How Health Insurance Protects Your Finances in Times of Medical Crisis

Alex’s son, Joseph, was severely burnt when an electric wire fell on him. Alex works as a junior executive in a retail showroom, and did not have a health insurance policy. His son is barely eight years old and this accident meant that he would need constant care for a long period, probably a year. joan, his wife, was also a junior clerk and they just about managed their finances on a tight budget. This emergency landed them in a tight spot financially.

Unfortunately, Alexis not alone, and many Indians do not have health insurance coverage. According to acko.com, around 75% of Indians pay for medical expenses out-of-pocket. Such high out-of-the-pocket expenses and no health insurance! Why is the majority not taking a health insurance policy? There are many reasons, primarily due to lack of awareness, insufficient funds to pay premiums on time, pre-existing diseases, inadequate hospital networks for cashless claim settlement, and improper handling of cases by Third Party Administrators (TPAs). This is a company appointed by the health insurance provider to manage and process the claim settlements. It is licensed by the Insurance Regulatory and Development Authority of India (IRDAI) and can be associated with multiple insurance companies at the same time.

Investing in health insurance

Health insurance covers medical expenses in case of illness, injury, or hospitalization, and helps reduce the financial burden of healthcare costs. According to statista.com, “…the penetration of health insurance in India stood at just around 35 per cent in financial year 2018. In the fiscal year 2021, nearly 514 million people across India were covered under health insurance schemes. Of these, the highest number of people were insured under government-sponsored health insurance schemes, while individual insurance plans had the lowest number of people…”

To provide relief to lower income group, the Government of India has 17 schemes.
1) Ayushman Bharat
2) Awaz Health Insurance Scheme
3) Aam Aadmi Bima Yojana
4) Bhamashah Swasthya Bima Yojana
5) Central Government Health Scheme (CGHS)
6) Chief Minister’s Comprehensive Insurance Scheme
7) Employees’ State Insurance Scheme
8) Karunya Health Scheme
9) Mahatma Jyotiba Phule Jan Arogya Yojana
10) Mukhyamantri Amrutum Yojana
11) Pradhan Mantri Suraksha Bima Yojana
12) Dr YSR Aarogyasri Health Care Trust Andhra Pradesh State Government
13) Telangana State Government – Employees and Journalists Health Scheme
14) Rashtriya Swasthya Bima Yojana
15) Universal Health Insurance Scheme
16) Yeshasvini Health Insurance Scheme
17) West Bengal Health Scheme

History of Health Insurance in India

Despite low penetration, modern health insurance in India goes back to 1948 when the Employee’s State Insurance Scheme (ESIS) provided healthcare services through dispensaries and hospitals. In 1954, a contributory health scheme for central government employees and their families was introduced under the central government health schemes (CGHS). Central government employees also contribute a nominal amount per month based on their pay scale for this scheme.

These two health insurance schemes benefit people in government jobs. ESI covers industrial employees who earn less than Rs 21,000 per month. CGHS covers current and former central government employees and their dependents.

There are pros and cons to these schemes as well. They provide cashless medical treatment to the beneficiaries in empaneled hospitals and dispensaries across the country. They cover medical facilities such as consultations, investigations, medicines, surgeries, maternity care, etc. They offer health insurance coverage of up to Rs 5 lakh per family per year for secondary and tertiary care hospitalization. They also provide certain cash benefits, such as sickness benefit, maternity benefit, disablement benefit to the ESI beneficiaries.

However, these schemes have limited coverage and do not include private sector employees, informal workers. There is a complex and cumbersome registration, verification, reimbursement process. Besides, the shortage of hospital staff in networked hospitals, infrastructure, equipment, medicines, affects the quality of care. The beneficiaries are not fully aware of their entitlements, benefits, procedures.

Looking at the evolution, General Insurance Corporation (GIC) launched a health insurance scheme in 1986. After liberalization in 1991, private players entered the market with various products and services. Today, there are many reputable health insurance providers in the market. Given the lifestyle changes, health insurance becomes imperative.

According to a report by the World Health Organization (WHO), non-communicable diseases (NCDs) account for almost 61% of all deaths in India. These include diseases such as diabetes, cardiovascular diseases, cancer, and chronic respiratory diseases. Treatment for these diseases can be expensive, and health insurance can provide a cushion against the financial burden.

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some factors to consider when buying health insurance policy:

Age and health status affect the premium and coverage of your policy. You may also have to pay a higher premium or face a waiting/cooling period for pre-existing conditions or chronic illnesses. For most insurance providers, the waiting period is two years. Some of the diseases or emergency conditions that are covered even before the minimum cooling period are: Accidental injuries, Cataract, Hernia, Joint replacement, Kidney stones, Piles, Sinusitis, Tonsillitis.

Hypertension and Diabetes are the most common pre-existing diseases covered by health insurance policies in India, but they are covered in high premium insurances. It’s important to note that pre-existing diabetes and hypertension may not be covered if they were not declared at the time of policy purchase. There might be a clause of co-payment clause for the pre-existing diseases. You may also have to undergo a medical check-up before buying a policy.

According to policybazaar.com, in 2019 IRDA passed a new rule under which health insurance plans in India cover the cost of robotic and bariatric surgeries. However, you need to look at the finer details with the insurance provider and the hospital.

Budget and needs: You should compare different plans and check the coverage, benefits, exclusions, sub-limits, co-payments, deductibles, etc. You should also check the claim settlement ratio and customer service of the insurance company.

You can check if your insurance provider offers treatment facility at hospitals accredited by the National Accreditation Board for Hospitals and Healthcare Providers (NABH). Your family doctor can also guide you. This might benefit you with cashless treatment facility, higher reimbursement amount or lower co-payment for your hospital expenses, better care and patient safety.

Family members: Consider buying a family floater plan that covers dependents such as spouse, children, parents, etc.

Types of plans: Choose from individual plans, family floater plans, senior citizen plans, critical illness plans, maternity plans, etc. If you want cashless treatment at any network hospital without paying out-of-pocket, choose a cashless Mediclaim facility.

Network of hospitals: Check the network of hospitals that are empaneled with the insurance company. Check if the specialty hospital of your desire is covered or not, as you may have to go to that hospital during a medical emergency.

Not all policies cover master check-ups, only some policies may cover master check-up or preventive health check-up, subject to certain limits and conditions. In such cases, the TPA may provide cashless or reimbursement facility.

All that you must know about claim processing

It is advisable to read your policy document carefully and understand the scope of coverage, exclusions, and sub-limits of your policy. You can also contact your TPA customer care or visit their website to know more about the benefits and features of your policy.

Does the insurance cover the entire hospital bill? Will the TPA settle it all? The TPA does not pay the whole hospital bill, but only the amount that is covered by the health insurance policy. The policyholder has to pay the remaining amount from his/her own pocket. This may include co-payment, deductibles, non-medical expenses, sub-limits, exclusions.

Sometimes the patient faces difficulties in getting the claim. The common challenges include lack of awareness, delay in claim processing, and service-related issues with TPAs. To resolve these issues, patients or their family members should first connect with the insurance advisor and company, then the TPA. If the issue remains unresolved, they can register a complaint with IRDA at complaints@irdai.gov.in or call Toll Free Number 155255 (or) 1800 4254 732. Website: https://irdai.gov.in/

Health insurance is crucial as it provides the advantage of stress-free recovery and access to better facilities. Despite challenges, there are private players and government schemes in place for people in low-income brackets. Therefore, it is imperative to invest in a health insurance policy that provides adequate coverage and benefits, without compromising on affordability.