Ahmedabad resident Neeraj Patel, who has a ₹10 lakh health insurance policy, was admitted to a hospital for surgery a few months ago. Though the hospital stay was cashless, Patel had to pay ₹35,000 out of the final bill of ₹1,60,000. When he analysed his bill, he found that certain expenses were not covered by the policy.
Like Neeraj, you may be surprised by a large bill even after undergoing surgery under a health insurance policy.
General health insurance doesn’t cover everything
When you take out a health insurance policy, you are supposed to be covered for all the costs associated with a hospital stay. However, this is not always the case.
“Out-of-pocket medical expenses refer to the costs that individuals pay directly out of their own pockets for healthcare services and treatments, which are not covered by health insurance policies,” says Parthanil Ghosh, President, Retail Business, HDFC ERGO General Insurance Company.
Certain costs are not covered by a normal health insurance policy (see box), while there may be some costs that are not covered because the policy has certain features to keep the premiums affordable.
Possible out-of-pocket expenses:
OPD (Outpatient Department Expenses): A health insurance policy usually does not cover OPD expenses incurred by the policyholder, as per Digit General Insurance. This includes expenses related to doctor’s visits, pharmacy bills, diagnostic tests, investigative tests, etc.
Consumables: Insurers typically do not cover medical items and supplies that are typically used during hospitalisation or medical procedures. These include administrative fees, gowns and gloves used by medical staff, surgical blades, syringes and other disposable materials.
Admission for examination and assessment:
Expenses related to any admission made primarily for diagnostic and evaluation purposes may not be covered by the insurer and you may have to bear such expenses out of your own pocket.
Hospitalisation due to PED or specific illnesses:
If you have a pre-existing condition (PED) or are admitted for a specific condition, there may be a waiting period for the same. If the specified waiting periods have not been completed, the hospitalisation costs in such a scenario would be borne by the policyholder.
For example, if your health insurance policy has a room rental limit of ₹10,000 and your room costs ₹13,500, you will have to pay ₹3,500 out of your own pocket. So if you’re in hospital for six days, you’ll have to pay ₹21,000 out of your own pocket.
Also, if you have a health plan with co-payments (where you agree to pay a certain portion of the medical expenses incurred) or deductibles (where you have to pay a certain amount before the insurance company starts paying for treatment), you may have to pay a portion of the bill out of your own pocket.
Options to consider
Health insurance policies offer riders, or extra options, to cover certain out-of-pocket expenses. These will cost you an extra premium, but will cover most of your out-of-pocket expenses. Here are some of the most important riders.
Consumables cover:
This cover provides cover for medical consumables and materials used during a patient’s hospital stay or treatment.
“Non-medical expenses like PPE kit, gloves, etc are considered consumables and are not covered by the insurer. This typically amounts to about 6-14% of the overall hospitalisation expenses. Adding a consumable cover ensures the insurer also pays for all such expenses as well. Adding a consumables cover may increase your premium by 8-12%,” says Vivek Chaturvedi, CMO and head of direct sales, Digit General Insurance.
OPD Cover:
Adding this feature to your health insurance can be really useful. It goes beyond the typical hospital stays and covers you for medical costs when you visit the doctor, get tests, or need medications. Even those minor procedures that don’t require a hospital bed are included.
Whether it’s a routine check-up or something more serious, this add-on has your back.
Add-ons to reduce the waiting period:
Health insurance usually has a waiting period of 3-4 years for pre-existing diseases(PED) and 2-3 years for specific illnesses. “However, one can take an add-on by paying a higher premium and reduce the waiting period,” says Chaturvedi.
For example, reducing a PED waiting period of 3 years and specific illness waiting period of 2 years to a year each for a 40-year-old can increase your premium by 18%.
Choose a comprehensive health insurance plan
Choosing an insurance plan that has no deductible or excess is a wise choice as it will allow you to fully utilise the sum insured and will cover your medical bills as long as they do not exceed the sum insured.
“Choose a health plan that explicitly covers out-of-pocket expenses so that you don’t have to bear the extra burden of finding money to pay for such expenses,” says Ghosh.
However, it’s important to strike a balance and ensure that the extra coverage doesn’t come at the cost of unaffordable premiums as you get older. The key is to consider riders carefully, focusing on those that have the potential to significantly increase your out-of-pocket costs.
