.00 PM. Cashless process and approvals after 07.00 PM are processed by the Hospital the next day. Hence, though the TPA provides 24/7 service, the cashless process may not move, once the Hospital stops working on it.

Conclusion

Expecting Cashless to work as an on-call Emergency Service is foolish. You should plan your emergency medical fund, as well as ensure you have good unutilized credit card limits, always.

You must compare no. of Day Care Procedures covered

Most Insurance Companies (specially the Private ones) flaunt a large list of more than 100 Day Care Procedures being covered under their policy. In fact, it is a highlight of their product pitch. The truth is comparison of such numbers can be very misleading. One company could list every procedure, while another could list macro-level treatments, including the listed procedures of the former. For instance, a person who compares Apollo Munich’s Easy Health Insurance which covers 140 Day Care procedures, with an Oriental Happy Family Floater which covers only 26 procedures would feel that Apollo has wider cover on Day Care Procedures. Believe me, but it could actually be the reverse. How? Oriental promises to cover Eye Surgery (a broader definition) in its daycare list, compared to say an Apollo which lists 15 specific eye treatments, which results in a larger number. Now, if the treatment being carried out is an eye surgery, which is day care but not a part of the 15 specific treatments, Apollo or many other Private players may not pay, whereas, in the case of Oriental it would get paid in the broad definition of eye surgery. By providing a specific list of surgeries instead of a macro area of treatment, the coverage under Apollo may actually be more restrictive in the long run than Oriental’s wide area of treatment wise list.

Conclusion

A short list of procedures could be wider than a long one. Do not compare the no. of Day Care Procedures.

You should check the list of Network Hospitals.

Many customers, we have interacted with demand Hospital network lists. They select the mediclaim product depending on whether their preferred hospitals are part of that Insurance Company’s list. What they fail to realize is that a Hospital Network is ever-changing. Insurance Companies regularly blacklist defaulting Hospitals. Hospitals blacklist or refuse cashless of certain Insurance Companies/TPAs for delayed payments. What is clear from this is that there is no fixed or contracted list of hospitals between your Insurance Company and you – which means there is no assurance that the hospital name in the list, which you are depending when you buy the policy, would exist in the network when you have a claim, say 4 years down time.

Conclusion

Network List of Hospitals are not fixed or contracted through policy terms. Do not depend on the network hospital list to decide a suitable product for your family. The list could change even tomorrow, in fact it could change any moment.

Capping on Room Rent is bad:

Public Sector (PSU) Mediclaim products and their current terms and conditions are evolved from experiencing and analysing millions of claims spread over more than 20-25 years. Hospital Rooms are classified into various categories like General, Shared, Private and Deluxe Rooms. Earlier without the room rent limits, for the same treatment, a person with a sum insured of 1 Lakh paying a measly premium of say Rs. 2000, would have access to the same category of room, as a person who pays 5 times the premium, and takes a Rs. 5 Lakhs cover for himself. The 1% and 2% Room Rent Limits in Mediclaim brought a clear sync between the kind of premium one pays and the eligibility of room. With such cappings, an individual who pays a high premium gets a better room, than one who pays a smaller premium, for the same treatment, which is fair. It’s like any other product with categories, like Indian Railways, providing you better facilities/services, as you move from 2nd Class to 3rd AC to 2nd AC and so on. In my opinion, sooner or later, Insurance Companies would either have to hike premium for lower sum insured or bring in a capping of some kind. For instance, the newest health insurance company – Max Bupa, has a restriction on the type of room according to the sum insured selected, instead of a “no capping on room rent” feature.

Conclusion

Cappings are good for Health Insurance as a community fund. Cappings could actually be helpful to customers in the long run.

Health Insurance Plans sold by Life Insurers are the same

The highly advertised Health Plans from LIC are Defined Benefit Health Insurance Plans, sold as “hassle free” alternatives with guaranteed payments. These plans should not be considered as a substitute to Standard Health Insurance plans sold by General Insurance Companies. These plans provide fixed benefits against no. of days of hospitalization and/or surgeries. These plans do not take care of healthcare inflation. For instance, with 18-25% healthcare inflation, a fixed benefit for Angioplasty at say, Rs. 1,50,000/- would miserably fall short in 10 years. Defined Benefit products are actually supplementary plans which provide a cover over allied costs of hospitalization including loss of earnings, if any, but such products surely cannot be a substitute to the good ol’ traditional mediclaim. Read more about the difference here.

