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Interactions with Customers, like any other interaction, have their ups and
downs, some are very interesting, some are a learning experience, some are
hair-raising, and then there are those that really open your eyes. Open your
eyes to the deeply ingrained Health Insurance myths. Deep myths
that became truth for many, with regards to features, terms and of course most
of them regarding Claims! Here’s an attempt to break these myths, and open your
eyes. In case you know of other myths, or have any feedback for us, please do
use the comment section. We would love to interact with you.
Myth # 1: 24 hours Hospitalization is necessary for making a Claim.
This health insurance myth always reminds me of an
incident. A little over a year ago, we were having our weekly meetings,
when a doctor friend who owns a hospital in Mumbai frantically called us. A
woman was making a ruckus in this friend’s hospital, insisting doctors continue
hospitalization of her son and discharge only after 24 hours, as her “advisor”
had informed her that they would get the claim only if the hospitalization is
over 24 hours. This incident brought to light the magnitude and the level of
fallacies customers have about Health Insurance. Advisors, Representatives,
Telemarketers, and even hospitals and customers have frazzled their throats out
on the 24 hours clause, while explaining or even using the product. Though, the
policy does mention this as one of the clauses, the 24 number in real world of
claims holds lesser importance. The clause, in spirit, required the
hospitalization to be “necessary” more than it to exceed“24 hours”. This was
purely from the general understanding that most hospitalizations less than 24
hours are treated under “Out-patient” (treatment at the Doctor’s Dispensary)
not covered under a Standard Mediclaim.
Hospitalizations (like Cataract), though required 2-3 days earlier, which are
now possible due to advancement in medical science in less than 24 hours are
covered, while, hospitalization by an insured for more than 24 hours for
getting his routine diagnostic tests done, while no active treatments are being
carried out, would not be payable under Mediclaim.
Conclusion: The thumb rule of a whether a claim is payable is not 24 hrs
hospitalization but whether the hospitalization was medically “necessary” or
not?
Myth #2: You must compare Pre-existing waiting period, always.
This is a clause that most people looking for a Mediclaim are confused
about. I speak to many customers whose requirement with mediclaim is that they
do not want a waiting period for pre-existing ailments. This, in spite of their
entire family being complete fit, without any ailment, whatsoever. Somehow, the
clause again being so popular has brought in its own confusions for customers.
In reality, the 4 year Pre-existing exclusion on ailments is applicable to
ailments existing at the time of applying for the policy, and not any other
ailments. If you do not have any ailments or conditions, you have no
pre-existing waiting period. Period.
Conclusion: When applying for a Mediclaim, if you are completely healthy,
the Pre-existing exclusion clause is not applicable to you
Myth #3: Cashless is an on-call Emergency Service.
Ever since it was introduced as a value addition to Mediclaim, Cashless has
remained a buzz word. To a level, that for a lot of people, Cashless
became a prefix, or, even synonymous to Mediclaim. The reason for the cashless
concept getting popular was obvious; it was a great value add, which helped
customers tide away the burden of large payments on their bank account,
documentation and of course, the stress of waiting for the claim cheque. Yes,
Cashless can do all this, but expecting it to work when there are emergency
funds required for Hospitalization is asking for too much.
You should understand the Cashless mechanism as a concept to know why it cannot
be depended on at the time of emergencies. Cashless is an arrangement between
the Health Insurance Company/TPA
and the Hospital where, the Hospital agrees, under contract, to grant
credit facility to the Insurance Company/TPA against authorized claims.
Such an arrangement is only for authorized Claims, and not for all claims.
TPAs/Insurance Companies, hence, need to assess every claim received, against
the policy terms and conditions, to authorize payment. Such an authorization
could require additional information as well as documents and hence can take
anywhere for 4 hours to 2 days of time. In their role, the TPA or the Claims
Team at the Insurance Company would have to do its job of evaluation of the
claim, irrespective of how urgent the medical admission or treatment is.
Cashless will help you save the burden of processing a reimbursement claim, but
it cannot provide you the convenience of on-call emergency funds.
Moreover, one should also note, unlike the hospital cashier, Insurance Desks in
hospitals (which coordinate for cashless claims) have fixed work-hours from
10.00 AM to 7.00 PM. Cashless process and approvals after 07.00 PM are
processed by the Hospital the next day. Hence, though the TPA provides 24/7 service,
the cashless process may not move, once the Hospital stops working on it.
