Health insurance, as we understand it, involves paying an annual fee (premium) for financially insuring your health and well-being, and covering medical treatment in the time of need. Unfortunately, such covers include and exclude a gamut of terms and conditions that vary from insurer to insurer, across policies as well as consumers. But no matter which product you choose to buy, lack of complete information regarding its utilization, and ignoring the list of exclusions, often leads to claim rejection—which can result in a huge financial shock.
In a bid to make some sense of terms and conditions, or exclusions, that you are likely to come across while purchasing, or using, a health insurance policy, the most common ones are explained below.
Initial waiting period: This is the first and the most common exclusion. Initial waiting period means that from the date of purchase of the policy to the period of 30-90 days (depending on your policy), any claim made by you will be rejected, though there might be exclusions for emergency situations.
Waiting period for pre-existing conditions: This clause means that any claim made for a pre-existing disease during the waiting period will be rejected. For example, if you had disclosed asthma as a pre-existing condition at the time of purchase and you make a claim for treatment costs incurred for the ailment, even after the initial waiting period of 30-90 days (depending on your policy) is over, your claim could still get rejected because your policy might state that you cannot make a claim for any cost associated with asthma for a period of 1 year from the date of buying the policy.
Be sure to enquire about, or check, the exact timelines associated with pre-existing conditions.
Specific waiting period: Another common waiting period, or fixed period, guideline is about the maternity cover. Some policies may have a specific waiting period for claiming maternity benefits. For example, if you bought a policy in June 2016, it may allow you to claim benefits after 9 months of the date of purchase. Some policies may have longer waiting periods of 24 or 36 months.
Apart from this, whether or not you have a specific ailment or you contract it in the future, there is a fixed list of diseases (depending on the policy) that have specific waiting periods associated with them.
Caps on diseases: Taking the example of asthma again, let’s say you spend Rs1.2 lakh on asthma-related treatment, tests, hospitalization and medicines in a year and submit the documents to claim insurance, keeping in mind all the waiting periods. You might still find that the claim has been rejected, completely or partly, because your policy document also included a cap on the expenditure that can be claimed. If your policy caps the expenditure on a disease at, say Rs1 lakh, then you will not be able to claim the remaining amount. Being aware of this clause will help you plan recurring treatments wisely.
Permanent exclusions: This section in your policy document includes the entire list of exclusions that your policy will not cover under any circumstances. It could include diseases such as diabetes , sexually transmitted diseases, critical diseases such as cancer; or even expenses relating to treatment for emergency situations such as accidents, specific medicines that may be expensive, eye wear and prosthetic limbs. Treatment in intensive care units (ICUs) and critical care may also be in this list but it is possible to opt for policies with enhanced coverage that have a shorter list of permanent exclusions. Go through the list thoroughly to keep the relevant exclusions in mind and avoid surprises at the time of utilization.
Room eligibility: This may seem trivial but many policyholders get a shock when their claim is rejected, or only partially reimbursed, or only a portion is pre-approved because the room rent exceeds limit mentioned in the policy. Exceeding room rent limit means that if your policy states that only 1% of the total sum insured can be allocated to room rent charges at the hospital, then charges above 1% will not be eligible for insurance. For example, if your policy insures you for a sum of Rs5 lakh, you will be eligible for a room rent for Rs5,000 per day only. Most hospitals practice differential billing for medical expenses incurred, in line with the type of room you choose. Thus, if you choose a room that costs Rs6,000, the related medical expenses will also be charged accordingly but you will be able to use your policy for expenses associated with a Rs5,000 room only. The rest will have to be incurred out of pocket.
While the real value of the policy can be measured when it is actually used, being mindful of the terms and conditions will certainly help you make more informed decisions and use your policy optimally.
Munish Daga is chief executive officer, Remedinet Technologies.