Tuesday, February 28, 2012

Health Insurance - Day-care Covers

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   Health insurance agnostics often cite the lack of cover for small or over-the-counter medical expenses to justify their scepticism. Their grouse is that though visits to a doctor and the associated medicine bills entail sizeable costs, these are not reimbursed by health policies.


At a conference held recently, the Insurance Regulatory and Development Authority (Irda) chairman urged insurers to launch more 'day-care' based covers, highlighting the fact that non hospitalisation expenses amount to almost twice the hospitalisation spends. He pointed out that advancements in medical technology have helped many treatment procedures throw off the 24-hour hospitalisation yoke.

Day-Care Is An Inclusion

As mentioned earlier, many mistakenly believe that their standard policy does not cover expensive treatment procedures pertaining to critical illnesses, since these do not necessitate 24-hour hospitalisation. If you buy an outpatient department (OPD) health policy instead under this incorrect impression, your decision would be faulty, as regular policies do cover several day-care procedures. 'Day-care' is the term used to describe treatment procedures that require hospitalisation of less than 24-hours. These include chemotherapy, radiation, dialysis, cataract, lithotripsy, tonsillectomy and so on. The list of such treatment procedures can be found in the policy documents as well as on company websites. With the Irda putting its weight behind more product innovation, the list is likely to grow further in the coming days.

Day-Care As A Comparison Tool

If you are comparing policies with 'day-care' as a key parameter in mind, don't go simply by the number of procedures covered. Instead, the emphasis should be on the definition of procedures under the scope of coverage. The broader the definition, the better the chances of your purpose being served. Some products may offer to pay for say eye correction surgery, which is a wider definition; while another company may segregate this further into several illnesses. As a result, the number of ailments covered will go up, but certain illnesses could be left out in the process. Public sector insurers, for instance, use a broader definition even though the number of procedures covered is smaller. As far as the claim process is concerned, it is largely similar to that of treatments entailing hospitalisation, since the coverage of 'day-care' procedures is an in-built feature. At best, some companies may ask for prior intimation to activate the cashless facility.

OPD And Maternity Covers

A clutch of companies offer policies whose USP is coverage of outpatient department (OPD), dental and maternity expenses. These products cover treatments that neither require 24-hour hospitalisation nor do they form a part of the 'day-care' procedures list. The difference between OPD and 'daycare' procedures lies in the type of procedures covered. While the former relates primarily to small-time expenses, the latter pertains to expensive procedures which would have entailed at least 24-hour hospitalisation, but for advancements in medical technology. For instance, cataract surgery is a 'day-care' procedure, while dental treatment will fall under the OPD category. OPD plans are primarily seen as tools for utilising the entire Rs 15,000-limit allowed under Section 80D towards health insurance premiums.

 

Apart from tax benefits, there isn't much differentiation you can bring to the table. This is one reason why there aren't too many OPD products available in the market today. Also, the usage is not easy to control. When the insurer receives pharmacy bills, it is difficult to tell whether they pertain to cosmetics or actual medicine costs.

The Workings

Barring the scope of coverage, OPD covers' functioning is largely similar to regular indemnity-based health plans. The hospitalisation expenses incurred by the policyholder are reimbursed by the company – either through the cashless route or after submission of the required documents. The ambit of coverage also includes specified 'day-care' procedures like radiation and chemotherapy, as well as pre- and post-hospitalisation expenses.


Unlike standard health plans, however, these products also pay for consultation fees, dental treatment, maternity expenses, diagnostic tests and pharmacy bills. However, remember, that these reimbursements are subject to sub-limits mentioned in the policy.

Should You Go For Opd Plans?

The answer to the question lies in your needs and expectations from the policy. If maximising tax benefits is important to you, even if it means shelling out a much higher premium, you can probably consider buying such products. But keep other factors, too, in mind. "With the additional cost charged being almost equal to the OPD Coverage, the current OPD products in the market are mere tax-saving instruments, without creating any real value for the customer. Health insurance should be part of one's longterm financial planning, and not just another tax-saving tool. If one can afford paying a premium of . 1,5000, in our opinion, it is more sensible to buy a larger coverage for your family, than go for such plans. After all, you can always buy a cheaper, regular health cover and invest the money saved elsewhere. This kitty can be used for funding your OPD expenses.


With the tax-saving season in full swing, it is likely that you could be approached to buy such products. Tax benefit-cum-additional-coverage may seem like an irresistible combination. But it would be unwise to go for a product based solely on these two aspects. The company's claim settlement record along with the product's premium, features, benefits as well as terms and conditions should make up the main factors influencing the decision.

 

 

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