Conclusion: Expecting Cashless to work as an on-call Emergency Service is
foolish. You should plan your emergency medical fund, as well as ensure you
have good unutilized credit card limits, always.
Myth #4: You must compare no. of Day Care Procedures covered
Most Insurance Companies (specially the Private ones) flaunt a large list of
more than 100 Day Care Procedures being covered under their policy. In fact, it
is a highlight of their product pitch. The truth is comparison of such numbers
can be very misleading. One company could list every procedure, while another
could list macro-level treatments, including the listed procedures of the
former. For instance, a person who compares Apollo Munich’s Easy Health
Insurance which covers 140 Day Care procedures, with an Oriental Happy Family Floater which covers only 26
procedures would feel that Apollo has wider cover on Day Care Procedures.
Believe me, but it could actually be the reverse. How? Oriental promises to
cover Eye Surgery (a broader definition) in its daycare list, compared to say
an Apollo which lists 15 specific eye treatments, which results in a larger
number. Now, if the treatment being carried out is an eye surgery, which is day
care but not a part of the 15 specific treatments, Apollo or many other Private
players may not pay, whereas, in the case of Oriental it would get paid in the
broad definition of eye surgery. By providing a specific list of surgeries
instead of a macro area of treatment, the coverage under Apollo may actually be
more restrictive in the long run than Oriental’s wide area of treatment wise
list.
Conclusion: A short list of procedures could be wider than a long one. Do
not compare the no. of Day Care Procedures.
Myth #5: You should check the list of Network Hospitals.
Many customers, we have interacted with demand Hospital network lists. They
select the mediclaim product depending on whether their preferred hospitals are
part of that Insurance Company’s list. What they fail to realize is that a
Hospital Network is ever changing. Insurance Companies regularly blacklist
defaulting Hospitals. Hospitals blacklist or refuse cashless of certain
Insurance Companies/TPAs for delayed payments. What is clear from this is that
there is no fixed or contracted list of hospitals between your Insurance
Company and you – which means there is no assurance that the hospital name in
the list, which you are depending when you buy the policy, would exists in the
network when you have a claim, say 4 years down time.
Conclusion: Network List of Hospitals are not fixed or contracted through
policy terms. Do not depend on the network hospital list to decide a suitable
product for your family. The list could change even tomorrow, in fact it could
change any moment.
Myth #6: Capping on Room Rent is bad:
Public Sector (PSU) Mediclaim products and their
current terms and conditions are evolved from experiencing and analyzing
millions of claims spread over more than 20-25 years. Hospital Rooms are
classified into various categories like General, Shared, Private and Deluxe
Rooms. Earlier without the room rent limits, for the same treatment, a person
with a sum insured of 1 Lakh paying a measly premium of say Rs. 2000, would
have access to the same category of room, as a person who pays 5 times the
premium, and takes a Rs. 5 Lakhs cover for himself. The 1% and 2% Room Rent
Limits in Mediclaim brought a clear sync between the kind of premium one pays
and the eligibility of room. With such cappings, an individual who pays a high
premium gets a better room, than one who pays a smaller premium, for the same
treatment, which is fair. It’s like any other product with categories, like
Indian Railways, providing you better facilities/services, as you move from 2nd
Class to 3rd AC to 2nd AC and so on. In my opinion, sooner or later, Insurance
Companies would either have to hike premium for lower sum insured or bring in a
capping of some kind. For instance, the newest health insurance company – Max
Bupa, has a restriction on the type of room according to the sum insured
selected, instead of a “no capping on room rent” feature.
Conclusion: Cappings are good for Health Insurance as a community fund.
Cappings could actually be helpful to customers in the long run.
Myth #7: Health Insurance Plans sold by Life Insurers are the same:
The highly advertised Health Plans from LIC are Defined Benefit Health
Insurance Plans, sold as “hassle free” alternatives with guaranteed payments.
