What your health insurance plan will not pay for?
It is not difficult to understand the value a health insurance plan adds to your insurance portfolio and the financial life. However, are you aware that there are treatments/scenarios that your health insurance plan may not cover?
You may have to fund the entire or partial cost from your pocket. Such a need may arise due to exclusions under the plan (cosmetic/dental treatment, OPD consultation) or due to the structure of the plan (co-payment, voluntary deductible, sub-limits).
It is important to understand the extent of coverage under your health insurance plans. This will help avoid any negative surprises at the time of claim.
In this post, let’s compile a list of expenses/scenarios where your insurance plan may not cover and you may have to pay from your pocket.
#1 Your share of co-payment
If you opted for co-payment while purchasing or renewing your health insurance plan, the insurance company will not pay for your share of payment. For instance, if your policy has a co-payment clause of 20%, you will have to foot 20% of the hospital bill.
By opting for co-payment, you can reduce your annual premium. However, be prepared to shell out more from your pocket if you were to get hospitalized.
#2 Deductible under your plan
If your plan had a deductible, the treatment cost (per hospitalization or per policy year) must exceed a certain threshold before the insurance company comes into picture.
For instance, if you purchase a super top-up plan of Rs 10 lacs with an annual deductible of Rs 2 lacs, you will have to pay first Rs 2 lacs from own pocket. The insurance company will pay only once the threshold of Rs 2 lacs is crossed.
#3 Any Excess over a sub-limit
You may have opted for a high Sum Insured in your health insurance plan. However, it may so happen that your insurance plan may have a sub-limit on a particular treatment. Let’s say, even though total coverage is Rs 10 lacs, there may be a limit of Rs 25,000 on cataract and maternity treatment.
There is no way the insurance company is paying more than the sub-limit for those specific treatments.
Be aware of such limits or be prepared for a nasty surprise.
#4 Proportionate Expenses above permitted room-rent category
This can get really tricky.
If the room-rent sub-limit as per your insurance plan is Rs 5,000 per day and you take admission in a room that costs Rs 10,000 per day, the insurance company may settle only half the bill. Therefore, you don’t just have to pay for differential charges in room rent. You may have to proportionate charges for surgeries, diagnostic tests, consultation etc. too.
I have discussed the issue pertaining in great detail in another post. Do go through the post to understand the nuances of the issue.
Better be aware of room-rent sub limit and pick up a room that is within the room-rent cap specified by your insurance plan.
#5 Treatment of a pre-existing illness before waiting period expires
Do I need to elaborate more?
This is as per the insurance contract and you must be aware of the waiting period for pre-existing illnesses in your insurance plans. The cheaper plans may have a longer waiting period.
#6 Cost of specific treatment for a few years
Now, this has nothing to do with your medical condition at the time of first purchase of plan. Therefore, there is no linkage to waiting period for your pre-existing illnesses.
However, for a few common treatments like kidney/gall bladder stones, hernia, cataract etc, the insurance company may not cover you for 2-4 years.
The rationale is that many may want to purchase a health insurance plan before an impending surgery (cost of surgery may easily be higher than cost of insurance). Moreover, you can plan for such treatments. A waiting period of 2-4 years can weed out such cases.
#7 Any treatment during the first 30-90 days
In continuation with the above point, any planned treatment is excluded for the 30-90 days from the first purchase of policy (not applicable for renewals). However, hospitalization due to accident or emergency is covered even during those 30-90 days.
#8 Permanent Exclusions
Cosmetic surgery, dental treatment, HIV/AIDS treatment or any treatment for a congenital anomaly is also typically not covered under Health Insurance plans.
There may be a few exceptions. For instance, cosmetic surgery or dental treatment due to an accident may be covered.
Outpatient Treatment/Alternative medicine treatment (ayurveda, homeopathy treatment etc) may not be covered under many plans.
In addition, based on medical underwriting policies, it is quite possible that the insurance company may decline to cover a particular treatment (for any pre-existing illness) in its counter-offer. If you accept the offer, treatment for such an illness will never be covered by the insurance company. Frankly, I have never seen such a case. Therefore, can’t comment much further.
It is not possible to compile the complete lists of exclusions in this short post. However, you must go through the policy wordings of your plan to comprehend the treatments excluded from coverage.
#9 Treatment Abroad
Most policies won’t cover treatment abroad. Most plans cover treatment only in India.
Do note a few really expensive ones may cover treatment abroad too.
# 10 Consumables
Your final hospital bill may not just include operation charges, room rent, medicines, diagnostic tests and doctor consultation.
You will also be billed for the food you ate. You will be billed for consumables (diapers, scissors, bandages, baby food etc), un-prescribed drugs (that you may have ordered from the pharmacy). Your medical bill may include various ancillary charges for say internet, television etc.
The insurance company won’t pay for such charges.
Frankly, it is difficult to make an estimate of such charges unless you actually see the bill. The itemized bill for even a minor surgery may run into tens of pages. The hospitals send such itemized bill to the insurance company before the insurer gives its final approval (and you get a discharge subsequently).
Such charges can easily form up to 8-10% of your total medical bill. And these charges ensure that you have to pay something from your pocket (and the treatment is not completely cashless). And you need to be prepared for that.
I have discussed areas where the decision is quite easy. Many of us don’t understand the scope of coverage properly and may unnecessarily blame the insurance company (even though the insurance company is correct as per terms and conditions of the contract). It does not make much sense fighting with the insurance company over these cases.
However, there will be cases that will involve a lot of subjectivity and the insurance company will reject your claim (and be unjustified in doing so). These cases are worth fighting for and worth spending your time and energy for.
You can differentiate between these cases only if you understand the terms and conditions properly.
Another point to note is that you will have to pay something from your pocket (even if the insurance company accepts the claim). Have such funds ready with you at all times.
Do not undermine the importance of a medical emergency fund even if you have a health insurance plan.
For all you know, the insurance company may reject your claim or reject your application for cashless treatment. You can always fight but the treatment can’t wait. Moreover, in case of emergency hospitalization, you will have to make upfront admission payment (and approach insurer subsequently).
Even for a planned hospitalization (for which cashless treatment has been approved), it is possible that you have to take admission at odd hours (say 4 am in the morning). There will be no one at the hospital insurance desk to complete formalities. In such cases too, you have to make upfront admission payment. Medical emergency corpus comes in handy in such cases.
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