Indian Consumer: Awareness about Health Insurance

Despite the projections of a high growth in the health insurance sector, India still lags behind when it comes to awareness about the same. The general public are by and large ignorant about the benefits of availing healthcare insurance policies and there lies an urgent need to educate the masses regarding the importance of Health Insurance and the benefits derived on account of it. 

Health insurance sector is very much in a formative stage still. There are health insurance products for more than 20 years now but still the penetration level is barely 2-3 per cent of the population. Though the general public is concerned about surging health care costs, they don’t realize that health policies can save them monetary losses. They often looks to purchase health insurance only when he or she needs medical treatment or at an older age. It is advisable to purchase insurance beforehand and preferably at a younger age as the premiums are cheaper, and customers will have no ‘pre-existing ailment exclusions’ as they grow older. Another factor that should encourage Indians to purchase health insurance is that they can avail of tax benefits under Section 80D of the Income Tax Act for most health insurance plans.

There is an irrationalfear among people that insurance is wastage of money and that they are never going to be awarded the claim money. In this sense, the role of intermediaries becomes vital who can assuage them comfortably. Again the distribution channels in India are very weak. Considering that Indian market is largely retail, consumers should be reached out not specifically for each need but through an intermediary who will look comprehensively into their needs.

In most cases, the insured is not even aware of his rights and duties. Most insurance purchasers do not have any clue as to what they should do if they have a disagreement on any issue with their insurance company - whether it is a simple thing as repeatedly asking for a change of address or receiving the policy itself or a slightly more difficult one that involves a dispute/ difference of opinion on the claim settlement. They need to be aware that there is an insurance ombudsman who looks into such grievances and resolves the matter.

Against this backdrop, IRDA has taken the responsibility to launch a multi-media, multi-level awareness campaign to address the issues related to the above mentioned problems. The insurance regulator is leaving no stone unturned to increase insurance awareness among prospective and existing policyholders in India. Given that the regulatory framework is improving and that many new players including foreign companies are willing to come in, things might be at a take-off stage.

Astonishing facts about Indian Health

• The Indian healthcare sector is expected to become a US$ 280 billion industry by 2020 with spending on health estimated to grow 14% annually.
• India is the diabetes capital of the world. It is estimated that currently there are 40 million people with diabetes in India and by 2025 this number will swell to 70 million. This would mean every fifth diabetic in the world would be an Indian.
• A study by Ernst & Young says that India will require another 1.75 million hospital beds by the end of 2025. The public sector is likely to contribute only around 15-20% of the required US$ 86 billion investment.
• There is an acute shortage of supply of services in rural areas. Not only is there non-availability of hospitals for simple surgeries, but several parts of the country have barely one or two hospitals with specialist services.
• The rising graph of ailments in India is directly proportional to the rapidly changing traditional food habits, believe experts.
• In about a decade’s time, India has earned the dubious distinction of being the capital for diabetes, hypertension and heart ailments. And, steadily even obesity is sneaking into the Indian households. The prevalence of coronary artery disease has reached to 14% in contrast to 11% in 2003 and just 1% in 1960.
• According to the World Health Organisation (WHO), mortality due to cardiovascular diseases has decreased by 60% in Japan and Finland, 50% in the US, and 25% in Canada and Australia. But, on the other hand, it is projected that by 2015, mortality due to cardiac ailments will increase by 100% in India. This is mostly due to wrong diet, which is bringing down the immunity massively.
• Over the past few years medical tourism has gained momentum in India. An increase in the number of patients from developed countries getting quality health services for less than half the price is making India a popular medical tourist hub in Asia. Which in turn is pushing the Health care costs to rise rapidly.

Health Insurance: Investment or Expense

A friend of mine once called up to say he wanted to buy 10 lacs of Health cover for his parents. I calculated the cost to be approximately Rs 30,000. Aware of his financial condition, I asked him if he could afford that, to which he replied ‘I might not be able to afford Rs 30,000 today but I DEFINITELY cannot afford Rs 10 lacs if there’s a medical need tomorrow.”

I guess, the above incident is self-explanatory as to Health Insurance is an Investment not an Expense.

Buying Health insurance, simply put, is limiting your expenditure on Health care by being proactive - a type of safeguard against the high costs of medical care. It covers those unfortunate and unpredictable moments in life to which we all are vulnerable every passing second. It is thus an investment and as such a dire need. As an investment we may not get regular returns on it, but when it provides us with better access to medical services and reduces the amount of money we must pay out of our pocket for medical needs, it makes an important asset. Its need cannot be underemphasised either, considering the tough ordeal one undertakes on being diagnosed with an illness and having the need to be hospitalized.