Conclusion

Beware of what you buy. A Traditional Mediclaim should be the first product you buy to cover the financial risk of healthcare expenses of the future. Defined Benefit Products are supplementary and not substitute to Traditional Health Insurance.

Health Insurance is a Tax Saving Tool:

A large Healthcare expenditure can severely affect your financial planning for the future. The goal when you buy Health Insurance should be to financially insure your family against such large scale healthcare expenditure. Buying a health insurance product blindly, for the 80D tax benefits, is a wide-spread fallacy, which has left a large no. of people underinsured or insured with products which are not suitable. The worst part is most of them are unaware of this.

Conclusion

Health Insurance at its core is not a Tax Saving Instrument. It could save you much more than your tax, if you invest wisely.

There will be no changes in the terms of the Mediclaim I bought:

Expect changes in your product, terms. Don’t be surprised. The Health Insurance companies and other stakeholders in India are going through a mindset change. Losses in Health Insurance are no longer acceptable by key stakeholders at Insurance Companies. A lot of streamlining and normalizing in premium, terms, benefits and procedures, which have already begun, is expected in the next 5 years. Group products would turn expensive, and restrictive. Parents would be out of most Sponsored Employee Mediclaim Covers. Large and small tweaks are expected in Retail/Individual products and processes, especially from new and private players who are till experimenting and understanding how to make a long term sustainable (read profitable) product for the Indian market.

For instance, last year, PSU Insurance companies tightened the procedure of intimation and submission of reimbursement claims. Customers who were not aware of such a change faced harsh action of denial of claims, and lost good money. 

Conclusion

Ensure you are updated with changes in the terms and procedures of your Mediclaim Product. Ensure you have recruited a good advisor who keeps you posted on such changes.

I can destroy Mediclaim Policies once they have expired.

Don’t know how many of you have observed at the time of renewals, but PSU companies and their divisions are infamous in the industry for changing their TPAs year over year. With TPAs being the custodian of claims, change in TPAs could result in scattered claims information amongst various TPAs across years of continuous renewals. Hence, when there is a claim, the TPA in all probability won’t have information regarding how long you are continuously covered, an essential data point to approve claims, especially, and those treatments which had a waiting period at entry into the policy. TPAs for evaluation of continuity may demand policy copies of past 3 to 4 years. Hence, destroying policy copies records have cost many customers lot of stress in proving continuity of cover. Yes, we know that it is ridiculous for the Insurance Company or its representative to ask for their own record from the customers, but then this is how it is. A good health insurance advisor knowingly would keep a repository of all policy copies, to ensure such queries do not create roadblocks in a smooth claim settlement.

Conclusion

In addition to the current one, keep copies of at least 3 previous year policy copies. Ensure your advisor also records them.

My Friend, My Health Insurance Advisor

No offence to agents, but in our interaction with Customers, we have noticed time and again, that most customers, who were found with a wrong health insurance product, bought these either from a friend, a friend’s relative, or a relative, or a relative’s friend. Most of these customers did not spend enough time in selecting an advisor, and relied on pure reference. Most of these agents selected were Life Insurance agents, who did not have a detailed understanding of mediclaim products, neither were they providing any real expert assistance (beyond picking of forms, and providing the TPA’s no.) at the time of claims. The advisor selected should have the capability and the intention to provide unbiased advice, the advisor should forever own the product they sold you, and provide services across the Health Insurance service cycle, including Purchase Assistance, Records management, Claims Assistance and Renewals. A good advisor would be able to hand hold you through the dynamic transformation that the Health Insurance industry in India, is witnessing and will continue to witness for the next 2-3 years.

Conclusion on Health Insurance Myths

Select an advisor on merits and the services he demonstrated, and just not merely on reference.

 

What was the biggest and most valuable learning for you out of this article ? How many of your health insurance myths were really broken ? Please share it on comments section .

