Chapter 10 Health Insurance sur cHUsSS CHAPTER-10_ Health Insurance Products ‘Traditional Life Insurance Products Lieimsirance eas Non ie intern ee Benet etcCHAPTER -10 HEALTH INSURANCE AGEND: LW is Health Insurance? 2. ‘Typesand Levels of Healthcare ‘A. Levels of Health Care B, ‘Types of Health Care 3. Health Insurance Market A. Infrastructure 1) Public Health Sector 2) Private Sector Providers 3) Insurance Providers 4) Intermediaries B. Insurance Selling and Serving Activities 4, Health Insurance Products A. Introduction to Health Insurance Products . B. Features of Health Policies . Board Classification of Health Insurance Products cHUsSS CHAPTER -10 HEALTH INSURANCE 1. Whatis Healthcare = Illness was caused due to various factors relating to environment, sanitation, personal hygiene and diets ~ “Hippocrates 370-460 BC” 2. Types and Levels of Healthcare Services provided by various providers, including the government to maintain and restore the health of people. A. Levels of Healthcare - The need to set up healthcare facilities in any area depends on various factors such as size, population, death and sickness rates, environment factors etc B. Types of Healthcare 1) Primary Healthcare - First point of contact eg: Set up by the government and private providers for all population. 2) Secondary Healthcare Provided by medical specialists who do not have first contact with patients eg: Intensive Care services, ambulance services, pathology, diagnostic services etc 3) Tertiary Healthcare - Specialized consultative healthcare with advanced medical facilities and medical professionals beyond the scope of primary and secondary healthcare providers eg: Oncology (cancer treatment), Organ Transplant facilities, Coronary (heart) eteCHAPTER -10 HEALTH INSURANCE Health Insurance Market Infrastructure Primary Healthcare Fst point of contact 5 Mealeare Secondary Healthcare eee (CUAmbulanee Pathology EL tertiary Healthcare FBRPH specitze constateheatcare ae . ‘ ne Siena ‘i (+ 2shoursintermatonal Medial Astance \ spa. * Emergency Evacaton& Reptrion Agents kes m alison : LE terion! sos AEA, Europe Aston ete cHUsSS CHAPTER -10 HEALTH INSURANCE 3. Health Insurance Market Providers of healthcare facilities, insurance services while some are intermediaries. A. Infrastructure 1) Public Health Sector By the government for all population at national, state, district and township level 2) Private Sector Providers Private providers of healthcare, NGOs and voluntary sector. 3) Insurance Providers Provide healthcare through Health insurance Products so that the insured can enjoy the healthcare treatment {in the hospitals and services like ambulance etc. 4) Intermediaries a) Insurance Brokers b) Insurance Agent - Usually individuals but can be corporate agents too, Only represent his/her insurer. © Third Party Administrators (TPA) - Provide administrative services to insurance companies for claim handling, cashless hospital admission ete - Usually corporates and not individual. Work independently of insurance companies. «They represent people/customers who want insurance and connect them to insurers.CHAPTER -10 HEALTH INSURANCE 3, Health Insurance Market B. Insurance Selling and Servicing Activities 1) Insurance selling through Agents, Brokers, Direct, Online etc 2) Servicing activities include: a) Policy servicing to the policyholders ) Data recording © Claims servicing - Directly or through TPA (3" Party Administrator) 4. Health Insurance Products A. Introduction to Health Insurance Products For sickness/illnesses benefits, medical, surgical, hospital expenses, long term care, travel insurance and personal accident ete - Hospitalization products cover most expenses during hospitalization, a) Health insurance important to provide financial assistance. b) Health Insurance preserves the savings of an individual. insurance cHUsSS CHAPTER -10 HEALTH INSURANCE 4. Health Insurance Products B. Features of Health Policies For expenses incurred due to sickness, which may be chronic, long lasting or critical. Expenses could also be incurred due to accidental injuries, Products are designed to suit various customers, in