By now, you surely have taken a health insurance policy for yourself and your family members. It is not just about the tax benefits under Section 80D but also about the benefits of cashless hospitalization and the peace of mind that it provides. But, like any contract, the health insurance plan is also a contract between the insurer and the insured. That means it is subject to the terms, conditions, find print and the terminologies pertaining to health insurance. What do we really understand by health insurance terminology and what are the health insurance terms to know. Understanding these terms will give you a better hang of the merits and the limitations of your health insurance policy. Here are the commonly used health insurance terms..
If you are a family of 4 then instead of taking a medical policy in each person’s name, you can take a family floater. If you take a health cover of Rs.2 lakhs for each person then most often it is not utilized. Instead, in a Rs. 5 lakh floater the entire family is covered and the cover pertains to the entire family. Any usage reduces the share of the other family members. For the insured it is a lot more economical and focused.
Waiting periods refers to the period during which the health cover is not applicable. For example your health policy will not be eligible for reimbursement within 1 month of the policy date. For other congenital diseases, the waiting period can be longer.
This is the annual premium that you pay for the health cover. It is in the nature of a term plan and has no endowment value. Premiums can be paid quarterly, bi-annually or annually.
No Claims Bonus
If you have a health insurance and you do not claim any hospitalization expenses during the year then you get a no-claim bonus (NCB). Normally, in case of health insurance the premium is not reduced but instead the cover is raised proportionately.
These are certain ailments that explicitly excluded from coverage of the health policy. For example, plastic surgery, Ayurvedic treatment, prosthetic surgery, bariatric surgery is all excluded from the ambit of health insurance.
This is the official contract document that lays down the terms of the health insurance contract between you and the insurer. It contains the list of terms and conditions of the contract and the rights and obligations of both the parties to the contract.
Co Payment is an option given if the health insurance sponsor is more than 65 years of age. Here the insured agrees to pay a part of the hospitalization (normally 15-20%) and the health insurer pays the rest. While co payment can be opted for by any individual, it is compulsory if you are over 65 years of age.
Day care treatment
Normally, you need to be admitted to a recognized hospital for a period of over 24 hours to be eligible for health insurance reimbursement. In specific cases where nursing is required, the facility is also available for day care at home by a recognized nurse.
This is based on the concept of insurable interest in the persons whom you are insuring. An individual can insure his spouse, children and aged parents who are dependent on him. Children above the age of 21 are not eligible for health cover sponsored by their parents.
This is the extra time period that the insurance company gives you to pay the insurance premium in case you have skipped the premium. Normally, the grace period is 3-5 days. During this period, your policy is valid even if you have not paid the premium and hence you can still claim health insurance.
Normally insurance claims involve a detailed documentation process and hence insurance companies outsource this activity to a third party administrator. These TPAs will do the job of processing your claim and also dispensing your cheque, handling cashless claims, interfacing with the hospital, getting approvals from the insurance company etc.
The insurance company provides a list of hospitals that are part of the network. It is always advisable to stick to doctors and hospitals who are already in the network provider list of the insurance company.
In cashless treatment you do not need to pay any cash to the hospital. Of course, the hospital will require an advance approval from the insurance company for this purpose. The hospital may still insist on a small upfront deposit to cover any shortfalls. Cashless is a big boon as you do not have to run around arranging for cash at short notice.
Pre and post hospitalization
Some medical conditions require prolonged treatment and care before and after the actual hospitalization. Medical insurance also covers this pre and post hospitalization costs within certain predetermined limits.
Day care procedures
Normally, insurance companies insist on 24 hours admission to the hospital for being eligible for claiming insurance. However, in specific cases that may not be required if advances in technology have made it possible. Such day care procedures are also admitted for claims.
There is a separate clause on domiciliary treatment by nurses where admission to a hospital is not possible due to unavoidable circumstances. Such expenses are also eligible up to prescribed limits.
Section 80D of the Income Tax Act
Premiums paid by you for medical insurance for yourself and your family are eligible for deduction under Section 80D of the IT Act. Depending on whether you and your parents are senior citizens or not, the total exemption can range from Rs.50,000 to Rs.60,000 effective the budget 2018.