Heart problems, diabetes, stroke, renal failure, cancer – the list of lifestyle diseases just seem to get longer and more common these days. The costs, we all know, are skyrocketing. Again because of high stress jobs, bad eating habits, more and more cars in the city, pollution etc. the younger generation has become as prone to the diseases and accidents as the older one. Those who have health insurance get more preventive care and see a doctor when needed, while those without health insurance may delay necessary medical care out of fear of the high costs.

Investing in health insurance means investing in your quality of life. If you have good health now, you may feel that you’ll never fall sick. This mind set needs to be changed. One visit to a nearby hospital may help you feel contrary. Fortunately we have many good hospitals and specialist doctors – but their service comes at a cost an average man can hardly afford. Only a right health insurance policy can adequately finance such expenses. Yes, preventive care helps and it may prolong the need for insurance. But there is nothing better than knowing you are fully protected.

Overall, uninsured people get about half as much care as the privately insured, as measured in terms of money spent on their care. This discrepancy holds true even when spending is adjusted for age, income, health status, and other factors. In the recent past, even the financial planners are focusing on medical policies and suggesting that one should get his health insurance first after taking the term cover and then look at other investments.

With our government eternally facing the fiscal crisis at both the central and state levels, the already inadequate public health budgets are further shrinking. This, coupled with rising health care costs in wake of the demand for its services and lack of easy access of people, especially from the low income group, to quality health care, increases our dependency on healthcare coverage. Thus, every individual, or the family as a whole, should invest in a quality health plan.

Changing Health Insurance Scenario

Today Healthcare is one of the most progressive and the largest service sector in India, defined by ground breaking innovations, flexible business models, new tech-trends and high investments. HealthInsurance thus cannot be far behind, further up bolstered by increase in public awareness, rising state-level participation, growth of health infrastructure, expanding choices of insurance products, etc. All these have not only increased the coverage of insurance sector multifold but also ensured its reach to the masses residing in remote areas.

Since the liberalization of the insurance industry India has been promoting private players to enter the health insurance sector. This was followed by another landmark decision of establishing Third Party Administrators (TPAs) to facilitate speedier expansion by providing an administrative– intermediary structure to the insurance industry. Expenditures that cover outpatient treatment, including medicines for all serving and retired CGHS beneficiaries and inpatient/diagnostic services availed by retired beneficiaries, has thus grown between 12% and 25% per year over the past several years. 

Social Security for medical emergencies dates far back in the Indian community. For e.g. villagers used to collect donation to support a household with a sick patient even earlier. Only the form has been improvised keeping in mind the changing social patterns.

Use of Internet and Mobile for service sectors including insurance is seen as a fast-emerging trend in India. This is supported by exponential growth in the country’s information and communications technology (ICT) sector, and plummeting telecom costs. Gone are the days when time and hassles involved to conclude a deal were herculean. Today everything is at the click of a mouse or an icon. One can compare quotes from various insurers from the cosy comforts of his home. Claim settlement is also more transparent with growing public awareness and reduced documentation.

Agents have thus taken a backseat, allowing Brokers to cater to the varied but specific needs of the clients. Dental and diabetes treatment, doctor consultation, maternity benefits, etc. are also seen to be included in customised policies. Senior citizens have finally been awarded special care and attention with specific policies to their needs.

The single largest change in the previous year was Portability of policies from one insurer to the other without losing the accrued benefits. This has jolted the reluctant insurance companies and kept them on their feet lest they lose their valued insured. Several other schemes and changes are under deliberations and are hoped to see the light of the day soon.

Realizing the increasing need for growth of health insurance, Govt. is also escalating its projects. For instance, the Rashtriya Swasthya Bima Yojana (RSBY) has been extended to cover unorganised sector workers in hazardous mining and associated industries, like slate and slate pencil, dolomite, mica and asbestos. The Yojana has emerged as an effective instrument for providing a basic health cover to poor and marginal workers. Presently it is being extended to MGNREGA beneficiaries, beedi workers and others.

