What, according to you, is an emergency? I am sure, for the most of us, medical hospitalization will rank at the very top. And where do you keep money that you would touch only in the event of medical emergency?
Where do you keep funds for medical emergency?
Cash in Hand or Cash in Savings Bank account. A few of us also keep in fixed deposits. The reason is ease of access.
What about returns on such funds? Your cash in hand does not earn any interest. Cash in savings account earns low interest. Premature withdrawal of fixed deposit to meet a medical emergency will attract penalty. Interest on FDs is taxable.
Some of us may have considered liquid funds for an emergency. However, you can’t redeem on weekends or holidays. It takes a business day for the funds to reach your account (by the way, a few funds have reduced the time to a few minutes). Does not fit the bill when you are talking about a medical exigency.
ICICI Prudential AMC has come out with Medical Advantage feature that may address this concern to an extent.
ICICI Prudential Medical Advantage: How it works?
ICICI Prudential AMC has tied up with Vidal HealthCare Services Pvt. Ltd (TPA or Third party administrator) to investor (under medical advantage feature) to offer cashless treatment at empanelled hospitals and diagnostic centers (with Vidal). As I understand, there are currently 6,000 hospitals empanelled with Vidal.
Following image in the feature presentation on ICICI Prudential website explains the feature quite well.
*The feature is not just limited to ICICI Prudential Savings Fund. You can avail under any open-ended schemes (except tax-saving schemes)
Apart from the above, you have an access to a neutral second opinion, advice on which hospital to choose and up to 25% discounts on medical tests and hospitalization. You can expect many terms and conditions for discounts.
The proceeds of the Redemption will be directly paid to the bank account of Vidal HealthCare.
As I understand, since the TPA is aware that you have funds in your MF folio, you wouldn’t have to wait for the redemption proceeds to reach your account (or Vidal’s account) before you access treatment.
Points to Note
- ICICI Prudential Medical Advantage is not a Health Insurance Plan.
- You have to pay everything from your pocket. Your investments are liquidated to make payment for your investments.
- You can invest under Medical Advantage Feature irrespective of whether you are covered under any health insurance plan.
- You will have to open a new folio with ICICI Prudential AMC to avail benefits under Medical Advantage Feature. This is for various operational and legal reasons. You won’t be able to use investments in old folis under this facility.
- As I understand, you can specify family members for whose treatment you can pay through Medical Advantage facility. However, I could not figure out where to specify such details in the application form.
- You can invest in any open-ended scheme under this feature. However, in my opinion, you should only invest in a liquid fund or ultra-short term fund.
- It is not prudent to invest in an equity scheme under this feature. Equity funds are meant for long term investments and medical advantage facility does not change that. For instance, your investment of Rs 5 in an equity fund lacs may have become Rs 4 lacs when you are forced to redeem for treatment.
- In my opinion, it is irresponsible on behalf of ICICI Prudential AMC to even allow investments in equity schemes under this feature.
- Capital gains tax and exit load (if any) shall be applicable at the time of redemption of units for treatment (or even otherwise)
- You can invest lump sum or through SIP.
What about discounts?
I don’t know if this is true.
Even in brochure, ICICI has mentioned it is subject to terms and conditions. Hence, the extent of discount, if any, is yet to be ascertained.
However, I have seen different cost estimates from the hospitals based on
- Whether you are paying yourself or are covered under an insurer.
- Insurer you are covered with
- Kind of room (single, shared) you choose
And these are cost estimates. Everything is quite structured.
Therefore, ICICI Prudential AMC may actually be right.
But, there is a scenario that needs to be considered.
Consider this. Person A uses ICICI Medical Advantage Facility to make payment to the hospital and subsequently claim reimbursement from an insurance company X.
Person B does not have any investment under ICICI Medical Advantage Facility and directly files for reimbursement with the insurance company X.
Let’s suppose both of them go for the same medical treatment/procedure. Assume Vidal also acts as TPA for the insurance company.
From the perspective of Insurance company X, it has to settle 15% less in case of A. Why? Because A has first made payment using ICICI Medical Advantage Facility.
Funny, isn’t it? Why should the insurance company care?
Insurance companies are not idiots. They will question Vidal in this case. Vidal is merely an intermediary.
Unless the insurance companies get discounts from the hospital, it does not make sense. I think insurance companies do. In such a case, the insurance is not paying anything extra. In case of Person B, they take discount from hospital and in case of A, they don’t. No extra cost to the insurer.
In my case, a family member had gone for cashless treatment. The bill to the insurer was Rs 40,000 and it settled only Rs 36,000. And I did not have to pay the deficit. I consider this as a discount to the insurer from the hospital.
With such examples, you might feel that you are being robbed by insurance companies and hospitals. Well, that’s what happens when you have as insipid a regulator as IRDA.
To be honest, it is not ICICI Prudential AMC’s fault. By the way, ICICI Prudential AMC comes under SEBI (and not IRDA).
I do not know anyone who has paid for hospitalization under Medical Advantage Facility from ICICI Prudential. Actual experience can be quite different from what is mentioned in the product brochure. In this case, what is more important is how easily you can access your funds in case of medical emergency. It is not about safety of your funds but about ease of access. The devil lies in the execution. This can only be answered through experience.
ICICI Medical Advantage Feature has been designed with a need gap in mind. Credit to ICICI Prudential AMC for that. Of course, it makes for an effective marketing strategy too. As an investor, you do not lose anything if you enroll for the facility. There are no additional charges for you.
Just you will have to fill an offline form to access such facility. I am not sure if you can avail Medical Advantage Facility by filling an online form.
Personally, I do not see much benefit of Medical Advantage feature. Here are a few points to mull over:
- The hospital where you go for treatment may not be empanelled with Vidal.
- If it is a planning hospitalization, you have all the time to redeem your investments and bring those to your savings account.
- With the advent of credit cards, the need for such facility is automatically diminished. I believe credit card swipe machines will be present at most Vidal’s empanelled hospitals. You can pay initially using your credit card (or debit card) and subsequently redeem MF units to pay credit card bill.
In any case, if you are planning to go for ICICI Medical Advantage feature, do note the following aspects:
- It is not Health Insurance and is not a replacement for Health Insurance. You have to pay from own pocket.
- It cannot a replacement for cash savings in your bank account or cash in hand. On Sundays, there is no one on the TPA desk at the hospitals (that’s my experience). Guess, Medical Advantage Feature is pretty much useless in such cases. Cash in hand or bank account will come in handy.
- Invest in liquid or ultra short term funds (and not in equity funds) under medical advantage facility.
In my opinion, ICICI Prudential Medical Advantage Feature is much ado about nothing. You can easily do without it. By the way, nothing wrong if you opt for it.
Keep an adequate medical emergency corpus. Keep a portion in savings account and the remaining in liquid funds or ultra-short term funds. Some amount of cash and a credit card will be handy too.
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