Health Insurance – A saviour in tough times

Health insurance is a category of insurance that would save you from unexpected medical expenses. It is a contract between a person and the insurance company where in the person pays a regular fee called a premium and the insurance company in return agrees to pay for the medical expenses of the person. These expenses can include doctor visits, hospital stays, surgeries, prescription drugs and other healthcare services. Essentially, it is a way to protect someone from huge medical bills that can throw them in to debts.

Basics of Health Insurance – What and How?

If a person is new to health insurance the kind of information and options available can overwhelm them easily. So here are simple points to start with.

• Who can take it: A health insurance can be taken by any person of 18+ for themselves or for anyone in their family.
• Understand the needs: Consider the age, health status, family history and lifestyle. Does the person has any pre-existing conditions? Do they have a family they want to take the cover for? These are the basic checks that decide the type of policy one needs.
• Explore the options:
  • Employer Sponsored Insurance: If a person is employed and their employer offers a health insurance, it is often the most affordable option.
  • Government Marketplaces (PM-JAY in India): These market places offer plans from various insurance companies, allowing one to compare prices and coverage.
  • Private Insurance companies: One can purchase insurance directly from companies either directly or often through third party brokers.
• Compare Plans: Don’t decide a plan based on premium. Consider these factors:
  • Deductible: The amount one pays out of pocket before the insurance starts covering costs.
  • Co-pays: Fixed fees one pays for specific services like doctor visits.
  • Co-insurance: The percentage of costs one gets to share with the insurance company after the deductible amount is met.
  • Out -of-pocket maximum: The most one pays in a year.
  • Covered services: Ensure the plan covers the services you need, including doctors, hospitals and medications.
    1. Example: Rahul’s health insurance policy includes a ₹10,000 deductible, meaning he pays the first ₹10,000 of his medical costs. After meeting the deductible, he shares costs with the insurer through 20% co-insurance; for a ₹50,000 hospital bill, he pays ₹10,000 and the insurer covers ₹40,000. Each doctor visit requires a ₹300 co-pay. His policy has a ₹1,00,000 out-of-pocket maximum, so after paying this amount in a year, the insurer covers 100% of further costs. Covered services in his plan include hospitalisation, doctor visits, medications, and physiotherapy sessions.

What is the Best Policy for the Family?

The best family policy depends on the needs and budget of the family. Choose a policy based on these factors:

• Number of Family members: If there are more family members, the premium would generally be high.
• Ages of Family Members: People above 50 or 60 years age may require more coverage and so the premiums would be higher
• Health conditions: If any of the family members have pre-existing conditions, make sure that the policy covers them fully.
• Budget: Also need to consider how much a person afford for health insurance and what is the cover needed. If the premium paid is less, then the amount that needs to be paid out of pocket will be higher.

Why is Health Insurance important?

Health insurance is important for several reasons:

• Financial protection: unexpected medical bills can lead to terrible debts. Health insurance protects a person from them.
• Access to good medication: Having a health insurance gives one the necessary means to seek care from quality hospitals without worrying about cost.
• Preventive care: Many plans cover preventive services like checkups and vaccinations that help one stay healthy and avoid more serious issues.

Difference between health Insurance and other insurances

Here’s how health insurance differs from other common types of insurance:

• Life Insurance: Pays the sum insured to the beneficiaries after the person insured dies.
• Auto Insurance: Covers damages and injuries resulting from car accidents. Health insurance covers medical expenses regardless of the cause.

Different types of health insurance available in the market

There are several types of health insurance plans:

• Health Maintenance Organizations (HMOs): Typically require you to choose a primary care physician (PCP) who coordinates all your healthcare services. Referrals are usually needed to visit specialists.
• Preferred Provider Organizations (PPOs): These plans offer greater flexibility in choosing healthcare providers. You can visit specialists without a referral, but if you visit a doctor mentioned in the plan’s network you will pay less.
• Exclusive Provider Organizations (EPOs): Like PPOs, these plans require one to take services from the providers mentioned in the network. However, the coverage for out-of-network care is usually not available except in emergencies.
• Point of Service (POS) plans: These plans are mix of HMO and PPO. One may be required to get a referral to visit a specialist, but they can also go visit the out-of-network specialist, but the cost would be higher.

Conclusion:

Health insurance is a key aspect of financial planning. It protects a person from unexpected medical expenses and ensures access to necessary healthcare. Understand your needs and choose wisely, protect your family.

This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.