However, there are lot of challenges ahead. Global experience and economic theory show proof of widening inequity, over utilization, adverse selection, upsurge in inappropriate care, inadequate risk selection, etc. thus increasing overall cost of care and insurance. Also, such highly competitive, voluntary markets will lead to high administrative costs, unviable risk pools, undercutting and unrealistic pricing, eventually paving the way for market instability and bankruptcies. Despite its expanding reach, the penetration of health insurance in India has been low. It is estimated that only about 3% to 5% of Indians are covered under any form of health insurance.

Rightful Claim and Speedy Settlement

Any insurance policy is taken out with the sole motive of availing the claim when it arises. To ensure that insurance co.s do not find a way to go around this on the pretext of delayed submission of documents, the Irda has sent a circular to all insurers clarifying that they cannot deny any claims if the delay is due to unavoidable circumstances. The regulator said that the insurers' decision to reject a claim should be on sound logic and valid grounds. Rejection of claims on purely technical grounds in a mechanical fashion resulted in policyholders losing confidence in the insurance industry, giving rise to excessive litigation.

At present the claim to be considered valid, has to be intimated to the insurance company in a prescribed form within 7days. After the claim is registered, the company will give a reference number that needs to be referred to in all future communications. The insurance company will then, carry out investigations, loss assessment and provisioning and make the final settlement.

The circular says insurers need to develop a sound mechanism of their own to handle such claims with utmost care and caution. It does not put any penalty on the insurer for rejecting the claim. The regulator also mentioned that the insurers are advised to incorporate additional wordings in the policy documents and must not repudiate claims unless the reasons for the delay are specifically ascertained and recorded. 

The insurers should satisfy themselves that the delayed claims would have otherwise been rejected even if reported in time.

To make claim settlement faster, the policyholder is to fill the claim form, which has details like basic information such as policy number, name of the insured, date, place and reason of hospitalisation or death and the name of the claimant, and submit all relevant documents such as hospitals bills, original death certificate, policy bond, police FIR, postmortem report, certificate and records from the treating doctor/hospital, etc. to the insurer as soon as possible. One should always keep a photocopy of all the bills and the filled claim form for records. Under the regulation 8 of the Irda (Policy holder's Interest) Regulations, 2002, the insurer is required to settle a claim within 30 days of receipt of all documents including clarification sought by the insurer. If the claim requires further investigation, the insurer has to complete its procedures within six months from receiving the written intimation of claim. However, some complicated third-party claims can take years for settlement. The claim amount is either sent through a cheque or remitted to the bank directly.

Basal Metabolic Rate

BMR is an estimate of how many calories you would burn if you were to do nothing but rest for 24 hours. It represent the minimum amount of energy required to keep your body functioning. Here’s the formula for calculating your BMR:
BMR = 655 + (9.6*weight in kg) + (1.8*height in cm) (4.7*age in years).
So your daily calorie intake to maintain your weight should be: BMR*1.15. To lose weight, cut down on this calorie count significantly.

WHAT IS METABOLISM?
Metabolism is the rate at which your body burns calories. Calories are burnt even when you’re sleeping and eating, because you need energy to keep you going. It differs for everyone. Factors such as muscle mass, genetics, overall weight, age and fat content determine how fast or slow your metabolism is.

HOW CAN YOU REV IT UP?

• Eat sensible, Eat healthy. Most people think that the thinner a person, the better her metabolic rate, and that this gives her a license to go on a junk food binge. Junk, oily and spicy food can slow down metabolism because these foods are tougher to digest and they add more to the fat content than to energy levels.
• Exercise will hike your metabolism levels simply because your body needs to burn more calories to sustain itself during and after a workout. “People must exercise for at least 30 minutes daily,” says a dietician. “An increased metabolism also helps in faster digestion, so even an occasional heavy meal does not make you feel bloated like it normally would if you work out.”
• Sleep like a baby. People who sleep less than seven hours a night cause their systems to slow down the next day-reflexes become sluggish and food is digested slower.
• “People do more cardio exercises because they think only these help in weight loss,” says a gym trainer. “But lifting weights and building muscle mass also causes calorie burn and weight loss.”

DON’T TAKE YOUR METABOLISM FOR GRANTED
A common misconception among people is that thin people have a high metabolism. People with high metabolism aren’t necessary thin. If you have a high metabolism, it only leads to a bigger appetite and higher calorie intake. Even the fastest metabolism hardly burns a maximum of 3000 calories in a day. So a high metabolism is of no use if you are eating more than what your body is burning.

