Health care costs for hospitalization in India have risen sharply in recent years in tandem with global trends. Many a family has seen their financial planning go for a complete toss due to unexpected costs on hospitalization of a family member. Also due to increasing exposure to media there is a far bigger consciousness about medical insurance. In fact the biggest question asked to us by first time mediclaim buyers is which is the cheapest mediclaim policy?

Unfortunately if this is the only parameter used by a consumer he is likely to end up making a wrong choice. An example will illustrate this point:

If you have diabetes, would you (all other things being the same) rather buy a mediclaim policy that may be a little more expensive but will immediately cover the hospitalization expenses arising from complications connected with this disease (heart problems, kidney or eye problems associated with diabetes) without considering them as pre-existing disease rather than a comparatively cheaper policy which treats all such diseases as pre-existing and hence not immediately coverable.

The following paragraphs lays down the broad parameters apart from premium which you must compare before you buy:

1) Pre-existing disease: This is probably the most important parameter. The relevance is because if a disease is treated as pre-existing then the policy normally provides no coverage or very restricted coverage for expenditure incurred due to that disease in the immediate future. The various things to be considered under this head are

a. Definition of Pre-existing disease: Most policies provide that any disease that was present at any time in the past (including any disease which the insured person may not have been aware of) is treated as pre-existing. But some have a narrower definition, which may extend to only diseases for which the insured person had sought consultation for or was treated for or he was aware of during say the last 4 years. The narrower the definition the better it is for the consumer

b. After how many years of continuous coverage by the company will the pre-existing disease get covered: This is important as after the expiry of the cooling off period even pre-existing diseases get covered. A fine point is to find out if the company you are considering allows your track record of continuous coverage from another insurance company for the purpose of calculating this cooling off period or insists only on continuous coverage with itself for this purpose.

c. Special dispensation for diabetes/hypertension: Diabetes and hypertension have acquired epidemic status in India with one estimate putting the figure at around 5% of India’s population. Also a host of illnesses/diseases such as heart disease, kidney failure, paralysis, stroke, eye problems can trace their root cause to either diabetes or hypertension or both. Since the definition of pre-existing illness includes any complications arising there from, this has been a major reason for disputes between the mediclaim providers and the consumers in the past. Now some insurers provide immediate coverage for at least complications arising from this (ese) disease(s) even though expenses on treating the main disease itself may not be covered. If you already have diabetes/hyper tension then this is a vital consideration for you. Off course it comes at an additional cost and may also involve pre-acceptance medical tests. All these factors need to be taken into account before taking a decision.

2) Sub- limits: Sub limits mean where the overall coverage is broken down into the maximum payable for a particular kind of expense. For eg. A few insurance companies now provide that room rent cannot exceed 1% of the covered amount or that doctors/consultants fees cannot exceed 20 or 25% of the covered amount. Whilst most of these sub-limits are reasonable it is better to take a decision after being aware of them.

3) Co-Pay requirements: Quite a few companies now require that the insured bear a certain percentage of the eligible expenses either unconditionally or under certain conditions. This is called a co-pay requirement. Some companies provide a discount in premium if you agree to co-pay. Some others might want a co-pay if you choose to get treated in a non network hospital or others may have a co-pay for choosing a single air conditioned room or for getting treated in a hospital in a higher cost city. The co-pay feature is built in to ensure that the insured chooses the appropriate hospital/room/doctor level relevant to his economic status and also watches the reasonableness of the charges levied by the hospital to ensure that there is no overspend or overcharge just because of the existence of the mediclaim policy. Again there is nothing inherently unfair about this provision as long as you take a conscious decision after being aware of it.

4) Specific Exclusions: Almost all policies have general exclusions such as costs incurred for Aids/Sexually transmitted diseases or congenital diseases, etc. However some policies have specific exclusions that may be relevant to you.

5) Maximum Coverage Amount: This is important, as a particular policy that suits you may not be available for the amount of coverage that you seek.

6) Maximum age at entry: This is relevant for senior citizens as quite a few policies may not be available to them.

7) Renewability upto what age: This is relevant for senior citizens as well as people in their 50s since they need to be able to enjoy the benefit of their track record

This is not a comprehensive list of parameters by far. Each policy may have specific positive or negative features that may be relevant to you such as restricted coverage for angioplasties or certain other kind of treatments or features such as free diagnostic tests offered after a certain number of claim free years, etc.

Now presumably it is far clearer why you need to study the policy features rather than just buy the cheapest policy available. The parameters listed have been summarized in the accompanying table.

In the next article in this series I will cover the debate on whether to go in for individual policies or for a family floater policy.

So best of luck with your hunt for the most suitable mediclaim policy.