Common Terms in Health Insurance
Here are some more common terms in health insurance in India, with definitions and examples for better understanding:
1. Ayush Cover
Definition: A feature included in some health insurance plans that covers treatments under AYUSH (Ayurveda, Yoga, Unani, Siddha, and Homeopathy) systems of medicine.
Example: If Meera opts for alternative treatment under Ayurveda for her chronic ailment, her health insurance policy covers the expenses as it includes Ayush cover.
2. Claim Settlement Ratio
Definition: The ratio that indicates the percentage of claims settled by an insurer compared to the total claims received within a financial year. It reflects the insurer's reliability in settling claims.
Example: If an insurance company received 1,000 claims and settled 950, their claim settlement ratio would be 95%, indicating a high reliability in paying claims.
3. Incurred Claim Ratio (ICR)
Definition: The ratio of the total claims paid by the insurer to the total premiums received in a financial year. It helps in assessing the profitability of an insurance company.
Example: If an insurance company receives ₹100 crore in premiums and pays out ₹80 crore in claims, the incurred claim ratio would be 80%, showing that a significant portion of the collected premium is used for claims.
4. No Claim Bonus (NCB)
Definition: A reward given by the insurance company to policyholders for not making any claims during a policy year. It typically increases the sum insured or reduces the premium for the next policy term.
Example: If Aditi does not make any claims during the year, her insurer awards her a 10% increase in her sum insured for the following year without a premium increase.
5. Restoration Benefits
Definition: A feature in some health insurance policies that automatically restores the sum insured back to its original amount once it has been exhausted due to claims, during the policy year.
Example: If Manoj has a policy with a sum insured of ₹10 lakh and makes a claim of ₹6 lakh, the restoration benefit allows his coverage to be restored to ₹10 lakh if he claims again within the same policy year.
6. Free Medical Check-Up
Definition: A provision in some health insurance policies that offers policyholders a free health check-up annually, encouraging preventive care.
Example: If Rahul’s policy includes a free medical check-up every year, he can schedule a comprehensive health screening without incurring any extra costs.
7. Lifetime Renewal
Definition: A feature that allows the policyholder to renew their health insurance policy for life, ensuring continued coverage regardless of age or health status.
Example: If Reena buys a health insurance policy with lifetime renewal, she can renew her policy even when she is 75 years old without worrying about being denied due to age or health conditions.
8. OPD Cover
Definition: Coverage offered for outpatient department consultations and treatments, which do not require hospitalization.
Example: If Alok has an OPD cover in his health policy, he can claim expenses for regular doctor visits, diagnostic tests, or minor treatments without needing to be admitted to a hospital.
9. Pre-existing Diseases
Definition: Medical conditions or illnesses that existed before purchasing a health insurance policy. These are often subject to a waiting period before coverage kicks in.
Example: If Shilpa has diabetes prior to getting her health insurance policy, she will need to wait for the specified waiting period before she can claim any treatment related to her diabetes.
10. Congenital Health Issues
Definition: Health conditions that are present from birth, which may or may not be covered under health insurance policies.
Example: If a newborn has a congenital heart defect, coverage for treatment of that condition will depend on the specific terms and exclusions of the health insurance policy purchased by the parents.
11. Portability
What It Is: Portability in health insurance allows you to switch from one insurance provider to another without losing your benefits, such as coverage for pre-existing conditions or accumulated bonuses. This feature is especially beneficial if you are unhappy with your current insurer or find a better policy elsewhere.
Example: Let’s say Raj has been with ABC Health Insurance for several years. He learns that XYZ Health Insurance offers a policy with better benefits and a lower premium. Raj wants to switch to XYZ, but he is concerned about losing the waiting period he's already served for his pre-existing condition, diabetes. Thanks to the portability feature, Raj applies to XYZ Health Insurance and successfully transfers his existing benefits. After the transfer, he retains the waiting period he has already completed, making it easier for him to claim coverage for diabetes-related treatments.
What It Is: A Third Party Administrator (TPA) is an organization that acts as a middleman between the insurance company and the insured. TPAs are responsible for managing the claims process, including receiving, processing, and settling claims on behalf of the insurance company. They also facilitate cashless transactions at network hospitals.
Example: Suppose Shalini has health insurance with an insurer that works with a TPA—a company called Health Claims Management. When Shalini is admitted to a hospital, she presents her insurance details. The hospital contacts the TPA to confirm her coverage and eligibility for cashless treatment. The TPA verifies the information and allows the hospital to treat Shalini without requiring upfront payment. After Shalini is discharged, the TPA processes the claim and coordinates payment directly with the hospital.
What It Is: The grace period is a fixed amount of time (usually 15 to 30 days) after a premium due date during which the policyholder can make a premium payment without losing insurance coverage. If the policyholder fails to pay the premium by the due date, the grace period ensures that they retain their health coverage.
Example: Anita’s health insurance policy has a premium due date of March 1. Unfortunately, she gets busy and forgets to pay the premium on time. However, her policy offers a 30-day grace period. This means she can still make her premium payment up until March 31 without losing her coverage. If Anita pays her premium on March 25, her health insurance remains active, and she continues to be covered for any medical expenses.
Definition: Consumables in health insurance refer to medical supplies and materials that are used during the treatment of a patient but are not typically covered under standard hospital or health insurance policies. These items are generally disposable and are essential for performing various medical procedures.
Examples of Consumables:
Example: Let’s consider the case of Neha, who underwent surgery for a gallbladder removal (cholecystectomy). During her surgery, the hospital utilized various consumable items, such as surgical gloves, dressings, and sutures.
After her hospital stay, when Neha received the bill, she noticed it included charges for the surgical procedure but did not cover the costs for the consumables used in her treatment. If the total cost of these consumable items amounted to ₹4,000, Neha would need to pay this amount out of pocket, as her health insurance policy does not cover the expenses for consumables.
Conclusion
Understanding these common terms in health insurance helps individuals make informed choices about their coverage, ensuring that they select policies that suit their needs and financial capabilities. Being well-versed with these definitions not only aids in effective communication with insurance providers but also empowers policyholders to utilize their benefits effectively when healthcare needs arise.