What is Commercial Health Insurance: Its Working, Inclusions and Types
Commercial health insurance refers to policies provided and administered by private companies and NGOs (non-government organisations). Private insurers design their policies to generate revenue from policyholders’ monthly premiums. This is in sharp contrast to Government-sponsored policies, which are reserved for certain groups and provide coverage without returning a profit.
The commercial health insurance market in India is regulated by IRDA (Insurance Regulatory and Development Authority in India). Until 1986 when the sector was opened to private companies, there were only two types of health insurance policies- ESIS and CGHS.
Today, there are 24 life insurance, 27 general insurance and 7 standalone health insurance companies in India. As of March 2021, health insurance companies have increased by 41% amidst a surge of sales due to the Covid-19 pandemic.
Let us take a deeper look into commercial health coverage in India.
How Do Commercial Health Insurance Policies Work?
Insurance companies offer a wide range of health insurance policies varying in the premium amount, coverage and other features. People can buy such policies from licensed agents and brokers or directly from the carrier via online and offline means.
Most people choose a health policy based on its premium and cover of services they want. In India, health plans always cover in-patient hospitalisation and necessary treatment costs in hospitals. Some insurance policies also offer additional coverage, including daycare expenses, ambulance charges, doctor’s fees, room rent, nursing charges, etc.
When the insured person wants to make a claim, he/she can do so via a cashless facility or reimbursement. With the cashless claim facility, you can receive treatment from a hospital under the insurer’s list of network hospitals without paying anything. On the other hand, if one is entitled to a reimbursement one can get treatment from any hospital in an emergency and claim reimbursement for the same from the insurer later.
Some health insurance policies come with a deductible that often translates to lower premiums. This is the amount the insurer must pay out-of-pocket in a calendar year before the insurer pays its portion. These policies usually cover a larger amount of expenses for medical treatment, which would otherwise greatly hurt the insured person financially.
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What are the Different Types of Commercial Health Insurance Policies?
In India, there are two broad categories of health insurance policies. These are:
1. Indemnity Plans
These are traditional health insurance policies that cover hospital-related expenses up to a maximum sum insured. Given are some types of these policies:
2. Mediclaim Insurance
These policies usually cover hospital-related expenses incurred due to only sudden sickness and accidents.
3. Individual Insurance
Under individual policies, only a single individual can receive the claim amount after they get admitted to a hospital. These policies are best for higher-risk individuals as they do not have a maximum limit for policy renewal.
4. Family Floater Policy
You can cover your entire family with a single-family floater plan. These policies divide the insured sum equally among members but carry a lower premium than mediclaim or individual policies.
5. Group Mediclaim
Medium and large scale enterprises get group health insurance plans for their employees. This is helpful for employers as they increase employee retention and offer a free/nominal cost health policy for employees.
6. Defined Benefit Plans
Under defined benefit plans, the insured person gets compensated with a lump sum amount on detection of a particular illness. While they do not provide cover for a range of illnesses, they offer a considerable sum of money for medical treatment. Some of the different types of defined plans are:
7. Critical Illness Insurance
These plans pay a large amount of lump sum money for certain illnesses such as cancer, kidney failure, heart attack, major organ transplant and more.
8. Personal Accident Plan
This type of policy pays a high lump sum amount to the insured person or his/her family in case of accidental injury or death.
9. Hospital Daily Cash
Provides a daily cash allowance up to a certain limit upon hospitalisation.
Common Inclusions under Most Commercial Health Insurance Policies
Health insurance plans in India commonly cover the following medical expenses:
1. In-patient Expenses
These include expenses incurred when the insured person is admitted to a hospital for more than 24 hours. This includes nursing fees, room rent, ICU/ICCU expenses, doctor’s fees, etc.
2. Pre- and Post-hospitalisation Expenses
These include diagnostics tests, X-rays, doctor’s consultation fees, etc., incurred for a specific number of days before and after hospital admission.
3. Daycare Treatments
These include expenses for medical procedures where the insured person stayed for less than 24 hours in a hospital.
4. Ambulance Charges
Insurers pay charges incurred to transport the patient to the nearest hospital up to a certain limit.
5. Homecare Treatment
Insurers cover expenses due to treatment availed at home. This facility is only for cases where the insured person cannot get treatment at a hospital.
6. Additional Coverage
Many health plans provide critical illness cover, free annual health check-ups and certain outpatient cover.
What Expenses are Usually Excluded from Most Health Plans?
The following are some of the most common exclusions of commercial medical insurance policies:
- Treatments taken outside India
- Congenital diseases
- Treatment or procedures not backed by sufficient scientific proof
- Supplements purchased without prescription
- Pre-existing diseases till the end of the waiting period
- Expenses due to injuries received from adventure sports such as mountain climbing, bungee jumping and more.
- Dental treatment
- Cosmetic procedures
Factors to Look for Before Buying Commercial Health Insurance
The following are some of the essential factors people should look out for before buying a health policy:
1. The Reputation of the Insurer
Your health insurance provider should be registered with IRDA and have good ratings and feedback. Since you will need to rely on the insurer during times of need, you should check all negative feedback and if the company resolves them.
2. Claim Settlement Ratio
You need to make sure that your insurer will pay rightful claims in times of urgent need. A high health insurance claim settlement ratio tells you that the company settles most of the claim requests as soon as it receives them.
An insurance company that has sold a higher number of policies is usually more trustable and reliable. Hence, it is more likely to have a better track record of arranging funds for treatment.
4. Network Hospitals
Companies with a large network of hospitals offer easy access to treatment without the need for cash. These hospitals allow you to get treatment without paying any cash, as the insurer settles all bills directly with them.
5. Customer Service
An insurer needs to deliver good customer service during times of medical emergencies to provide necessary financial support. Check a company’s record of settling claims within three months to get an idea of the efficiency of its customer service.
6. Health Insurance Premiums
Look not for the cheapest plans but ones offering the best value for money. The best policies offer great coverage and do not have any exclusions that can compromise your financial security during times of need.
Final Word
The commercial health insurance sector in India offers a range of products with different coverage, pricing and types. Health insurance policies can cover basic treatment charges, pre and post hospitalisation expenses, ambulance charges, home treatment and add-on covers.
Navi offers a range of health insurance products with cover upto Rs. 1 crore with a very simple claims process. Download the Navi App to avail health plans with 100% paperless, cashless claims that get settled in only 20 minutes.
FAQs
Ans: IRDAI (Insurance Regulatory and Development Authority of India) regulates all general and health insurance policies in India. Companies registered with IRDAI must follow certain rules and guidelines, ensuring transparency for customers.
Ans: The following are some essential parameters you may want to check when purchasing a health plan:
• Waiting period for pre-existing conditions
• Capping/sub-limits for coverage
• Exclusions under policy
• Number of network hospitals
• Co-payment clause
• Claim settlement ratio of the insurer
• Premium amount
Ans: Based on market share, claim support and cashless treatment facility, here are some of the top insurers in India are:
• Star Health and Allied Insurance Company
• HDFC Ergo General Insurance Company
• Care Health Insurance Company
• ICICI Lombard
• Bajaj Allianz General Insurance Company
• Max Bupa Insurance Company
• Aditya Birla Capital
• Tata AIG General Insurance Company
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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