One of the most asked questions in Mint Money remains: Is there a good medical policy that will cover doctor’s consultation fees and cost of medicines? The local family doctor for the urban mass affluent Indian has been replaced by the plush hospital chains that charge between Rs500 and Rs800 for just a consultation. Says Sudhir Sarnobat, co-founder and CEO, Medimanage Insurance Broking Pvt. Ltd, a health insurance broker: “While for an individual, such medical expenditures are few and far in between. A family, especially with younger kids, can run up bills more than Rs10,000.” No wonder we get such questions often. Called OPD (outpatients department) in medical parlance, the insurance plans that cover such expenditure are called OPD policies. Who sells these? What do they cost? And do they really work? Read on to find out.
Also See | Plans on offer (Graphic)
Policies in the market
Currently, there are about five insurers that offer OPD benefits with their basic health plans. You can take individual as well as a family floater plan. A floater policy considers a family as one unit and the sum insured of say Rs1 lakh is applicable for the entire family (usually four members). If one member invokes the cover, the sum insured reduces by that much on other members in that year. In floater policies, OPD benefits, too, are applicable to the entire family. For example, a limit of Rs7,500 per year will be the limit for all the expenses made by each member of the family covered.
For instance, Bajaj Allianz Tax Gain Comprehensive Health policy offers an OPD limit of Rs7,500 per year to an adult couple below 35 years of age for a premium of Rs14,999. The couple can claim OPD expenses worth Rs7,500. But if you spend less than the OPD limit, you forfeit the balance. However, OPD policies by stand-alone insurers such as Max Bupa Health Insurance Co. Ltd, Apollo Munich Health insurance Co. Ltd and Star Health and Allied Insurance Co. Ltd allow you to carry forward the unclaimed benefit.
Given the loopholes in medical industry, fudging bills has become rather easy. In order to avoid misuse of the OPD benefit, insurers insist on a doctor’s prescription.
Says Sanjay Datta, head-customer service (health and motor), ICICI Lombard General Insurance Co. Ltd: “We insist on a doctor’s referral because we don’t want policyholders to misuse the OPD policy by producing fake bills. Even over-the-counter medicines can be claimed after the doctor’s prescription. At the time of making the claim, the doctor’s prescription is needed.”
What’s the cost
The premiums of OPD policies include the cost of OPD benefits and are, therefore, very expensive. Says Deepak Mendiratta, director, Health and Insurance Integrated, a health insurance consultant: “OPD policies are structured such that the cost of OPD care is taken upfront from you. The danger is that you pay upfront, but may not really need it.”
However, for those who suffer from a chronic ailment or need regular medical care, there is a value proposition since insurers are able to negotiate better rates with hospitals in their network. Says Neeraj Basur, chief financial officer, Max Bupa: “Insurers are able to negotiate value on behalf of their customers since they have collective bargaining power and are able to bring down costs in network hospitals.”
But if the doctor you go to does not fall under that network, then you don’t gain much.
Do they work?
In their current form, OPD policies don’t really work. Primarily for two reasons: the benefits are not in sync with the cost and you can manage your tax saving more efficiently by keeping health insurance needs and OPD expenses separate.
OPD limit: For instance, in case of Star Health for a premium of Rs14,725, the OPD benefit for a family of four, with adults below 35 years of age, is capped at Rs6,500. The remaining Rs8,225 is the cost of the regular floater policy with a sum insured of Rs3 lakh. A stand-alone floater for the same sum insured would come for about Rs5,000. Moreover, the expenses of a family of four may go beyond Rs6,500 in a year.
Policies that offer a higher OPD limit are very expensive. Take Apollo’s Maxima that gives an OPD benefit of Rs7,000 with two annual health check-ups and 8 consultations. For a family of four with adults being under 35 years of age, the annual premium is Rs28,468. Assuming consultation to be at an average of Rs600 and two health check-ups at Rs7,000, the total cost of OPD benefits would come to Rs18,800. So, the extra Rs9,668 that you pay is just for the floater policy.
Tax saving: The only visible benefit from an OPD policy is tax saving. You can claim a tax deduction on your health premium under section 80D. For individuals below 65 years of age, the limit is Rs15,000 and for those above 65, the limit is Rs20,000. If your premium is Rs14,725 and you are in the highest tax bracket of 30.9%, you save around Rs4,550 in taxes. So your effective premium or cost is Rs10,175.
But you can do better. Let’s take a floater policy that costs Rs5,000. Assuming you are in the highest tax bracket, the post tax-deduction premium would come to Rs3,455. Add to this the OPD expense of, say, Rs6,500 and your total cost is just Rs9,555, less than Rs10,175 in the above example.
If you are a salaried individual and enjoy tax exemption on medical expenses of up to Rs15,000, then OPD policies don’t make sense at all. Says Sarnobat: “The market is not mature for OPD policy and so they are taken from the point of tax saving, but for individuals who already enjoy that benefit by claiming a tax exemption on medical expenses, these policies can be given a miss.”
OPD policies in the current situation don’t cut much ice. However, if you have a family that needs recurrent medical care and you don’t get medical exemption, you could opt for it. But make sure that the plan is cashless and allows you to carry forward unclaimed OPD benefit.
Graphic by Yogesh Kumar/Mint