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Vinit
Vinit
8 years ago

Sir,
I have query about the hospital daily cash and Convalescence Benefit.As I have a mediclaim policy from ICICI Lombard and admitted in a hospital on 28/09/2015 at 11.29 a.m and discharged on 07/10/2015 at 9.40 p.m. As its cashless hospitalization.ICICI Lombard ows my hospitalization expenses well.But not paying me the Convalescence Benefit.Which was mentioned in policy documents as well as ICICI Lombard website also.Which was given below.

Hospital Daily Cash and Convalescence Benefit
Hospital Daily Cash:
A certain amount (as per the plan chosen) will be paid for each and every completed day of hospitalization, if such hospitalization is atleast for a minimum period of 3 consecutive days and subject to a maximum of 10 consecutive days.

Policy Sum Insured (Rs.) Benefit per member ( Rs.)
2 Lac 500 per day
3 Lac / 4 Lac / 5 Lac 1000 per day
7 Lac /10 Lac 2000 per day

Convalescence Benefit:
A benefit amount of Rs.10,000 will be offered to every insured once for each Policy year and insured will be paid in case of hospitalization arising out of any Injury or Illness as covered under the policy, for a period of 10 consecutive days or more.

Now the customer service team says that my hospitalization for 9 days only.As hospital charged the room rent for 9 days only.Where as hospital charged the doctors visit charges for 10 days and as far as my self is concern I am eligible for both benefits as I occupied the hospital bed for 10 days and not joined my services for more than 10 days.

Kindly help about the above issue and let me know that how i would get my entitlements.
Regards and thanks in advance.
Vinit Garg

nikhilk.saini
nikhilk.saini
9 years ago

A pretty educating article. I have a query.
I am covered by a group medical insurance of my company with a maternity benefit of 90000 and my wife company covers her with a maternity benefit of 100000. So now if the total amount for delivery comes to 1.4 lakhs. Can we claim the amount from both the insurance companies. If yes, then is there a laid down procedure for claiming the amount like which company should we claim first?

Thanks

vikrant
vikrant
10 years ago

Wonderful article Manish, of great worth to a layman. I have one question. The diagnostic tests’ done prior to admitting a person for further treatment, are they covered under claims by the Insurer’s. My father has BOI swasthya bima policy running in its 4th year now. We would be getting him diagnosed for some cough issues he’s having.
Pls. advise.
Thanks.

Peter
Peter
11 years ago

And just to add, my kid was admitted in a all together separate nursing home since the one where my wife was admitted did not have NICU facilities..

Peter
Peter
11 years ago

Hi Manish,

I did not know where to post my query, i thought this was the right place..I have a medical Insurance from my company with ICICI, we recently had a baby and the maternity bill was 36K and my baby was admitted in NICU since my wife is diabetic, and that bill came to 15K, now the company is just paid us 40K as per maternity limit, and not paying up the rest, saying that no treatment was done.. My kid was admitted for under observation, since mother is diabetic.. and when she was born she sugar levels were on the lower side, and they had to give her oral glucose and kept the kid under observation for 2 days, regularly checking her sugar levels… The mediassist guy is saying since no treatment was done and the kid was only under obv, the amount can be paid and will be covered under maternity limit only.. Kindly advice if this is correct ?

Pooja CHaubey
Pooja CHaubey
11 years ago

hi,
excellent article… eye opener.. i have united india mediclaim policy as a family floater covering myself spouse and 1 kid. apart from it my husband has medical insurance coverage from his company. would you recommend to take indiviual policy or additional family floater policy. pls suggest

sreenivasan
sreenivasan
11 years ago

hi manish, I have 10 LIC policies which was initiated by my father and he is no more with us. I don’t know how many, but most of my policies are covering accidental and death benefits as i read it thru websites. Recently, my friend was saying me that in case of multiple policies my nominee can avail death benefit from only one policy, like that…is it true?

sreenivasan
sreenivasan
Reply to  Jagoinvestor
11 years ago

thank you manish…

sreenivasan
sreenivasan
Reply to  Jagoinvestor
11 years ago

I have a slight confusion on your reply…you are saying all companies…but, iam talking about same company(LIC), where i have multiple policies…pls clear me

Ashok Gupta
Ashok Gupta
11 years ago

I recommend Aviva’s health insurance plan to everyone. After being a customer of Aviva for three years, I can say that it is definitely one of the safest and best health plans in the market.

Dishant Verma
Dishant Verma
11 years ago

Manish

I would like yo thank you for this article. It will surely help me in choosing a right health insurance.

