Health Insurance Terms
We seldom make full use of our health insurance policies. One reason for this is our inability to understand the technical health insurance terms used in the fine print of policy documents. Here we decode some of the terms that are regularly used by the insurance companies.
In health insurance, benefit refers to the total amount that the health insurance company will pay the policyholder to compensate for medical bills expenses incurred by him.
As per the health insurance glossary, the coverage amount is the total amount that the policyholder can claim from the insurance company for medical bills incurred. If the expenses are higher than the coverage amount, then the policyholder has to meet the balance on his own.
If you have a co-payment clause in your health insurance plan, then the insurance company pays a part of the medical expenses incurred by the policyholder. The rest is borne by the policyholder.
For example, if there is a co-payment clause in your policy and the co-payment ratio is 30: 70, then in a medical bill of Rs 1 lakh, then you will have to pay Rs. 30,000. The insurance company will cover the rest of Rs. 70,000.
Insurance companies put co-payment clauses to discourage policyholders from making repeated claims.
Several medical treatments and procedures, for example, chemotherapy and dialysis, can be completed in the hospital in less than a day’s time. For such procedures, you do not need to stay at the hospital for 24 hours. Though the basic requirement for claiming medical insurance is hospital admission for at least 24 hours, you can claim insurance benefits for certain treatments and procedures under day-care treatment. All medical insurance companies cover day-care treatment for a number of treatments and procedures, which are usually mentioned in the fine print.
There are certain medical conditions, healthcare expenses, etc., that are not covered by health insurance policies. In case such expenses are incurred, the policyholder has to pay from his own pocket. Exclusions are always mentioned in the policy document as terms and conditions.
The health insurance terminology – family floater applies to those health insurance companies who offer family floater health insurance, apart from individual health insurance, in which, they provide cover for more than one member of a family.
The policyholder can claim health insurance for treatment of more than one person in the family if they are covered under family floater health insurance policy. For example, a family is covered under a floater policy of Rs. 5 lakh. One member of the family incurred Rs. 1 lakh medical expenses, and the insurer covered it. The balance Rs. 4 lakh can be used to cover the medical bills incurred by other family members covered under the policy.
Group health insurance
Several companies and corporate houses offer health insurance to their employees or members of the association. Such policies are called group health insurance. The biggest advantage of being covered under such policies is that they do not have any waiting period for any pre-existing illnesses.
A health insurance is a simple contract between the insurance company and the policyholder. It covers the medical expenses incurred – like hospitalisation expenses, room rent charges, operating theatre, doctor fees, nursing, specialist charges, day-care procedures, pre- and post- hospitalisation etc. – by people covered under the policy. There are two kinds of health plans that are offered by insurers – individual and family floater policy. The policyholder pays a premium for it. The premium amount can also be paid yearly, half-yearly or quarterly.
Hospital admission for at least 24 hours or one day is termed as in-patient hospitalisation. It is the basic requirement for the insurer to claim coverage against the health plan. However, all plans also provide a few day care treatments for which the insured can claim insurance coverage even if he or she is not hospitalised for this time period.
The individual or individuals covered under a particular medical insurance policy is the insured. In case they fall sick and are required to be hospitalised, the insurance company covers the expenses.
Often the health insurance company is also referred to as the insurer.
Medical expenses such as X-ray, Lab fee, admission fee etc., that are often not covered by the medical insurance policy are termed as miscellaneous expenses. Policyholders will pay for such. These miscellaneous expenses are mentioned in the policy documents in some form. Carefully look for them.
If you have a claim-free year, then you can have a higher coverage (sum insured) amount at the same premium level as no-claim bonus (NCB). It is the way by which insurers reward the policyholders for having a claim-free year.
The amount of the sum insured can be increased every year by 5-50 per cent through NCB. Over the years, one can accumulate enough NCB to increase the coverage amount by up to 100 per cent.
One who has bought the health plan is a policyholder.
It is the amount of money the policyholder has to pay to the insurance company for keeping the policy active. It can be paid as monthly, quarterly, half-yearly or yearly, depending on the terms and conditions of the policy.
In case the policyholder consumes the entire coverage amount on being hospitalissed and still need more, then few insurance companies add more coverage to the health plan without taking any additional premium. This is called restoration. There are some rules around it which are insurer specific. Read the policy papers before applying for it.
It is a provision that offers additional benefits to your insurance policy. This is applicable for most types of insurance coverage. If you have bought health insurance, you can buy a critical illness rider with it. If you are diagnosed with one of the listed critical illnesses in the policy, the insurance company will pay the sum assured for the rider.
A sub-limit is a cap of how much a policyholder can claim for a particular expense/procedure. For example, there is a cap for knee surgery, cataract per eye etc.
The waiting period is a kind of a hibernation period during which no claim will be admissible. The waiting period might vary between one year and four years. While all health insurance plans come with a waiting period of at least one month, some plans provide cover for accidental hospitalisation from Day 1 of the insurance coverage.
For treatment of a few diseases such as tonsils, hernia and cataract, policyholders need to wait one year in some medical insurance plans. Your insurance provider would specifically mention this in policy documents. The waiting period is usually 2-3 years for pre-existing illnesses.
Now that you know most of the basic health insurance terms, you can make full use of your insurance policy and reap its many benefits.
Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.