Know the A to Z of Health Insurance

Health insurance plays a vital role in financial planning, yet it remains the most neglected aspect. Without health insurance, we would have to borrow or withdraw a significant amount from our savings during a medical emergency. Therefore, health insurance safeguards our financial journey. (Featured image credits: Photo by Olya Kobruseva)

In this Blog…

Let’s make an effort to understand the different jargon, terminologies, and features in health insurance. This understanding is crucial for comparing various plans and policies in the marketplace and identifying a suitable product for ourselves.

IMPORTANT NOTE

I have defined the various jargon and features, incorporating hypothetical examples where possible. However, the exact specifics, definitions, applicability, or limits of these features are shared in the policy wording document. To obtain specific details, you should refer to the policy wording documents of your prospective insurance policy.

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Contents of this Blog

Jargon, terminologies and features in Health Insurance
Conclusion

Jargon, terminologies and features in Health Insurance

AYUSH Benefits

AYUSH stands for Ayurveda, Yoga and Naturopathy, Unani, Siddha or Homeopathy systems.
These are alternate forms of treatment.
This benefit covers the medical expenses for treatment taken under AYUSH.

The insurance company would have one condition: the same insured person will not receive payment for allopathic treatment for the same medical condition.

Black Listed Hospitals

Insurance companies blacklist hospitals that are found indulging in corrupt practices such as:

Overcharging patients with Health Insurance.
Inflating the bills submitted to insurance companies.
Performing needless surgeries and procedures with the sole purpose of charging exorbitant medical bills.

Your insurance company will deny claims (cashless or reimbursement) for treatments availed at any of the blacklisted hospitals.

Cashless Facility

This facility enables you to receive treatment in a Network Hospital registered with the health insurance company without paying the bills upfront.
You only need to provide your insurance details to the “Insurance help desk” at the network hospital.
The hospital then connects with the health insurance company with details of the treatment and seeks the necessary approvals.
The Insurance company directly pays the hospital for the treatment.

Claim Settlement Ratio (CSR)

The ratio of claims approved to total claims received
The higher the CSR the better for the policyholders.
An insurer with a CSR of 80% indicates that for every 100 claims, 80 are honored and paid, and the remaining 20 are rejected.

Co-payment

This mandates that the policyholder will bear a predefined percentage of the claim.
Insurance companies commonly apply this arrangement to Senior citizen health insurance.

Complimentary Health Check-up

Health insurance companies provide the insured person with a free medical check-up as an incentive to renew the plan.
You get a free health check-up after two successful renewals, and this does not affect the premium amount when the policies are due for renewal.
The frequency of the medical check-up (i.e. annual or once in 2 years, etc.) depends on the terms and conditions of a particular plan.

Cumulative bonus

The health insurance company provides a cumulative bonus when the insured does not claim in the previous policy year.
You can accumulate this bonus year after year.
The bonus results in an increase in the sum insured or a discount on the premium payable, or a combination of both.

Critical Illness

Critical illnesses are relatively more serious forms of illnesses that are difficult to treat and require more time and money for treatment.
These situations involve higher expenses and a longer period of absence from work for the affected person.
Critical illnesses can be life-threatening or lifestyle-disabling.
Standard insurance may not cover these illnesses, and even if covered, it might not be sufficient.
To protect oneself against such critical illnesses, it is essential to take critical illness cover.

Critical Illness Cover

Critical cover is a benefit that helps cover the treatment of critical illnesses.
One of its key features is that hospitalization is not required; the diagnosis alone is enough to get the critical illness benefits.

Day care procedures

Day care treatments require an admission of less than 24 hours.
Policies that cover day care treatment will reimburse you for the expenses incurred in such treatments.
A complete list of permitted day care treatments is available in the policy wording document.
Insurance companies may not cover these procedures if the treatment is done at a health care facility other than a hospital.

Domiciliary Treatment

Patients receive treatment at home, which would have otherwise been done in a hospital.
This situation may arise when a patient cannot be taken to the hospital due to their inability to do so.
However, this must be done on the advice of a medical practitioner.