different customer segment, lie styles, affordability ete C.Broad Classification of Health Insurance Products a) Indemnity Covers «Pay for actual medical expenses incurred due to hospitalization, b) Fixed Benefit Covers “Hospital Cash’. Fixed sum per day for the period of hospitalization and for surgery. (Eg: Fixed sum per day I day I lakhs so 10 days 10 lakhs) ©) Critical tliness Covers Fixed benefit payout on occurrence of pre-defined critical illness eg: cancer etc eat Indemnity Fre Bene cualesCHAPTER -10 HEALTH INSURANCE 4, Health Insurance Products Broad Classification of Health Insurance Products 1a) Hospitalization Indemnity Product - Fg: In-patient Hospitalization Expenses ) Room & Board (includes nursing care, IV fuids, blood transfusion, injection, administration charges ete ii) Intensive Care Unit expenses ii) Surgeon, anesthetic, medical practitioner, consultants, specialist fees. iv) Operation theatre charges, surgical appliances. Oxygen, blood v) Medicine and drugs vi Prosthetic devices implant like pacemaker, orthopedic, cardiac valve etc vii) Laboratory and diagnostic tests ete b) Preand Post Hospitalization Expenses i) Pre Hospitalization Expenses Hospitalization that are planned in advance. Medical expenses incurred before the person is hospitalized, provided that such medical expenses are for the same condition for which the person's hospitalization was required. ‘The In-patient hospitalization claim for such hospitalization is allowed by insurer. Pre-hospitalization expenses like tests, medicine, doctor's consultation fees ete cHUsSS CHAPTER -10 HEALTH INSURANCE 4.Health Insurance Products C Broad Classification of Health Insurance Products ii) Post Hospitalization Expenses For follow up. After discharged from the hospital, provide again that such medical expenses incurred are for the same condition for which the insured person's hospitalization was required, The In-patient hospitalization claim for such hospitalization is allowed by insurer. Post hospitalization expenses like medicines, drugs, follow up review by doctors ete Post hospitalization usually cover for 60 days after discharge. ©) Domiciliary Hospitalization Expenses Expenses incurred for medical treatment taken at home, provided that the condition of the patient is such that he cannot be moved to a hospital. xxcess clause eg:3 to 5 days. Meaning treatment for the first 3 days have to be borne by the insured. Common Exclusions: 4) Pre-existing diseases - “Any condition, ailment or injury or related conditions for which insured had signs or symptoms, and/or were diagnosed and/or received medical advice/treatment within 48 months prior to the first policy issued by the insurer. (see the list of exclusions in next side)CHAPTER -10 HEALTH INSURANCE List of common exclusion: ‘a Weight control programs/supplies/services: >. Cost of spectacles/contact lenses/hearing aids etc: « Dental treatment expenses that do not require hospitalization; 4d ormone replacement; e Home visit charges £ Infertility/subfertlty/assisted conception procedure; Obesity (including morbid obesity) treatment; h. Psychiatric& psychosomatic disorders; I. Corrective surgery for refractive error; J. Treatment of sexually transmitted diseases: Donor screening charges I. Hospitalization for evaluation, dtagnostic purpose: ‘m. Expenses for investigation, treatment irrelevant to the disease for which admitted or diagnosed; rn. Any expenses when the patient is cliagnosed with retro virus andor suffering from HIV/AIDS ete. is detected directly or indirectly; ‘0. Stem cell implantation/ surgery and storage; p. War and nuclear related causes: {All non-medical items such as registration charges, admission fees, telephone, television charges, toiletries, ete. F. A waiting period of 30 days from inception of policy is normally applicable in most policies for making any claim. This however will not be applied for hospitalization due to an accident. cHuUsBS " CHAPTER -10 HEALTH INSURANCE 4. Health Insurance Products Broad Classification of Health Insurance Products ©) Coverage Options Available: i) Individual Coverage - An individual can also cover his dependents insured under a single policy with separate sum insured chosen. for each insured person - Each person can claim up to max amount of his sum insured. Premium will be charged for each person, according to his age and sum insured chosen. i) Family Floater (Family Plan) - Family consisting of spouse, children and dependent parents under single policy and single sum insured floats (shared) over the entire family. Premium will be charged based on the age ofthe oldest member of the family. 