Importance of Health

Health insurance, like other forms of insurance, is a form of collectivism by means of which people collectively pool their risk, in this case the risk of incurring medical expenses.

Rising medical costs

Sharing of Health Related risk

Uncertain Hospital Bills

Expensive/Quality Health Care Services

Money Value – Sick Vs Healthy

Family Health Insurance

Tax Benefit

Productivity of Workforce

Removes some of the burden from the State

Keeping pace with the customer needs while achieving Profitability

How to Improve Health Insurance Penetration?

Regulator / Government

  • Enhance customer awareness
  • Enhance client confidence – real value benefits in the event of a claim
  • Effective supervision
  • Compulsory percentage of total business towards health
  • Compulsory savings towards health
  • Tax incentives to employers for promoting group health coverage

Insurer

  • Clients confidence – warrantable claim will be paid out in a reasonable time frame
  • New clients have to be reached
  • Value for money
  • Design products as per clients needs
  • Product transparency
  • Cost efficiency
  • affordability
  • Wellness programmes

Initiatives of IRDA

Committee to formulate regulations

Pure health insurance products

Allowing the formation of an stand alone health insurance company

Standalone health insurance companies

Renewability

Senior citizens

Types of Health Insurance Plans

Largely, an individual health insurance plan (IHIP), or ‘mediclaim’, would cover expenses if you are hospitalised for at least 24 hours.

These plans are indemnity policies, that is, they reimburse the actual expenses incurred up to the amount of the cover that you buy.

Some of the expenses that are covered are room rent, doctor’s fees, anaesthetist’s fees, cost of blood and oxygen, and operation theatre charges.

This is a fairly new entrant in the health insurance firmament.

It takes advantage of the fact that the possibility of all members of a family falling ill at the same time or within the same year is low.

Under a family floater (FF) health plan, the entire sum insured can be availed by any or all members and is not restricted to one individual only as is the case in an individual health plan.

Let’s look at an example. Say, a family of four has individual covers of Rs 1 lakh each. If the cost of treating one person crosses Rs 1 lakh, then the rest has to be borne by the family out of its own money. If, however, the entire family is insured for Rs 4 lakh through a floater policy, then any of the members will be covered for that amount in any year. To the extent of the annual cover, any number of members can avail the money.

Insurance is considered a form of long-term savings for senior citizens. This money provides financial stability and also helps them in times of need. Medical insurance enables senior citizens to pay for health checkups, emergency medical costs and long-term treatment. The income tax benefit on insurance premiums is up to Rs. 15,000 under Section 80 D of the Income Tax Act, as on March 31, 2007. Medical insurance is provided through several private insurance companies and four public sector general insurance companies. These are:

National Insurance Company

Oriental Insurance Company

New India Assurance

United India Insurance Company

The National Insurance Company offers the Varistha Mediclaim Policy for senior citizens. This policy covers hospitalization and domiciliary hospitalization expenses under Section I as well as expenses for treatment of critical illnesses, if opted for, under Section II. Diseases covered under critical illnesses are coronary artery surgery, cancer, renal failure, stroke, multiple sclerosis and major organ transplants. Paralysis and blindness are covered at extra premium.

Oriental Insurance Company provides a Comprehensive Health Insurance Scheme, a Group Insurance and an Individual Mediclaim Policy. These policies pay for hospitalization or domiciliary hospitalization of the insured in case of a sudden illness, an accident or surgery. These conditions should have arisen during the policy period.

A Critical Illness plan means to insure against the risk of serious illness. It will give the same security of knowing that a guaranteed cash sum will be paid if the unexpected happens and one is diagnosed with a critical illness.

The purpose of a critical illness plan is to let you put aside a small regular amount now, as an insurance against all this happening.

Bajaj Allianz, in its efforts to provide a customer centric solution is offering an insurance policy to cover to some of these critical illnesses like Cancer Coronary Artery bypass surgery First Heart attack Kidney Failure Multiple sclerosis Major organ transplant Stroke Arota graft surgery Paralysis Primary Pulmonary Arterial Hypertension.

Expense benefit is paid on per day basis after hospitalization (most plans mandate at least 48 hours of hospitalization).

The pre-decided daily benefit amount is paid in full, irrespective of the actual expenses.

For example, a person buys a DHC plan with a limit of Rs 2,000 per day. He gets hospitalised for 7 days and the total bill is Rs 35,000. He would be reimbursed Rs 14,000 (2,000×7). If the bill is Rs 8,000, he would still be reimbursed Rs 14,000.

All ULHPs offer one or more combination of the other benefits (for which risk premium is deducted from fund value). Also, charges such as premium allocation charge and policy administration charge are deducted from the fund value.

LIC has launched Health Plus plan, a unique long term health insurance plan that combines health insurance covers for the entire family (husband, wife and the children) – Hospital Cash Benefit (HCB) and Major Surgical Benefit (MSB) along with a ULIP component (investment in the form of Units) that is specifically designed to meet domiciliary treatment (DTB) related expenses for the insured member.

Health Insurance in India

The health insurance market in India is very limited covering about 10% of the total population. The existing schemes can be categorized as:

Voluntary health insurance schemes or private-for-profit schemes

Mandatory health insurance schemes or government run schemes (namely ESIS, CGHS)

Insurance offered by NGOs / community based health insurance, and

Employer-based schemes

Employer Based Schemes

Employers in both public and private sector offers employer based insurance schemes through their own employer.

These facilities are by way of lump sum payments, reimbursement of employees’ health expenditure for out patient care and hospitalization, fixed medical allowance or covering them under the group health insurance schemes.

The Railways, Defense and Security forces, Plantation sector and Mining sector run their own health services for employees and their families.