Medical Expense Coverage

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Medical expenses are generally covered under a medical claim (commonly called mediclaim) policy. This is an indemnity-based policy that compensates the beneficiary or insured for their actual economic loss up to the limiting amount of the insurance policy.

A mediclaim policy normally covers expenses incurred under the following heads with respect to each insured person:

  • Hospital room and boarding expenses

  • Nursing expenses

  • Fees of surgeon, anaesthetist, physician, consultants, and specialists

  • Anaesthesia, blood, oxygen, operation theatre charges, surgical appliances, medicines, drugs, diagnostic materials, X-ray, dialysis, chemotherapy, radio therapy, cost of pacemaker, artificial limbs, cost or organs and similar expenses.

The following are some of the important aspects of the policy:

  • Sum insured: It refers to the maximum ceiling up to which a claim can be paid during the policy period. As described earlier, this may be on an individual basis or a floater basis for the family as a whole.

  • Cumulative bonus (CB): This policy may offer cumulative bonus for every claim free year, the sum insured is increased by a certain percentage at the time of renewal subject to a maximum percent- age (generally 50%). In the case of a claim, CB is reduced by 10% at the next renewal.

  • Minimum period of stay in hospital: For being eligible to make a claim under the policy, a minimum stay in the hospital is necessary for a certain number of hours. Usually, this period is 24 hours. This time limit may not apply for the treatment of accidental injuries and certain specified treatments which are known as day-care procedures.

  • Pre and post-hospitalisation expenses: Expenses incurred during a certain number of days prior to hospitalisation and post-hospitalisation. Expenses for a specified period from the date of discharge or last consultation as specified in the policy are reimbursed if the expenses related to the disease or sickness for which hospitalisation was done.

  • Additional benefits and other standalone policies: Various other benefits are offered by insurance companies as add-ons or riders. In addition, there are standalone policies designed to provide various benefits, such as hospital cash, and critical illness benefits and surgical expense benefits. These policies can either be taken separately or in addition to the hospitalisation policy.

Limited Health Insurance Policies

Certain health insurance policies cover only specific types of injuries and illnesses. Such insurance policies are termed as limited health insurance policies as they provide limited coverage. An insurer, while offering such type of policies, mentions on the very first page of the policy document that ‘This is a limited policy’ to avoid any controversy in the future.

The following are the major types of limited health insurance policies:

Travel accident insurance

This is a type of limited insurance policy that covers death or injury resulting from accidents while the insured is travelling through some fare-paying public career like commercial flights, bus, etc.

Specified disease or dread disease insurance

Such insurance offers a number of benefits for a few specific diseases, such as cancer or heart disease.

Hospital income insurance

Under such type of insurance, the insured gets paid a specific sum of money on a daily, weekly or monthly basis while he/she is hospitalised. However, this amount is not related to expenses incurred in the hospital or with income lost while the insured is hospitalised.

Accident only insurance

Such type of insurance is provided to cover injuries from accidents only. An insured is paid for any conditions that include death, disability, dismemberment, or hospital and medical expenses.

Credit insurance

Such insurance policies are issued only to those applicants who are in debt to a creditor. The maximum limit of coverage is usually equal to the total amount of the debtor’s indebtedness.

Blanket insurance

This is a type of group insurance, which may include the students of a certain college, campers, common career passengers, players of certain team, etc. The insurance policy covers the entire group and the members are automatically covered under the blanket policy. In other words, the policy applies to the group and in case an individual leaves the group; he/she will no more be covered under that policy.

Dental Expense Insurance

Dental expense insurance benefits are generally provided as a part of group health insurance coverage. This is because most of the insurers do not offer individual dental expense coverage due to its expensive nature.

Dental expense insurance benefits cover the following:

  • Preventive maintenance, such as teeth cleanings and X-rays
  • Repair charges related to teeth fillings, root canals, etc.
  • Replacement of teeth

Limited Policies-prescription Drugs

Prescription drug insurance denotes to a limited form of health insurance that covers the cost of drug and medicines prescribed by a doctor. It is generally an optional benefit covered under a group medical expense insurance policy. The policy usually covers a specific amount per prescription.

Therefore, irrespective of the cost of medicines, the insurer pays only the prescribed amount. In other words, in case, the cost of drugs exceeds from the prescribed amount, the insurer would pay the prescribed amount and the insured would pay the extra cost.

Medical Savings Accounts

A medical savings account (MSA) refers to a medical plan that includes high-deductible health insurance coverage as well as a tax-deferred savings account. These accounts allow the subscribers to meet their healthcare expenses by savings in a savings account that helps in tax savings as well.

MSA subscribers can pay for their medical expenses from this savings account. The main objective of MSA is to incentivise insurance consumers in controlling their health care expenses. In 2007, MSA has been replaced by Health Savings Accounts (HSAs), a tax-exempt account that can be set up to meet future medical expenses.

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