These plans should not be considered as a substitute to Standard Health
Insurance plans sold by General Insurance Companies. These plans provide fixed
benefits against no. of days of hospitalization and/or surgeries. These plan do
not take care of healthcare inflation. For instance, with 18-25% healthcare
inflation, a fixed benefit for Angioplasty at say, Rs. 1,50,000/- would
miserably fall short in 10 years. Defined Benefit Health insurance
products are actually supplementary plans which provide a cover over allied costs
of hospitalization including loss of earnings, if any, but such products surely
cannot be a substitute to the good ol’ traditional mediclaim. Read more
about the difference here.
Conclusion: Beware of what you buy. A Traditional Mediclaim should be the
first product you buy to cover the financial risk of healthcare expenses of the
future. Defined Benefit Products are supplementary and not substitute to
Traditional Health Insurance.
Myth #8: Health Insurance is a Tax Saving Tool:
A large Healthcare expenditure can severely affect your financial planning
for the future. The goal when you buy Health Insurance should be to
financially insure your family against such large scale healthcare expenditure.
Buying a health insurance product blindly, for the 80D tax benefits, is a
wide-spread fallacy, which has left a large no. of people underinsured or
insured with products which are not suitable. The worst part is most of them
are unaware of this.
Conclusion: Health Insurance at its core is not a Tax Saving Instrument. It
could save you much more than your tax, if you invest wisely.
Myth #9: There will be no changes in the terms of the Mediclaim I bought:
Expect changes in your product, terms. Don’t be surprised. The Health
Insurance companies and other stakeholders in India are going through a mindset
change. Losses in Health Insurance are no longer acceptable by key
stakeholders at Insurance Companies. A lot of streamlining and normalizing in
premium, terms, benefits and procedures, which has already begun, is expected
in the next 5 years. Group products would turn expensive, and restrictive.
Parents would be out of most Sponsored Employee Mediclaim Covers. Large and
small tweaks are expected in Retail/Individual products and processes,
especially from new and private players who are till experimenting and
understanding how to make a long term sustainable (read profitable) product for
the Indian market.
For instance, last year, PSU Insurance companies tightened the procedure of
intimation and submission of reimbursement claims. Customers who were not aware
of such a change faced harsh action of denial of claims, and lost good money.
Conclusion: Ensure you are updated with changes in the terms and procedures
of your Mediclaim Product. Ensure you have recruited a good advisor who keeps
you posted on such changes.
Myth #10: I can destroy Mediclaim Policies once they have expired.
Don’t know how many of you have observed at the time
of renewals, but PSU companies and their divisions are infamous in the industry
for changing their TPAs year over year. With TPAs being the custodian of
claims, change in TPAs could result in scattered claims information amongst
various TPAs across years of continuous renewals. Hence, when there is a claim,
the TPA in all probability won’t have information regarding how long you are
continuously covered, an essential data point to approve claims, especially,
those treatments which had a waiting period at entry into the policy. TPAs for
evaluation of continuity may demand policy copies of past 3 to 4 years. Hence,
destroying policy copies records have cost many customers lot of stress in
proving continuity of cover. Yes, we know that it is ridiculous for the
Insurance Company or its representative to ask for their own record from the customers,
but then this is how it is. A good
health insurance advisor knowingly would keep a repository
of all policy copies, to ensure such queries do not create roadblocks in a
smooth claim settlement.
Conclusion: In addition to the current one, keep copies of at least 3
previous year policy copies. Ensure your advisor also records them.
Myth #11: My Friend, My Health Insurance Advisor
No offence to agents, but in our interaction with Customers, we have noticed
time and again, that most customers, who were found with a wrong health
insurance product, bought these either from a friend, a friend’s relative, or a
relative, or a relative’s friend. Most of these customers did not spend enough
time in selecting an advisor, and relied on pure reference. Most of these
agents selected were Life Insurance agents, who did not have a detailed
understanding of mediclaim products, neither were they providing any real
expert assistance (beyond picking of forms, and providing the TPA’s no.) at the
time of claims. The advisor selected should have the capability and the
intention to provide unbiased advice, the advisor should forever own the
product they sold you, and provide services across the Health Insurance service cycle,
including Purchase Assistance, Records management, Claims Assistance and
Renewals. A good advisor would be able to hand hold you through the
dynamic transformation that the Health Insurance industry in India , is
witnessing and will continue to witness for the next 2-3 years.
Conclusion: Select an advisor on merits and the services he
demonstrated, and just not merely on reference.