Emergency Ambulance

The health insurance policy covers the expense of an ambulance provided by a hospital or ambulance service to transfer the insured to the nearest hospital with adequate facilities following an emergency. However, this benefit is subject to the condition that the insured should have been accepted for In-Patient hospitalization.

Check my detailed video on Ambulance Claim.

Free Look-up Period

This feature is mandated by regulation, providing you with a valuable opportunity to review and understand your purchased policy.
If you feel that you misunderstood or were mis-sold the plan, you have a second chance to return it within a 15-day window.
During this period, you can assess the policy and request a refund of the premium, after deducting the cost of medical check-up, insurance cover for that period, and stamp duty charges.
It’s essential to note that the free-look period applies to first-time purchase and not to renewals.

The policy will terminate upon payment of this amount. For more details on this regulation, you can refer to the policy document.

Incurred Claims Ratio (ICR)

The health insurance company calculates ICR by dividing the total value of all claims paid by the company in a specific period by the total amount of premium collected during that same period.
ICR serves as an indicator of the company’s ability to pay claims.
If the ICR is greater than 1, it means that the company has to pay out more towards claims than it earns through premium from policyholders.
In such a scenario, the company may face challenges in sustaining itself and might struggle to honor payments in the future.

In-Patient Treatment

This component covers the expenses of:

Room Rent, Boarding Expenses
Nursing
Intensive Care Unit (ICU)
Medical Practitioner expenses
Anaesthesia, Blood, Oxygen, Operation Theatre Charges, Surgical appliances
Medicines, Drugs and Consumables
Diagnostic Procedures

IRDA

IRDAI is The Insurance Regulatory and Development Authority of India.
The IRDAI regulates and promotes the insurance industry in India.
All insurance companies, agents and brokers work in compliance with the IRDAI.

Lifetime Renewal

To enjoy continuous coverage, policyholders must renew their health insurance at the end of every policy year.
However, insurers may not offer lifelong renewal, and renewals may stop after a certain age, typically around 65 or 70.
The option of lifelong renewal allows individuals to enjoy the benefits of health insurance throughout their lifetime.

Network Hospital

Health insurance providers have tie-ups with certain hospitals to offer cashless facilities to their policyholders.
When insured individuals are admitted to these hospitals, they don’t need to worry about arranging money, as the insurance company directly bears the cost.
This relieves both the policyholder and their family members from the burden of arranging funds for hospitalization.

Check my detailed video on Network hospitals.

Non-Network Hospital

This is the opposite of what we saw in Network hospital

An insurance company cannot tie up with every hospital in the country.
Hospitals that do not have tie-up with an insurance company are called as Non-Network hospitals.
When you seek treatment at these hospitals, you cannot avail cashless facilities.
Instead, you have to pay for the expenses upfront and later claim reimbursement from the insurance company by providing the necessary bills and documents.

OPD Cover

Normal insurance policies cover hospitalization expenses, excluding OPD-related costs such as dental procedures and diagnostics.
To address these expenses, some insurance companies offer an add-on feature known as OPD cover.
However, only a few companies provide this feature, and plans with OPD cover generally come with a higher policy premium.

Organ Donor

The medical expense of the organ donor treatment for harvesting, with the condition that:

The organ is for use on an insured person
The insured should have been accepted for In-Patient hospitalization
The organ donor is a person in accordance with “The Transplantation of Human Organs, 1994”

Permanent Exclusions

The policy does not cover certain expenses, such as admission solely for diagnostic or evaluation purposes, weight reduction treatment, plastic surgery, infertility treatment, etc.

Pre-Existing Condition

Pre-existing conditions refer to any medical condition or disease that an individual has before buying Health Insurance.
It is essential to declare these details at the time of applying for the policy.
The health insurance company would then impose a waiting period for such conditions or exclude them from cover.