Zubair
Zubair
11 years ago

Hi Mahavir, I have a happy family floater (GOLD) policy of oriental, Now that the time has come to renew the policy, I am thinking of adding my mother as well in this policy. will it be good to add her in this policy or take a standalone policy for her. Her date of birth is 2/06/1951
she has following existing ailment
diabetes mellitus type 2, Hypertension, OA Knee.
Let me know which plan I should be consider for her.
Thanks

Ravi
Ravi
12 years ago

I thank you for your most valuable inputs.
I hold one individual mediclaim policy and also covered under Group mediclaim from my employer (Both schemes are of cashless)
In case there is claim (whether planned or unplanned treatment), kindly clarify on the below
1. Can I claim only from the group insurance covered by my employer.
2. Do I have to inform both insurance company
3. what is the pros and cons wrt to above two points.

Kapil
Kapil
Reply to  Ravi
12 years ago

Ravi – why don;t you put up this question in the forum. It will have a larger visibility when compared to comments section.

Mahavir Chopra (Medimanage.com)
Mahavir Chopra (Medimanage.com)
Reply to  Ravi
12 years ago

Hi Ravi,

1. You can claim from the insurance policy of your choice. Do check whether the treatment/ailment is covered, before putting up a reimbursement claim (where you pay first), to avoid back-n-forth of documents from one insurer to you to another.
2. Ideally, as per policy conditions, and principles of insurer, you are supposed to claim proportionately from both companies. It does not work in real life, hence you need not inform. Having said that, it is good to make a procedural claim intimation to both companies, in case you need to make a claim to the other company later.
3. Didn’t quite understand your question.
4. It is better to claim from the group policy, as you will earn No Claim Bonus, discount and avoid loading in your individual policy.

Regards,

Mahavir Chopra (Medimanage.com)
Mahavir Chopra (Medimanage.com)
Reply to  Mahavir Chopra (Medimanage.com)
12 years ago

Apologies….

principles of *insurance.

Mahavir Chopra (Medimanage.com)
Mahavir Chopra (Medimanage.com)
12 years ago

Hello Ashish,

Yes, Public Sector companies do have 2 advantages for consumers. 1) They have huge reserves 2) They are government owned and hence have a social mission other than profits. The flip side is PSU companies are lethargic many a times. If you don’t have a strong advisor, you would face huge issues with them. Private Insurers have different challenges, when you look at very long term (say 20-30 years from now)

Choosing which player to go with, is a personal choice. You need to find a good health insurance advisor and then discuss your needs and requirements in detail with him to zero on a player.

Ashish
Ashish
Reply to  Mahavir Chopra (Medimanage.com)
12 years ago

Thanks Mahavir for the information. But I could not understand what you meant by “Private Insurers have different challenges, when you look at very long term (say 20-30 years from now)” ..

Ashish
Ashish
12 years ago

Hi Manish, thanks for the great information. This really helps us to be an informed consumer.
I do have a confusion, where I thought you can throw some light on:

I am confused between Private (Apollo Munich, Max Bupa .. etc) and Public (National, Oriental .. etc) companies for medical insurance. I want to take it for my parents (49 and 46) along with critical illness rider. I have heard that since a lot of the insurance business is loss-based, it is safer to go with Public companies. It is tougher to get a claim from private companies, as compared to govt companies. Is that true? What are the other important considerations that should be taken while deciding between private and public player?

Thanks

LICAgentJaved
LICAgentJaved
Reply to  Ashish
12 years ago

Hi Mr Ashish
Private Health Insurance Companies are also paying claims and Govt Companies are also rejecting claims, you cannot take it granted all claim will be paid by Govt. company.
Standalone Health Insurance companies are doing good business and are doing only one business .i.e health insurance in which they have experties.
So choose high SI, better coverage, life long renewal, also low premium per lac of SI etc etc.
Javed

Mahavir Chopra (Medimanage.com)
Mahavir Chopra (Medimanage.com)
12 years ago

Hello Rahul,

1. A Floater Policy does not lapse, on demise of the senior person. On renewal, anyone else under the policy can become the proposer and continue the policy. Yes, if there is only a single person left in the policy, it could be renewed with continuity of waiting periods to an Individual Policy. All in all it does not affect your cover.
2. Yes, you can get a good cover for your parents under Oriental Happy Family Floater. In fact, you can also get your wife and you covered under the same Oriental Happy Family Floater policy, and take a larger coverage.
3. The other option is Max Bupa Family First – Gold, which will cover all your family members under one policy, but it is expensive, if you cover your parents in this policy.
4. Ensure, your advisor is experienced and provides you services at the time of claims, related to follow up with Insurance Company/TPA, and also coordination for paper work.

