ABOUT HEALTH INSURANCE

 Health insurance is a type of insurance coverage that covers the

cost of an insured individual's medical and surgical expenses.
 Insurers use the term “provider” to describe a clinic, hospital,
doctor, laboratory, healthcare practitioner or pharmacy that
treats an individual.
 Depending on the types of health insurance coverage either the
insured pays costs out of pocket and receives reimbursement or
the insurer makes payments directly to the provider.
 In countries without universal healthcare coverage such as
United States, health insurance is commonly included in
employer benefit packages.
 The level of treatment in emergency departments varies
significantly depending on what type of health insurance a
person has.
 Types of Health Insurance
 Health insurance, also called, medical insurance or simply med claim, covers the cost
of an individual's medical and surgical expenses. The individual pays a fixed sum
(premium), every year for the health cover.
There are broadly three types of health insurance in India:
1. Hospitalization plans
Hospitalization plans reimburse the hospitalization and medical costs of the insured
subject to the sum insured. For this reason, the plans are also known as indemnity
plans.
The sum assured can be fixed -
i- For a member of the family in case of individual health policies or
ii- For a family as a whole in case of a family health insurance policy
For instance, consider a three-member family with an individual cover of Rs 1lakh
each. Each member can claim reimbursement for a maximum of Rs 1lakh as all three
policies are independent.
If the family applies for a family health plan cover of Rs 3lakhs, then any family
member can claim medical benefit for more than Rs 1lakh so long as it is within the
overall sum assured of Rs 3lakhs.
2. Hospital Daily Cash Benefit Plans
The daily cash benefit plan is a defined benefit policy. As evident from the
Name, the policy pays out a defined sum of money for every day of
hospitalization regardless of actual costs. For instance, the hospitalization
costs for a day may be Rs 2,000/day and the defined daily limit of the
policy could be Rs 1,500/day, in which case the insured receives the latter.
On the other hand, if the hospitalization cost is Rs 1,000/day, he still
receives Rs 1,500/day.

3. Critical Illness Plans

These are benefit-based health insurance plans which pay a lumpsum
amount on diagnosis of predefined critical illnesses and medical
procedures. The illnesses are specified at the outset. By nature, critical
illnesses are high severity and low frequency and cost of treatment is
higher compared to regular medical problems like heart attack, stroke,
among others.
 ADVANTAGES
• Prevention: prevent diseases through early detection and doctor
recommended life style changes. It keeps citizen healthier and saves
money

o Skip the waiting list: A benefit of health insurance for some consumers is
that a shorter waiting period for receiving treatment can apply.

o Select your doctor or surgeon: Many health insurance policies give

members the ability to select their preferred doctor or surgeon to carry
out an operation. In a public hospital, your doctor will be the one on duty
at the time of your operation.

o Private hospital rooms: Another potential benefit of private health

insurance is the option of being treated in a private room.
 Issues / Limitations
• Limited coverage
- Only around 10% of the population is covered through health financing
schemes.
- Geographic spread in terms of health care facilities and financing
awareness is limited
• Moral hazard and Adverse selection
- Claims ratios for Med claim and Jan Arogya policies have been in the range
of 120-130%
• Lack of universal schemes
- Limitations in terms of coverage of illness as well as treatment options
• Pre-Existing Exclusion
-Another disadvantage would involve people who have a pre-
existing illness. They have to undergo a waiting period which is
typically four years
 Exclusions
• Pre-existing medical conditions
• Lifestyle related conditions
• Cosmetic treatments
• Pregnancy and childbirth
• Injuries caused due to suicide attempt
• Permanent exclusions