Recently, one of my close friend’s mother had cardiac arrest and she had to be immediately admitted in nearby star hospital. At the time of admission, hospital asked to deposit huge amount even before admitting her. My friend was not in that position to deposit that amount. That’s when he called me & asked for some monetary help. Needless to say that I helped him. But, later after her mother was operated & discharged, I asked him one day as don’t you have health insurance for you & your parents? That’s when I learnt that he had landed in soup by buying health insurance policy, which didn’t helped him in the need of the hour.
After little bit of research, I realized that there are seven key concepts regarding health insurance policy that one needs to understand to avoid any financial surprises when you fall sick. These concepts will help you to choose health insurance plans wisely.
1 – Cost sharing
Health Insurance Company will not completely pay your medical expenses. They will share the cost with you by deducting a fixed amount or percentage every time you put claim. The mechanism to deduct this amount varies from company to company.
2 – Out-of-pocket maximum
The out-of-pocket maximum is the maximum you will pay towards deductible in a year. Beyond that threshold, health insurer will start paying 100% of your health care claims for the rest of the year. This limit gets reset at the beginning of your renewal period.
3 – Provider Network
The health insurance company has tie-up with selected hospitals & medical centers. If you take treatment at those centers, your expense may be paid directly by Health Insurance Company after deducting applicable deductibles as per your policy & terms & conditions. However, if you consult doctor or specialist outside of those networked hospitals, you will have to initially pay from your pocket & then claim later from insurance company.
4 – Pre-hospitalization authorization
Health Insurance Company won’t allow you to get any health service whenever you wish to avail & wherever you wish to avail. Since they are paying maximum part of your medical expenses, they want to ensure that you actually need the required health care and that also at a economic rate. Hence, most insurance companies have put a process in place whereby one needs to seek ‘pre-authorization’ from them before getting admitted. If they refuse to authorize it, your claim will get rejected & you will stuck with the bill.
5 – Insurance Claims
The health insurance claim is the mechanism to alert insurance company about the expenses spent on getting medical treatment. Mostly, hospitals within in-network will directly send claim bills to Health Insurance Company. However, in case of out-of-network service provider hospital, one has to pay bills from his own pocket & then later claim it from Health Insurance Company. The company will validate the bills & reimburse it after deducting the deductibles.
6 – Insurance Premiums
The Premium is the amount you pay for buying health insurance. This premium can be paid at agreed & defined frequency (monthly, quarterly or yearly) with company as per terms & conditions.
7 – Open enrollment
One can only sign up for health insurance at the certain times of year, called open enrollment period. This is to stop people from postponing the buying decision of insurance until they are sick.