1) Special Features 4) Sub limitsand Disease Specific Capping (Total Overall Limit and Sub limit) = Limit & capping on Room, ICU & OT charges, surgeon's ees etc i) Co-payment (or Co-pay) Cost sharing by insured. Insured must first pay for a certain amount before insurer pays for the rest. Usually in percentage . fil) Deductible (also cost sharing by insured) ~ Also called “Excess” in Non Life Insurance. cHUssS 2CHAPTER-10 | HEALTH INSURANCE 4.Tealth Insurance Products . Broad Classification of Health Insurance Products ® Cost of Pre-Policy Check Up Cost of medical examination nowadays reimbursed by insurer provided proposal is later accepted by insurer, 1h) Top-Up Covers or High Deductible Insurance Plans Example is individuals covered by their employers can also opt for top-up cover for additional protection. Ifthe cover i top up, Deductible will also be increased. To be eligible to claim under such Top-up policy. the medical costs must be greater than the new Deductible amount (&g Medical cost imi, Deductible is 100k. Insured can claim the amount after 100k: That means insured must fist pay for 100%). Available on individual or family plan. Example: L Before Topping Up the Coverage Sum Assured -10 Mil (Thus, maximum claimable is 10 Mil) Deductible 100,000. IF Total Medical Cost was 10 Mil- the cost paid by insured will be 100,000 and the cost pald by insurance company will be 9.9 Ml 2.After the Topping up the Coverage _:Sum Assured top up to 20 Mi (Thus, maximum claimable is 20 MID Deductible - 200,000 Total Medical Cost was 150,000 - the cast paid by insured will be 150,000 and the cost paid by insurance company will be zero cHUuUsS . CHAPTER -10 HEALTH INSURANCE 4,Health Insurance Products 2) Fixed Benefit Covers - Hospital Cash, Critical IlIness, In health insurance plans, the risk to insurer is the unnecessary and unreasonable use of health policy benefits by insured, doctors, hospitals tend to over-treat the insured, Constant rise in medical costs Thus, Fixed benefit cover provide adequate protection and help insurer to effectively price the policy for reasonable duration. ‘Common occurring treatments that are paid on fixed benefits are (Obstetrics, Gynecology, ENT, Ophthalmology.) listed under each category and pay out for these are spelt out in the policy. Package charges with fixed claim sum for Surgeries, Room, Diagnostic, Drugs, Pre & Post hospitalization. expenses, ambulance etc - Fixed benefits covers are simple to administer as only proof of hospitalization and coverage of ailment under the policy are sufficient to process the claim.CHAPTER -10 HEALTH INSURANCE 4, Health Insurance Products 2) Fixed Benefit Covers - Hospital Cash, Critical Iliness Some of the Fixed Benefit Insurance Plans are: + Hospital Daily Cash Insurance Plan ¢ Critical Iliness Insurance Plan a) Hospital Daily Cash Policy i) Per Day Amount Limit Fixed sum for each day of hospitalization. fi) Number of Payment Days No of days of Daily Cash is linked to the type of illness and treatment taken. iil) Standalone Cover or Add-On Cover - Help insured to cover incidental expenses as a fixed sum. This isin addition to any cover under health plan. iv) Supplementary Cover - These policies supplement a regular hospital expenses policy and also expen: existing plan such as exclusions, ¥)_ Other Advantages of The Cover Easy to explain and sell to customers. Pays fixed sum per day for the duration of the hospitalization regardless of actual expenses not payable under the cHUsSS CHAPTER -10 HEALTH INSURANCE 4.Health Insurance Products 2) Fixed Benefit Covers - Hospital Cash, Critical Illness b) Critical liness Policy. - Also