Top-ups for Your Health-In­sur­ance Plan

A hedge against chronic ill­nesses?

Consumer Voice - - Contents -

Here we re­visit our ear­lier study on top-up health-in­sur­ance plans (pub­lished in Jan­uary 2017 is­sue of Con­sumer Voice), fo­cus­ing on as­pects such as prod­uct up­date or im­prove­ment, if any, with ref­er­ence to user feed­back and claim set­tle­ments, as well as new play­ers in the seg­ment. The fol­low­ing re­port will add on to our in­for­ma­tion on what to ex­pect from top-up health plans (in­clud­ing for se­nior cit­i­zens), what the ben­e­fits/rid­ers are, what the in­clu­sions and ex­clu­sions are, and which com­pa­nies of­fer the best, good and fair poli­cies. Af­ter all, it is hardly ever as sim­ple as just top­ping it up. How is it dif­fer­ent from a stan­dard health-in­sur­ance plan? What are thresh­old lim­its and de­ductibles, and when is a top-up ap­pli­ca­ble?.

– Subas Ti­wari & Gopal Ravi Ku­mar

When even a mi­nor surgery and at­ten­dant hos­pi­tal­iza­tion can set one back by a lakh or a cou­ple of lakh ru­pees, a health-in­sur­ance pol­icy needs to be more than equal to ex­i­gen­cies. What if there is a sit­u­a­tion of mul­ti­ple hos­pi­tal­i­sa­tions within the same year? One can barely af­ford to be com­pla­cent about such mat­ters and if the ex­ist­ing health-in­sur­ance cover seems in­ad­e­quate in the face of es­ca­lat­ing costs, one will look to in­crease the cov­er­age. What are the op­tions here? Buy an­other health pol­icy or up­grade the ex­ist­ing plan? How­ever, both are rel­a­tively ex­pen­sive op­tions. Here, top-up plans make sense

be­cause these will let one in­crease the sum as­sured at an af­ford­able premium amount—at half the cost or even less com­pared to other op­tions.

How Does a Top-up Work?

Un­like nor­mal hos­pi­tal­i­sa­tion poli­cies, top-up plans come with a de­ductible or thresh­old limit. You have to se­lect the thresh­old limit at the time of pur­chas­ing the pol­icy – this is the amount up to which you or your ex­ist­ing pol­icy can pay the med­i­cal bills. As long as your pre­sent ail­ment is fully met by your ex­ist­ing pol­icy and the hos­pi­tal bills meet the pol­icy claim amount (through ei­ther cash­less or re­im­burse­ment method), there’s no worry. The topup plan does not come into the pic­ture here.

Top-up plans work when your hos­pi­tal bills show ex­pen­di­ture in ex­cess of the med­i­cal-in­sur­ance claim es­ti­mates cleared (ei­ther by in-house ar­range­ment or through a third-party ad­min­is­tra­tor) by the in­sur­ance com­pany. In such a case, you can very well file an ad­di­tional claim on the top-up pol­icy on the same hos­pi­tal bills for treat­ment un­der­gone.

A top-up health-in­sur­ance plan cov­ers hos­pi­tal­i­sa­tion costs be­yond this spec­i­fied limit (called the base amount pol­icy).

Thus, ba­si­cally a top-up health pol­icy is an ad­di­tional cov­er­age for peo­ple who have an ex­ist­ing in­di­vid­ual plan or a medi­claim cover from the em­ployer. Note that it is for re­im­burse­ment of ex­pen­di­ture that arises out of a sin­gle ill­ness/hos­pi­tal­i­sa­tion be­yond the limit of the ex­ist­ing cover, if any.

For all pur­poses, top-up health plans are a backup to your health-in­sur­ance pol­icy af­ter you ex­haust the sum-in­sured limit. A reg­u­lar pol­icy re­im­burses hos­pi­tal bills up to the sum in­sured, while a top-up plan cov­ers costs be­yond the spec­i­fied limit. So, for a lit­tle ex­tra premium, one may own a com­plete health-in­sur­ance plan.

The De­ductible Makes It Dif­fer­ent

Un­like nor­mal hos­pi­tal­i­sa­tion poli­cies, top-up plans come with a de­ductible or thresh­old limit. You have to se­lect the thresh­old limit at the time of pur­chas­ing the pol­icy, which is the amount up to which you or your ex­ist­ing pol­icy can pay the med­i­cal bills. Only if your hos­pi­tal bills cross the de­ductible limit can you use the top-up plan. Thus, the only dif­fer­ence be­tween a nor­mal health-in­sur­ance plan and a top-up plan is the de­ductible.

Top-up health-in­sur­ance plans come handy when the thresh­old of the ex­ist­ing health cover is al­ready used or ex­hausted and there are some more med­i­cal costs left to deal with, which would oth­er­wise ex­ert pres­sure on your fi­nan­cial sav­ings.

For ex­am­ple, let’s as­sume that you have a topup health cover of Rs 10 lakh sum as­sured, with the thresh­old limit of Rs 3 lakh, in which case the pol­icy will only cover your ex­penses be­yond Rs 3 lakh. If your claim amount is Rs 8 lakh, the in­sur­ance com­pany will pay you Rs 5 lakh (8–3), and not Rs 8 lakh. In a reg­u­lar health-in­sur­ance pol­icy with sum in­sured of Rs 8 lakh, the en­tire amount of the claim – that is, Rs 8 lakh – will be paid. It is an­other mat­ter that premium amount will be much more than that in a top-up pol­icy.

You must of course check de­ductible cri­te­ria for pre-ex­ist­ing dis­ease, sin­gle ill­ness, and pre/posthos­pi­tal is at ion. Also, the higher the de­ductible, the lesser will be the premium amount (due to less in­sur­ance risk for the in­surer).

Rea­sons Why You May Want a Top-up

• You have not yet taken any health-in­sur­ance

pol­icy. • You do have a ba­sic/reg­u­lar health-in­sur­ance pol­icy with, say, X com­pany but this com­pany does not pro­vide a top-up cover. • You have a health-in­sur­ance pol­icy but the sum as­sured is not sig­nif­i­cant to cover huge hos­pi­tal­i­sa­tion costs. • You want to min­imise the premium amount.

It is not com­pul­sory to have a health-re­im­burse­ment pol­icy to buy a top-up plan, but it is fu­tile to take a top-up pol­icy un­less you have a re­im­burse­ment cover equal to at least the ‘thresh­old limit’ of the top-up plan. This way you will be able to take care of your bills even be­fore the top-up plan starts work­ing. A top-up plan can be taken even if you have a group heath cover from your em­ployer.

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