WHAT FACTORS INFLUENCE YOUR METABOLISM?
There are some factors that you can control and change, and some factors that you can’t.

Age: Metabolic rate decreases by 5% with each decade.
Gender: Men generally burn calories more quickly than women because they have more muscle tissue.
Heredity: You can inherit your metabolic rate.
Thyroid disorder: Hypothyroidism and hyperthyroidism can slow down or speed up metabolism, but only 3% and 0.3% of the population have them respectively.

Source : Femina, oct 2011

Choosing the Right Health Plan

Are you caring for any dependents? Do you have any pre-existing conditions? How comprehensive do you want your plan to be? Do you need dental and vision plans? Do you have a chronic illness that requires monthly treatment? What are your month-to-month medical expenses, like prescription drugs? What could happen should you require surgery? What if you were injured in an accident? How much preventative care do you want?

Given the plethora of questions and options in the health insurance space, it is difficult to make a rational choice. One person who can rationally help you find the right health insurance plan is your insurance broker since he would be aware of the latest health insurance products in the market and he has your best interest in mind. It is finally up to you to make an informed decision based on his suggestions.

With insurance going online, getting health insurance quotes has become even simpler. No longer do you need to call up several insurance companies or fill out various different applications for getting health insurance quotes. On sites like healthandinsurance.in, all that you need to do is – enter in your requirements and you will be easily able to compare benefits and costs from different insurers.

Selecting a health plan is a matter of balancing the cost of a plan with the amount of coverage you need, the degree of choice you want and the trade-offs you are willing to make. Fueled by the skyrocketing costs of health care, revolutionary changes have been taking place in the design of health plans to reduce costs while maintaining quality care. There can thus be no dispute over the need for health insurance. Some points that specially needs to be noted are -

 

Cashless & reimbursement plans
There are two options available. The first is the cashless policy where you don’t need to pay while getting the medical treatment done.The payments are generally done by hospitals through their tie-ups with third party administrators (TPAs). Then there are reimbursement plans where you have to pay at the time of getting the treatment done and then are supposed to apply for reimbursement from the insurance company.

Difference in premium
How much health insurance will cost you depends on your age, the condition of your health, where in the country you live, your income, your job status and the like. When comparing policies, make sure you are comparing the same benefits and coverage. Also check the co-pays or coinsurance, deductibles and waiting period.
The deductible is the amount you must pay out-of-pocket before any medical charges are eligible for reimbursement. Plans with the highest premiums usually have low deductibles. When you choose a plan with a higher deductible, the premiums are usually lower.
Co-insurance is the percentage of covered expenses that you will pay. For example, co-insurance on office visits may be 70/30. This means the insurance company will pay 70% after the deductible, and you will pay 30%.
You will have to serve a waiting period when you start a new health insurance policy or increase your level of cover. There are also waiting periods for particular diseases.

Tenure of the cover
The mediclaim has to be renewed annually and within the specified time.


Size Matters
You should look at the annual limit of your health insurance policy. According to experts, if you hail from a small- or mid-sized town you should look at a cover of Rs 2-3 lakh. If you reside in a metro, then you should not look at covers less than Rs 4-5 lakh.

Clause On Sub-Limits
There are sub limits in mediclaim policies, the most common of them being room rents, doctors’ fees and diagnostics. If you have a sum insured of Rs 1 lakh and the insurer has capped your room rent at 1-1.5% of the sum insured then your room rent cannot exceed Rs 1,000. If it exceeds the specified amount, then you have to pay the balance from your pocket.

Other Clauses

There are mediclaim covers which do not cover pre-existing diseases for four years whereas some which do not cover it for three years. Similarly, ensure there is no ambiguity in the renewal clause of the policy. Another clause is the limit on Pre-Post i.e.expenses which include commuting to the hospital, buying medicines post hospitalisation and so on.

Other Information

Go through the list of hospitals and other facilities you would be able to use under the insurance plan. Equally important is to understand the plan’s procedures for handling claims and complaints.

The Ideal Choice

Keep in mind that there is no one-size-fits-all health insurance plan. The needs of a healthy 20something are vastly different from the needs of a family of four, which are vastly different from a baby boomer entering retirement. Right health insurance can save you from multiple expenses when it comes to paying for emergency or long term health services. Once you’ve settled on a plan, it is imperative to thoroughly understand it and follow its guidelines. And don’t forget you always have the option of claiming a tax benefit of up to Rs 15,000 under Section 80D.