known as dreaded disease cover. - Life expectancy increase due to medical science but surviving major illness entails huge expense for treatment and post treatment living expenses, Itisa Benefit policy that pays a lump sum amount on diagnosis of certain named criti Standalone ii) Asan Add-on to Health policy, or iii) Add-on to Life insurance policies. Critical ilIness benefits can be “Accelerated” Cl benefit plan or “Standalone” Cl benefit plan. (Accelerated CI plan isa rider to life policies while Standalone is not) =A Standalone CI plan offers more flexibility in choosing the sum insured and larger cover but for Accelerated CI plan, the sum insured is usually the same as the base life policy and cannot exceed the coverage amount of the Iness. It is sold asi) base policy - Definition of critical illness are standardized and defined by Insurance Authorities. -Clplan usually available for age group 21 to 65 years. Waiting period of 90 days. = Survival clause of 30 days in some CI policies (cos itis meant for living benefit, not death benefit) 4) Cancers, Coronary Artery, Renal Failure, Stroke (See next slide)CHAPTER -10 HEALTH INSURANCE 4, Health Insurance Products 2) Fixed Benefit Covers - Hospital Cash, Critical Iliness ‘The critica illnesses covered vary across insurers and products, but the common ones include: i. Cancers of specified severity il, Acute myocardial infaretion ill. Coronary artery surgery iv, Heartvalve replacement; ¥. Coma of specified severity: Acwe myocardial inrtion ey ay Muliple sclerosis ef Renal fire vi, Renal failure vii, Stroke resulting in permanent symptoms viii, Major organ/bone marrow transplant ix. Multiple sclerosis, x. Motor Neuron disease, Permanent paralysis of limbs; nti Permanent disability due to majoraccidents. ¢ as ‘bone marrow transplant cHUuUsS ° Motor Neuron disease, CHAPTER -10 HEALTH INSURANCE 4, Health Insurance Products 3) Long-Term Care Insurance Nursing care for elderly people. 2 types of plans for long term care: i) Prefunded plans which are purchased by healthy people to take care of their future medical expenses. fi) Immediate Need plans which are purchased by a lump sum premium when the insured is requiring long term. care. The severity of disability (and expected survival period) decides the quantum of benefit, a) Retirement Age Can choose a retirement age between 55 and 60 years. A gap of 4 years between the date of joining and the retirement age chosen. b) Pre-retirement Period «Date of acceptance of proposal and ending with policy retirement age. ©) Withdrawal (Terminate the plan) - Refund of premium allowed if insured wishes to withdraw or terminate the plan before the plan commences. If withdraw after retirement age, the premium will be refunded provided no claim occurred under the policy.CHAPTER -10 HEALTH INSURANCE 4, Health Insurance Products 4) Group Health Cover a) Group Policies A group policy is taken by a group owner (eg: employer, association etc) under a single master policy that covers the entire group of individuals. ) Features of Group Policies Hospitalization Benefit Covers i) Scope of coverage ‘The most common Group Health insurance is taken by employers covering employees. ii) Tailor-made cover - To suit the requirements of the group. Also standard exclusions under the group policy. iil) Child cover From age of 3 months of individual Health policy but from day one of babies for group policies. iv) Premium calculation Premium charged for a group policy is based on the age profile of the group members, the size of the group and claims experience of the group. cHUuUsS * CHAPTER -10 HEALTH INSURANCE 4, Health Insurance Products 4) Group Health Cover v)_Non-employer-employee groups Insurable interest must be established. Regulations prohibit formation of groups primarily for the purpose of taking out a group insurance cover. vi) Pricing: - Discount on premium based on the size of the group and also claim experience. vii) Premium payment Totally paid by the employer/group owner or on a contribution basis by the employees or group members. However, it isa single contract (one master policy) with the insurer.