Anybody who has struggled with trying to select a mediclaim policy will know how painful it can be. There is plenty of choice and lots of hard sales push, but no way to know what works for you. There is an information gap in the market today—there is plenty of information out there but it is of little use to somebody wanting to buy a policy. Until you have an experience of hospitalization, you would not know what features are important. It took me one stint with a family member suffering from food poisoning to find out what a sub-limit means. For those still out of the loop—if your medical policy comes with a ‘sub limit’ clause, there will be a limit to what the company will pay for room rents.
As consumers, we’ve moved quite a distance from buying the cheapest policy in the market. Low premiums can also mean lots of things hidden in the fine print that the policy does not pay—like a high room rent or for treatment of a particular disease or a particular medicine. At the very basic level, a mediclaim policy is good if it comes at a reasonable price, promises good benefits and pays up the claims when they are made. Sounds simple enough, but begin reading a policy document and you will be stumped to decode what the jargon means. The Mint SecureNow Mediclaim Rating does the grunge work for you and trawls through some 400 data points to bring you a shortlist of policies that make the cut on the three parameters.
Let’s talk about price first. Till last year we just took the current price of the policy and gave it high marks if it sat in the cheapest policy bucket. There are four price buckets that go from cheapest to most expensive, relative to the whole group. That works if the world is frozen in time. But people get old and mediclaim premiums rise as we age. What if we find a good cheap plan today but the same plan becomes expensive 10 years later as you age? This is the risk of your current policy not being among the best-in-the-class products in a different age group. To solve this, our ratings now look at premiums in the older age bands as well. A policy gets high marks if it continues to be cheap as you age.
What benefits should you want a good policy to have? A good policy should have no more than two years of waiting period to cover a pre-existing disease. If you already suffer from a disease, insurers can exclude ailments related to that disease for a maximum period of four years. Our rating rewards policies that reduce this to two years. Having said that, on the ground, people find it very difficult to get a medical cover if they suffer from a disease, even if it was many years ago. Look for policies that don’t have sub limits on room charges and those that give you a hike in the sum assured for every year that you don’t make a claim. After the fuzzy ads are done and the sales spiel is over, the moment of truth is when you pull your card out at the hospital. How many claims a company pays out is a key determinant of the ‘goodness’ of the policy. We give full marks to policies that pay at least 95 out of 100 claims made.
But there are still things that you need to be careful of. You should know that some hospitals, specially the five-star corporate chains, may ask you to first pay and they will ‘adjust’ at the time you check out. I know of people who have refused to pay and ensured that they get cash-less service as was promised. India does not have effective regulation of hospitals and there is little that the insurance regulator can do to solve this. But there are plenty of problems still left for the Insurance Regulatory and Development Authority of India (Irdai) to solve in health insurance. One, the regulator needs to fill the information gap on the way claims data is disclosed. Today claims of individuals and group polices are bunched together. Anybody who has used their office mediclaim card and their own can see the difference in treatment of the two. Group claims go much faster and get paid more than individual claims. Today, there is no way of knowing which firm has a larger group business and hence better claims numbers going by public disclosures. Irdai needs to fix this with better disclosure on product-wise data. Two, firms can change the terms of the policy in the future. For instance, there is a policy that suddenly made one injection in a cancer treatment an ‘exclusion’. This means that from the next year, your policy will not fund a very expensive injection that was earlier part of the policy. You can read more in this column: bit.ly/2vde1Cf. The regulator needs to prevent such unilateral changes to the contract. It is unfair. Specially because you won’t find out till you need that particular injection since most of this information is buried in fine print.
And while you’re thinking about medical insurance get even more scared and watch the Matt Damon movie The Rainmaker (imdb.to/2tQdqT6) to see what insurance firms can get up to deny claims.
Monika Halan works in the area of consumer protection in finance. She is consulting editor Mint and on the board of FPSB India. She can be reached at email@example.com