Coverage for OPD expenses still at a nascent stage

IRDAI’s standardisation guidelines have made the scope and coverages under insurance policies easy to understand for the end customer.

Published: 25th March 2019 07:48 AM  |   Last Updated: 25th March 2019 07:48 AM   |  A+A-

Mayank Bathwal

Aditya Birla Health Insurance CEO Mayank Bathwal

Express News Service

MUMBAI: The health insurance segment has seen emergence of several new concepts, including wellness as an integrated part of the insurance offerings. Aditya Birla Health Insurance, one of the youngest players in the domain, bets on the philosophy of keeping the customer healthy and rewarding physically active customers with a 30 per cent premium payback. The basic idea is to move customers from ‘mediclaim’ to ‘wellness’, says its CEO Mayank Bathwal.
Health insurance still ranks low on priority in the overall financial planning for most. What is the deterrent? 

Health insurance industry is experiencing a robust growth over the past few years. As per IRDAI annual reports, health insurance market continues to grow over 20 per cent year-on-year during the past three financial years. Yet, India still has a low non-life insurance penetration (ratio of premium to GDP) of 0.93 per cent.

However, with increasing medical inflation and financial distress due to hospitalisation, awareness of health insurance has increased significantly over the last few years and customers have started asking for adequate coverage in the urban areas. IRDAI’s standardisation guidelines have also made the scope and coverages under insurance policies easy to understand for the end customer.

Moreover, with introduction of schemes like Ayushman Bharat, both accessibility and affordability of health insurance would greatly increase in the coming years to a segment of population for whom health insurance had still not become a major focus point of overall financial planning.
Health insurance is still looked up as covering hospitalisation. How do you change that with your plan that is targeting wellness? 

Health insurance in India and worldwide has predominantly evolved as a product for indemnification against hospitalisation expenses. This is the primary intent of any indemnification-based health insurance product.We have been a pioneer in bringing in the concept of wellness as an integrated part of health insurance offerings.

We have incentivised the customer in forming such healthy habits to take care of their health and, in turn, use such incentives to reduce premium payments and make other medical payments. Such kind of a structure also motivates the youth to buy insurance as generally, younger population view health insurance as an unnecessary expenditure.

What can be done about adding OPD expenses into the insurance ambit? 

OPD (Out Patient Department) expenses as part of health insurance coverage is at a nascent stage of development in India. There are only few players offering such cover in some of their products. 

Market is slowly evolving, and industry is coming up with innovative products covering OPD expenses including coverage for doctor visits, pharmacy bills and medical tests.

Standardisation of medical diagnostic expenses and pharmacy expenses, increase of distribution network by insurance firms to cover a large number of doctors and making the fragmented OPD ecosystem into a well regulated and standardised entity across each city and town would go a long way to ensure uptake of OPD products by the customers.
For the salaried, who may have an existing group health plan from employers, what is the advice on top-up plans and the cost for the additional cover? 

For salaried people covered under an employer corporate group health insurance plan, they may go for additional top-up or super top-up cover with deductible matching the sum insured provided by the employer. Even for individuals with a personal or floater health insurance cover of Rs 5 lakh, it is cheaper to go for a Rs 20 lakh super top-up cover with Rs 5 lakh deductible, rather than a direct Rs 25 lakh cover.

One should note that claims under top-up cover is payable on breaching the deductible limit on a per event/hospitalisation basis, while claims under super top-up cover is payable on breaching the deductible limit on an aggregate claim basis in a policy year. Hence, it is advisable for everyone to a have base individual cover in addition to corporate cover.
What is the kind of tax incentive available for medical insurance and how beneficial is that? 

Health insurance should not be looked only through the lens of tax savings. Protection from uncertain financial expenses due to any hospitalisation and adequacy of coverage should be the primary deciding factor for health insurance, while tax incentives should only be of secondary consideration.
However, the government is trying to popularise health insurance penetration in India through such tax incentives.

Below is the current structure for deductions applicable under Section 80D of Income Tax Act.

Depending on the tax rates applicable for the individual, substantial savings can be made via deductions on health insurance premium.


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