Pre-& Post Hospitalization expenses

Pre-Hospitalization Expenses: Doctor consulting charges, testing and medicine costs before the hospitalization.
Post Hospitalization Expenses: Follow up consultation charges and medicine expenses after discharge

Two conditions that may be needed to cover this expense are:

Expenses should be for the same medical condition as In-Patient hospitalization
The insured should have been accepted for In-Patient hospitalization (or day care procedure)

Normally, there is a certain number of days before or after hospitalization for which expenses can be claimed. For example, pre-hospitalization expenses up to 30 days before hospitalization and 45 days after discharge will be accepted for claims. You can find these details in the policy wording document or brochure of the policy.

Restoration Benefits

It is a benefit provided by the insurance company wherein the original sum insured in the policy year is restored when it gets fully exhausted due to incurred claims.
Even if the entire sum insured is used up, the insured need not worry as this benefit can restore the entire amount for future hospitalization.
One common condition is that the benefit is applicable only for different illnesses and not for the same illness.
Another condition may be that the sum insured and the cumulative bonus are exhausted in a single claim.
Unlike the no-claim bonus, the restore benefit cannot be carried forward to the next year.
This benefit is available for both individual and family floater policies.

It is also known by other jargons like recharge, replenish, and refill benefits.

Sub Limits

This is also known as “capping”. Health insurers place limits (or caps) in their policies in the form of predetermined limits on the claim amount. The sub-limit may be indicated as a percentage of the sum insured or a specific amount. There are different kinds of sub-limits:

Disease Wise Capping: A policy would have a cover of Rs. 5 Lacs, but the insurer incorporates ‘Disease Wise Capping’ which restricts the maximum pay-out for a specific set of illnesses to say, 1 Lac.
Room Rent Capping: Most health insurance companies cap room rent charges. It is important to note that other hospital charges are directly related to the type (shared or semi-deluxe or deluxe) of room opted for by a patient. Hence, the choice of the room has a cascading effect on the overall hospital bill.
Capping on Different Expense Components: There could be capping on expenses like ambulance charges, oxygen supply, physicians’ consultation fees, anaesthetists’ charges and diagnostic tests (X-rays) among many others.

Of these three, room rent limits have a significant impact on your claims. Check my detailed video on the topic.

Sum Insured

Sum Insured (SI) represents the maximum value that your insurance company can pay for a year if you are hospitalized.
Any amount above and beyond the sum insured will have to be paid from your pocket.

Survival Period

This term or clause applies specifically to Critical Illness policies.
It refers to the length of time for which the insured must survive after being diagnosed with the illness to receive the claim or policy benefits.
The insured amount/policy benefits will be paid only after the survival period has passed.
For instance, if a person dies within a few hours following a heart attack, even if they have critical illness insurance, their family may not receive any payout from the insurer as the person did not survive the survival period outlined in the policy.

Third-Party Administrators

Third Party Administrators (TPA) represent Health Insurance companies and facilitate the settlement of claims, both cashless and reimbursement.
They process the claims by using various documents like hospital bills and medical reports.
However, they are not responsible for claims rejection or acceptance.
The insurance company ultimately decides on the rejection or acceptance of claims.

Some companies have their own in-house claims processing departments

Waiting Period

It is the period before you can avail some or all of your policy benefits. This is the period during which a claim is not admitted. There are different kinds of waiting periods:

General Waiting Period
- This is the period between the purchase of a policy and a claim that the policyholder can apply
- It is normally 30 days across all plans
Waiting Period for Specific Diseases
- Policies may incorporate an additional ‘waiting period’ for specific diseases i.e. cataract
- This period is normally 24 months
- The policy document covers the list of such illnesses/diseases
Pre-Existing Diseases
- This is the waiting period for pre-existing diseases by the policyholders
- Example: A person with diabetes may not be able to claim treatment related to diabetics during the waiting period.
- 48 months is the normal waiting period, however, some policies have waiting periods of 24 or 36 months.

Check out my detailed 9 minutes video on Waiting Period.

Conclusion

Navigating the world of health insurance can be challenging, especially with the abundance of jargon and technical terms. However, understanding these key jargons is essential for making informed decisions about health insurance plans and policies. Being familiar with these terms empowers you to choose the most suitable coverage for their specific needs.

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