Understanding medical insurance

Mediclaim is the primary health insurance cover in India. Rider is a provision in an insurance policy allowing for amendments to its terms and/or coverage. Usually riders are placed on health insurance companies to exclude specific pre-existing conditions or inclusion of some risks for a given extra premium. Critical illness cover is one such rider. As it is not required to embed the critical illness rider to primary health cover, it is called a ride-on ride-off condition, which means the policyholder has an option to buy it, or surrender its benefits to avail exemption from the extra amount of premium payable.

Knowing the basics

Understandably, it would be impossible to find a health insurance policy that covers every illness or medical condition without limits or exclusions. Most policies specify certain types of injuries, illnesses, or procedures for which they provide a lower level of coverage. Furthermore, certain illnesses, injuries, and procedures may not be covered at all. Limitations are conditions or procedures covered by a policy but at a benefit level lower than the norm. Exclusions, on the other hand, are conditions or procedures that are completely omitted from coverage. A health insurance policy should list all limitations and exclusions. Therefore, reading and understanding a health policy is certainly an important thing to do.

Although, the specifics of limitations and exclusions do vary from policy to policy, a list of common limitations and exclusions a standard policy might include are:

• Pre-existing conditions: A pre-existing condition is an illness or injury that began or occurred before you obtained coverage under a policy. Pre-existing conditions are often excluded from coverage, or may be covered after a specified waiting period.
• Non-duplication of payments/coordination of benefits: In order to prevent double coverage, many policies specify that benefits will not be paid for amounts that are reimbursed by other insurance companies. This provision limits the total payment of benefits to 100 per cent of covered expenses.
• Alcohol and/or drug abuse treatment
• Care covered by the veteran’s administration or workers’ compensation
• Cosmetic surgery: Cosmetic surgery required as the result of an accidental injury or congenital defect is generally not excluded.
• Dental expense: Some policies may cover reconstructive dental treatment resulting from accidental injury.
• Experimental procedures
• Hernia
• Infertility treatment
• Injury incurred while committing a felony
• Injury, illness, or death that occurs while under the influence of intoxicants or narcotics
• Military duty: This provision usually suspends the policy while the insured is serving in the military.
• Non-commercial airline travel
• Organ transplants
• Self-inflicted injuries
• STDs[Sexually Transmitted Diseases]
• Vision correction
• War or acts of war that result in injury or death

Riders and endorsements

Insurance policies are usually written in a standard form, most of which is dictated by insurance act or regulations by IRDA [Insurance Regulatory and Development Authority]. If the policyholder needs additional coverage or if there are changes to the standard document, these changes can be made by way of a rider. The information to be conveyed in the rider is typed up on a separate piece of paper, that is attached to the standard policy. An endorsement can accomplish the same goal; the only difference is that an endorsement is actually incorporated into the body of the existing policy.

Some common health insurance riders are “multiple indemnity”, “waiver of premium”, “impairment” and “critical illness”.

In some health insurance policies, accidental death or dismemberment benefits may be doubled or tripled, depending on the cause of death or specific type of dismemberment. This multiple indemnity may be included in the policy by way of a rider. Some policies may allow policyholder to skip premiums during periods of extended hospitalization, which is waiver of premium rider. Impairment rider is used to specify a medical condition that might normally be covered, but is not covered because it is a pre-existing condition. Although, the particular condition is not covered, use of this rider allows the applicant to obtain insurance for other healthcare needs when this condition might otherwise make the person uninsurable. If the insurer agrees to provide coverage that is not included in the standard insurance contract, this coverage might be described in a rider.

Mediclaim

Mediclaim is a generic health insurance cover in India. In USA, such generic health insurance product called Medicaid has undergone several bouts of transformation. But the Indian version of Mediclaim remains almost static in structure excepting some marginal modification in quantum of coverage. It mostly covers expenses incurred by the insured for hospitalisation for illness/diseases or injury sustained [domiciliary hospitalisation also payable as per certain policies]. These include hospital charges [room, boarding and operation theatre], fees for surgeon, Anaesthetist nursing, diagnostic tests, cost of medicines, blood, oxygen, cost of appliances like pacemaker, and artificial limbs.

A standard Mediclaim policy covers any person in the age group of 5-75 years. Children between three months and five years can be covered only along with parent/s. It also covers institutions [government or private] for their employees, clubs/associations for their members in the said age group and group schemes are mostly available for homogenous groups of more than 50 persons.

Apart from cover against illness/disease, accidental injury leading to one or more of class of expenses, the policy offers a few other benefits in the fringe. Domiciliary hospitalisation benefits can be excluded under group Mediclaim policy and a premium discount can be availed. Exemption under income tax [80D of Income Tax Act] for premium paid by cheque is one attraction of Mediclaim policies. A discount of 10 per cent of total premium is generally extended for coverage of an entire family under a single policy.

Critical illness rider

If the insured is diagnosed to be suffering from any of the specified critical illnesses, and the insured survives the specified illness for a period of at least 30 days from the date of diagnosis, usually Critical Illness Rider is available as a ride-on ride-off product.

Usual cardiac illnesses covered

Heart Attack: The death of a portion of the heart muscle as a result of inadequate blood supply and being evidenced by all three of the following: A history of typical prolonged chest pain; New Electro Cardio Graphic [ECG] changes; and significant elevation of cardiac enzymes above accepted laboratory levels of normal. Confirmation by a specialist approved by insurer may be required.

Diagnosis of heart attack based solely on an ECG or solely on a blood test is excluded. Insurer will not pay for other causes of severe non-cardiac chest pain, heart failure or angina.

Stroke: Stroke is a cerebrovascular accident or incident-producing permanent neurological deficits lasting more than 30 days, as verified by a consulting neurologist or specialist approved by the insurer. This includes infarction of brain tissue as a result of thrombosis or heamorrhage or embolisation from an extra-cranial source. Specifically excluded are transient ischaemic attacks, any reversible ischaemic neurological deficit, vertebrobasilar ischaemia, cerebral symptoms due to migraine, or brain damage due to external traumatic causes.

Surgery of coronary arteries: The undergoing of open heart surgery or keyhole surgery, on the advice of a consultant cardiologist, to correct narrowing or blockage of one or more coronary arteries with insertion of bypass graft[s]. Balloon angioplasty [PTCA], heart catheterization, laser relief, rotablade, stenting and all other cardiac procedures are excluded.

Whether Mediclaim or Critical Illness Rider, the inclusions, exclusions, coverages and quantum are only illustrative. Companies are free to innovate in most cases but subject to IRDA file and use norms as at present.