This article is written by Sorbhi Sharma who is pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho.

Introduction

Medical emergencies come unannounced and as such living in these Covid times has made taking a medical insurance cover ever so important.  The pandemic has made people realize the importance of staying fit and also the financial implication of their insurance coverage. If one doesn’t own a Mediclaim policy, be sure to be ready with massive medical bills due to hospitalization.  

Mediclaim Policy 

Typically, it is a form of insurance policy wherein the insured pays an amount known as the premium to the insurance company to avail the benefits that come along with the Mediclaim policy. Therefore, these policies not only provide a sense of financial security but also act as a shield that helps reduce the cost incurred because of hospitalization and accident-related treatment. They are usually for a specific period of time and need to be renewed monthly or annually to enjoy their benefits. Usually, a mediclaim policy’s coverage does not exceed 5 lakh rupees. Furthermore, the premium that you pay is eligible for tax exemption under Section 80D of the Income Tax Act, 1961, making it a good investment. 

These policies can be availed either through reimbursement or the cashless facility cashless provided by the insurance company. In the reimbursement policy, as the name suggests, the insurer first bears the treatment expenses and later files a claim to get the amount reimbursed from the insurance company. On the other hand, the cashless facility is a service provided by the insurance company where all the medical bills are settled directly by them, provided the medical expenses don’t exceed the sum insured. However, the cashless transaction has a catch that it can only be used in the hospitals that are impaneled in the insurer’s network.

Features and Benefits of the Mediclaim Policy 

• It shields from financial burden;
• Offers ease of cashless transaction;
• Tax Exemption under Section 80D of Income Tax Act;
• Ease of buying it online from various health insurance companies; 
• Removes expenses paid from the pocket; 
• Avail cost-effective health care services;
• Expenses shall be settled by the insurance company;
• You can choose an insurance policy either for self or the whole family.

Types of Mediclaim Policies 

Different Mediclaim policies cater to your different needs and requirements.

1. Individual Mediclaim Policy– This insurance plan offers financial coverage only to the policyholder. It includes the pre-and post-hospitalization costs, diagnostic tests etc. These policies are valid for a year). There are different types of Individual Mediclaim policies that are according to one’s needs e.g maternity, critical illness, etc.
2. 2. Family Floater Policy– The policyholder and the family members get covered in this plan including parents and children and the spouse.
3. Senior Citizen Mediclaim Policy– Under this plan, senior citizens people above the age of 60 are covered for their medical expenses.
4. Critical Illness Mediclaim Policy–Medical emergencies arising out of critical illness are usually high and these policies cover illnesses like cancer, kidney failure, etc.
5. Low-cost Mediclaim Policy– These policies cater to the underprivileged sections of the society. The premium is low and is usually bought by the small and medium enterprises to cover the medical needs of their employees.  

What does a Mediclaim policy cover?

1. Hospitalization Costs–All costs that are incurred by the policyholder or its beneficiaries upon hospitalization. For example, OT charges, diagnostic tests, X-rays, etc.
2. Pre-and post-hospitalization costs– Medical expenses arising 30 days before hospitalization and 60 days later. However, one needs to check with their insurance company if such a benefit is inclusive of their Mediclaim policy.
3. Daycare expenses– All medical expenses arising out of advanced treatment but does not require the policyholder or its beneficiaries to be admitted in the hospital for more than 24 hours.
4. Doctors and medical fees– The policy provides coverage for the doctor’s fees, nurses’ fees, etc.
5. Hospital Room services– Hospital wards and Intensive Care Units (ICU) costs are fully reimbursed by the insurance company.

What is not covered under a Mediclaim policy?

Every policy is different and one has to choose what one wants to add to the policy to make it suitable to their needs.

Usually, these policies don’t include the following things:

1. Pre-existing diseases;
2. Sexually transmitted diseases; 
3. Birth Control;
4. Infertility treatments; 
5. Dental treatments; 
6. Vaccinations;
7. Maternity costs if not added in the add-on feature;
8. Plastic and cosmetic surgeries;
9. Any ailment contracted after purchasing the policy.

Important Things to consider while purchasing a Mediclaim Policy

1. Coverage – While selecting your Mediclaim policy, you need to first choose the coverage amount. Usually, a Mediclaim policy comes with a pre-decided sum insured. High coverage would require paying a higher premium but one must purchase the policy according to the person’s requirements and needs.
2. Co-payment– It is a flat fee that is borne by the insured and the rest is paid by the insurance company. A few Mediclaim policies have a co-payment clause that defines the percentage of payment between the insured and the insurer like 90-10, 80-20, etc.  If you have a co-payment clause in your policy, the premium to be paid would then be less.

