India’s need for adequate health insurance cannot be stressed upon enough. Nonetheless, with rising medical inflation and new health emergencies coming to light every day, certain factors need to be considered before zeroing in on a policy. The most important ones include the type of coverage, types of treatments, and exclusions among others. Another important, yet often ignored aspect of a health insurance plan is out-of-pocket expenses that one may have to pay. According to a report by Niti Aayog published last year, 63 per cent of all healthcare spending in India is out-of-pocket expenditure. This is among the highest in the world.
However, health insurance is constantly evolving and there are several options available in the market today that minimise out-of-pocket medical expenses. But before going into how out-of-pocket expenses can be minimised, it is first important to understand what these expenses actually are and how they impact the policyholder.
What are out-of-pocket expenses?
Health insurance policies offer numerous benefits to policyholders to cover for the cost of medical treatment. However, there are certain expenses which might not be covered by health insurance. So you need to pay such expenses out of your own pocket. So despite having a health plan, such medical expenses can add up to a big amount if you do not plan ahead and buy a comprehensive policy.
What might not be covered?
If one reads the fine print in their policy, they may notice that there are a few things not covered by it. For instance, the cost of consumables—that is, medical aid and equipment that gets discarded after use—is not covered by most policies. This includes PPE kits, syringes, gloves, etc. Also, OPD (Out Patient Department) costs had also been traditionally excluded from health insurance plans.
If you have chosen a policy with deductibles, the insurance company covers the expenses only after you’ve paid the deductible amount out of pocket first. Similarly, if you’ve opted for co-payment in your policy, you’ll have to bear a certain percentage of the bill on your own. For instance, if you have a policy of Rs 5 lac, and opt for Rs 1 lac deductible, then you’ll have to first pay Rs 1 lac out of pocket before your coverage begins. However, if you have opted for 10 per co-payment, then you’ll have to pay Rs 50,000 at the time of claim settlement.
Some policies also set limits on which particular costs they will pay, like room rent and ambulance fees. If the total cost of these items is more than what’s specified in your policy, you’d have to cover that extra expense yourself even if you haven’t used up all your insurance money.
How do new-age health insurance plans minimise out-of-pocket expenses?
Health insurance companies are constantly evolving their products to suit their customers’ needs. This has led to various options in the market that, if chosen carefully to customise one’s health insurance plan, can substantially bring down your out-of-pocket expenses. Here’s what to look for in your plan –
OPD coverage: Many insurance plans these days come with OPD cover as an add-on option or even an in-built feature. This way, the OPD costs, which were usually not covered by standard plans, are brought under the purview of the health policy. Basically, all health insurance plans earlier required patients to be hospitalised for at least 24 hours so that they can serve their claims. This means that they did not cover occasional visits to the doctor and cost of treatments that do not require hospitalisation. These costs, if paid out-of-pocket, can add up to a lot during a year. So it is wise to include the OPD cover add-on to your policy. An OPD cover often pays the cost of diagnostic tests, pharmacy expenses, dental treatments and hearing or visual aid equipment, thus further bringing down out-of-pocket expenses.
Consumables cover: Another big out-of-pocket expense that causes a significant financial burden to the patient’s family in case of hospitalisation is the cost of consumables, which is usually not covered by the insurance policy. However, many insurance plans these days offer the option of consumables cover that covers the cost of syringes, PPE kits, sutures, needles, catheters, cotton, bandages, medical gloves, masks, gowns, sanitisers etc. It is a fact that the cost of all these items, when added for every single day of hospitalisation, can add up to a lot for a serious ailment that needs a long hospitalisation. When you have a consumables cover, these expenses will be covered under your plan instead of being charged to your account. Other things that can be covered by this kind of policy include administrative charges like the cost for admission kit, cost of birth and death certificate, documentation expenses, charges for visitor’s pass, etc.
Plans without sub-limit of capping: Apart from these crucial add-on features, insurance plans have evolved to include many other possibilities that can bring down the extra expenses incurred by the policyholder. For instance, a hospital cash cover pays a fixed daily allowance to the insured to cover any expenses that may be out of the scope of the health insurance policy. It is also wise to go for plans without sub-limits and deductibles. This would ensure that you can fully utilise the sum insured as long as the total medical expenditure does not exceed it.
While medical expenses are on the rise, a little bit of prudence in selecting your health plans goes a long way in saving you these extra costs. Additionally, always compare various policies, features, and premiums online to choose a plan that fits your budget. Following these tips will make sure you have minimal out-of-pocket expenditure.
Amit Chhabra heads the Health Insurance vertical at Policybazaar.com.
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