Humans are hardwired to protect themselves against perceived danger. It could be something as simple as your daily dose of multivitamins to preserve physical health. But do you protect your financial health? There is no magic pill. But a health insurance plan may come close. In times of medical emergencies, don’t let your savings drain away. Just let your insurance provider know about what you need. Should you need hospitalisation, the insurance will kick into full gear. It will send help in the form of a direct payment to the hospital. Or, you could get a lump sum disbursed to you.
Your Health Insurance Premium cost
For a health insurance policy, you pay a fixed premium every year. The amount depends on:
- The demographics: age, income, members you are seeking cover for. A history of smoking, the medical history of the family etc. are also factors that influence the premium amount.
- Pre-existing health conditions: Lifestyle diseases like diabetes or blood pressure are taken as predictors of future health complications. Such conditions would make your premium steep.
- Exclusions and riders stipulated by the company.
- Coverage amount: If the sum assured is higher, your premium will be high as well.
- Plan chosen: Most insurers offer several different options. There can be individual plans, a family floater plan, senior citizens’ plan, or a cashless plan. Each would differ in coverage, terms and conditions, and premium amount.
- Applicable Discounts: For instance, with Reliance Health Insurance, single women get a 5% discount on the premium.
- Organizational Expenses: This includes the expenditure the insurance provider makes on marketing and administration.
- A part of the premium goes towards investments that the insurance provider makes. The returns on these decide the premium amount.
- Medical underwriting: The insurance providers do a risk analysis for products. Medical underwritings help them decide under which conditions can a claim be denied or coverage refused.
- Modified community and band ratings: Community ratings refer to a geographic location. A particular area, its level of economic development, and prevalent lifestyle impacts the health insurance premium. Band ratings encompass many other characteristics like age, profession etc. For instance, professionals in high-stress jobs between the ages 45 and 50 should expect to pay a higher premium than a group of just-employed youngsters between 21 and 26.
However, know that you may be responsible for the co-payment and deductibles when claiming reimbursements. Co-payment refers to the small, fixed amount that the policyholder pays when opting for certain healthcare services. Deductibles indicate the amount you pay before the insurer starts covering your costs. Go online and use a medical policy premium calculator. You will get a more precise idea of what you should expect to pay. Remember, you get standard income tax deductions on up to Rs.60000 under Section 80D (assuming you pay for your dependents’ health insurance plans too).
What costs does your premium cover for you?
A health insurance covers your treatment and health-related expenditure. So, what are the expenses that a good health insurance plan takes care of?
- Pre- and post-hospitalisation: You are not only reimbursed for your hospitalisation expenses. The medical investigations and consultations for the condition that led to the hospitalisation are covered too. Post-release treatment like medicines, follow-up consultations, and therapy may also be covered.
- Prescription expenses: depending on the terms of your policy. You may be reimbursed for prescription medicine and prescribed medical aid like hearing aids.
- Critical illnesses: If your policy provides cover for the same. A health insurance policy may provide cover for specific critical illnesses like cancer. This may include anything from lump sum disbursement upon diagnosis to reimbursement or cashless cover for treatment.
- Services Covered: These may include services like the ambulance service or therapeutic services.
- Daycare treatment: Certain procedures, including surgery, do not require overnight hospitalization. Think of a cataract surgery, where the patient is released in a few hours. Your health insurance should ideally cover those too.
Meeting expenses with a health insurance
Think for a moment. What would you need to pay if you had to meet a medical emergency on your own? For example, Rahul, computer professional got married at the age of 28. At his wife Aditi’s insistence, he bought a health insurance at the time. The annual premium was Rs.5000. He considered this an unnecessary expenditure, since both of them were young and fit. But four years later, Rahul met with a biking accident, which required him to undergo surgery. This led to a total hospitalisation expenditure of Rs.4 lakh. Thanks to his health insurance policy, Rahul didn’t have to pay anything, barring a deductible of Rs.10000. So, his net cost was Rs.30000. That is, the four premiums he paid, and the ten thousand bucks as deductible. Without this protection, he would have had to pay Rs.4 lakh instead! Remember, a health plan may not cover certain illnesses. Or there may be a waiting period for certain pre-existing diseases. In such cases, you have to pay out of your own pocket
If you do not have health insurance, you are losing out. The difference in costs can be massive. Factor in those costs. You will see that the expenses related to a health insurance are quite nominal. Given how health costs are rising day by day, do not flirt with the danger of financial ruin. Get yourself and your family the protection of a health insurance plan today.