For example, Seema bought a Mediclaim policy with an approved claim of 2 lakh and agreed to pay 10% as co-payment. In this case, she will have to bear 20,000 as the co-payment and the rest 90% will be paid by the insurance company.

3. Individual or family floater- Before finalizing the Mediclaim policy, you must make sure whether the policy only caters to one member or the whole family. In case it is a family floater pack, then the sum insured is going to be distributed among the family members.
4. Network Hospitals– While purchasing the policy from a particular insurance company, be sure to check the list of network hospitals for availing of the cashless facility. The wider the range of network hospitals, the better it is as you can benefit from them being anywhere across the country.
5. Waiting period– Different Mediclaim policies have a different waiting period. 

A waiting period is a period wherein the policyholder cannot claim for medical expenses for any specific ailment. For example, in a group policy purchased by the employer, a new employee will have to wait to claim the group policy. The waiting period could be applicable as the new employee might be on probation. Even in the case of a pre-existing ailment, your insurance company may ask you to wait before you can make a claim. Therefore, it is pertinent to ask your insurance provider about the waiting period before settling for a particular policy.

Difference between a Mediclaim policy and Health Insurance 

Health insurance has a wider ambit than the Mediclaim policy.

1. It provides comprehensive coverage that includes regular checkups (depending on which insurance company’s policy you buy), hospitalization charges, pre-and post-hospitalization charges, ambulance expenses and also provides compensation in case of loss of income due to an accident.
2. It also provides add-on facilities like maternity coverage, critical illness, accident disability, etc.
3. It provides flexibility, that is, the policyholder can reduce the premium and the duration period of the chosen insurance plan after a specific period.
4. The sum insured in health insurance does not exceed 6 crores that is the reason it provides extensive benefits.
5. In a health insurance policy, when claims related to critical illness and accidental disability arise, either the amount is paid in a lump sum and they can be used only once in the entire duration of the policy or the insured can file claims till the sum insured isn’t exhausted. However, it all depends upon the insurance company you choose and the facilities that the insurance plan provides.

News related to Mediclaim Policies 

With thousands being tested positive for COVID-19 and the rising death toll in India, the government has made some relaxations in the insurance policies: 

1. The IRDAI has provided additional time in payment of renewal premiums for health insurance policies.
2. In April 2020, the apex body of insurance companies IRDA has announced an Aarogya Sanjeevani Policy. Under this Mediclaim policy a coverage of 1 to 5 lakhs is insured to battle the coronavirus outbreak. The apex body also said that all medical policies which are currently in force will cover the treatment cost of hospitalization due to coronavirus infection.
3. In July 2020, IRDA then launched the Corona Kavach plan, wherein all health and general insurance companies are to provide Individual and Family Floater plans to battle the coronavirus infection in India. The coverage amount is from Rs. 50,000 to 5 lakh and the duration is 3.5, 6.5, and 9.5 months.
4. The Life Insurance Council announced that for all life insurers, whether public or private, any death claims pertaining to COVID shall be processed at the earliest.
5. The Government of India has made it mandatory for all employers to provide health insurance coverage to all their employees irrespective of their earnings. Before the coronavirus outbreak, employers didn’t need to provide health insurance coverage as the employees earning above Rs. 21,000 per month in the organized sector were already covered under the Employee State Insurance Act, 1948. However, this rule is for people earning below Rs. 21,000 per month, whereby the employer shall provide health insurance coverage.

Conclusion 

Health insurance is a prerequisite for surviving in these times and as it is said there is no right time for buying a health insurance policy for oneself and the family. Since there is a thin line between a Mediclaim and health insurance, both offer more or less the same services. An Employment cover won’t be enough in case there is a medical emergency in the family. Therefore, it is pertinent to purchase a Mediclaim policy/Health insurance as it also helps you in planning for the future financially.

 References

• https://life-and-health-insurance-license.readthedocs.io/Chapter3.%20Legal%20Concepts%20of%20the%20Insurance%20Contract/
• https://www.thehindubusinessline.com/opinion/columns/slate/all-you-wanted-to-know-about-force-majeure/article31834792.ece
• https://www.icsi.edu/media/webmodules/FULLBOOK_PP_IL_P_2018_CRC.PDF
• https://www.policybazaar.com/health-insurance/individual-health-insurance/articles/mediclaim-vs-health-insurance/
• https://www.acko.com/health-insurance/mediclaim-policy/

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.

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