Rahul
Rahul
Reply to  Mahavir Chopra (Medimanage.com)
12 years ago

Hi Mahavir,

Thanks for the advise but I am not able to find out any clause in Policy wording even for apollo or star that states that policy will not lapse or it will be transferred to second senior most person incase first person dies.

I have seen TV Programs in which they insist to take Individual giving above factor as main reason. It is good for younger family but in later age it will be problem.

I am desperately looking to take Health Insurance for my family but in doubt weather to go for FF or Individual.

Will Oriental FF for 6 Lacs for Parents & myself and Apollo Munich (FF) for 3 lacs for my wife & me with be good combo.

Please suggest.

Rahul
Rahul
12 years ago

I am 27 Year old,recently married. Me & My wife both are working with monthly salary 25K+.I am planning to take Health Insurance for myself & my wife. Please suggest me if i should go for Individual or Family Floater.My dilemma is that as per some sites & TV programs, Individual is better.As per these programs, if senior most person dies , whole policy get lapse and other member has to take new policy with fresh exclusion period & pre-existing disese not getting covered.

How much true is this? As as per some policy persons from Apollo & star- next senior most person get covered automatically with individual plan with existing exclusion period and pre-existing disese period.

Kindly suggest.

Also,I want good health Insurance cover for my Father, Mother & Younger Brother. My working mother retiring in 2018 has taken Health Insur from National Insur (FF) for 3 lacs in Jan,11 with Premium is 12K per year.But recently Someonetold me that this plan is not good and one member can’t claim more than 1.5 lacs & offered me that i should take 6 lacs FF from Oriental on my name with covering my mother & father & 3 lacs apollo munich on my wife name. So that we both ( me & my wife) get good cover along with tax benefit , which as per him we need much then my mother.

Is it correct. I know you yourself not recommend any health insurance product,but Please help me by giving right suggestion as i am totally confused from last 1.5 months and not able to finalize ?

Mahavir Chopra (Medimanage.com)
Mahavir Chopra (Medimanage.com)
12 years ago

Hello Jayesh,
Bank Mediclaim is not a long term solution to cover the risk of large hospital/healthcare expenses in the future. The product is not suitable for the young, hale and hearty, who have a good choice of better long term products to choose from. We would recommend Bank Mediclaim to ONLY those do not have a choice.

I have written a blog on Bank Mediclaim here: http://bit.ly/nRd8vw

Jayesh Trivedi
Jayesh Trivedi
12 years ago

Dear Manish,
pls go through the july issue of money life magazine. They have mentioned family floater policy offered by some banks which is cheapest . Pls throw some light on it. Is it trustworthy or can we take this policy

karthik
karthik
12 years ago

Manish.. wonderful articles..

please throw some light on maternity health insurance…
seems MaxBupa is offering it….

Rakesh
Rakesh
12 years ago

Manish,

Nice points, cleared some of my doubts.
Keep up the good work.

Rakesh

Vinod Krishnan
Vinod Krishnan
12 years ago

Hi Manish,

Thanks for enlightening a lot of us out here. This is very helpful.

A few questions that I have been carrying along for a long time and because of which I haven’t purchased a health insurance yet – If I have a health insurance and a top up with a pretty decent cover from my employer why would i still need to buy health insurance on my own?
a. In case I move to a different employer or am in between jobs etc – I would need it
b. I don’t have many pre-existing illness and so if I insure now the coverage would be better
Are there any other reasons because of which I should buy now?

Does the premium of the health insurance change from year to year (or in slabs) as you grow older? and also when you make a claim?

If you don’t claim (since I am covered under employer’s plan) are there plans which give you a rebate on premiums? – Most Health Insurance bump your coverage by x% until you make a claim which doesn’t sound that useful at least to me.

Vinod