What Is Catastrophic Health Insurance And What Are Its Benefits
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Catastrophic health insurance refers to health insurance plans that provide coverage for emergencies. These policies cover all the basic benefits and come with low monthly premiums. A sudden medical crisis could incur extremely high medical expenses, which are often paid straight from their pocket. If you want to safeguard yourself and your family from any such medical emergency, purchasing catastrophic health insurance could be beneficial.
But before you do so, learn about the coverage it provides, benefits, eligibility, exclusions, claim settlement process and more. Read on!
Table of contents
- What Is Catastrophic Health Insurance?
- Expenses Covered Under Catastrophic Health Insurance Plans
- Benefits of Getting a Catastrophic Health Insurance Policy
- Eligibility Criteria for Purchasing a Catastrophic Health Insurance Policy
- Tips to Choose the Right Catastrophic Health Insurance Policy
- How to Claim a Catastrophic Health Insurance Policy?
- Exclusions under Catastrophic Health Insurance Policies
- Who Should Not Purchase a Catastrophic Health Insurance Policy?
- Final Word
- FAQs on Catastrophic Health Insurance
What Is Catastrophic Health Insurance?
Catastrophic health insurance provides coverage for medical emergencies as well as preventative care. They usually come with a low monthly premium. Catastrophic plans were first introduced in the United States in 1973 for workers and Medicare beneficiaries. In India, top-up, and super top-up plans are the most appropriate health plans to protect oneself from catastrophic events.
Top-up plans increase the base coverage of an existing health plan and can be very helpful for a single event of hospitalisation. In addition, super top-up plans provide coverage for cumulative medical expenses providing adequate financial cushioning throughout the year. These catastrophic health insurance plans provide coverage after one’s medical expenses cross a certain threshold limit called the deductible.
Let us say that you have a base plan with an insured sum of Rs.10 lakh and a deductible of Rs.4 lakh. Now, if your medical expense is around Rs.6 lakh, the super top-up plan will pay Rs.2 lakh.
Expenses Covered Under Catastrophic Health Insurance Plans
Most catastrophic health plans will cover essential benefits such as:
All Hospital-Related Expenses
It includes fees for doctors, surgeons, anaesthetists, nurses, surgical appliances, blood bags, oxygen, etc.
Room Rent
It will cover room rent, ICU (Intensive Care Unit) charges, nursing expenses, etc.
Daycare Procedure
This includes treatments that require a one-day stay at a hospital.
Complementary Health Screenings
A catastrophic medical insurance policy offers free annual check-ups as well as a few complimentary health screenings.
Besides paying for emergency medical costs, catastrophic insurance policies may also account for the following expenses:
- Routine vaccination
- Emergency services
- Maternity and newborn care
- Diagnostic tests
- Mental health services
- Chronic disorders
Benefits of Getting a Catastrophic Health Insurance Policy
These are among the most important reasons to get a catastrophic insurance policy:
- These policies are a great alternative to higher-cost health insurance plans.
- Catastrophic health plans provide financial coverage against high out-of-pocket medical expenses. Thus, protecting one’s savings.
- These provide extensive coverage, including emergency medical costs, routine check-ups and hospital-related expenses.
- Catastrophic insurance policies can provide extended financial coverage for senior citizens and elderly parents without increasing the premium too much.
- When buying this policy, one can choose the right deductible amount, depending on their base plan.
- These insurance policies allow you to get a higher insured sum covering most/all your potential medical expenses.
Eligibility Criteria for Purchasing a Catastrophic Health Insurance Policy
The following eligibility criteria are applicable for purchasing catastrophic health insurance policies:
- Age limit: In India, the minimum age to apply for most health insurance policies is 18 years, while the maximum age is around 65-70 years. There are certain policies for children which provide coverage for even 16-year-olds. Catastrophic health insurance plans usually have a low maximum age limit of around 30 years. That said, the requirement varies across different insurance providers.
- Pre-existing medical conditions: Insurance buyers have to submit a declaration of good health and disclose pre-existing health complications. Usually, anyone purchasing a health insurance policy at the age of 45 years or above needs to undergo medical tests to be eligible.
Tips to Choose the Right Catastrophic Health Insurance Policy
Follow the given tips to choose the optimal catastrophic plan for your needs.
Tip 1: Select the Right Deductible
This is the amount you will have to pay from somewhere else before the catastrophic health plan takes effect. Select a deductible amount close to your current health insurance coverage to avoid paying out-of-pocket.
Tip 2: Stick with the Current Insurer
If someone gets this policy from the current insurer, they may waive off the waiting period for pre-existing diseases. This could allow long-time customers to get coverage as soon as they buy the top-up policy.
Tip 3: Check the Terms and Conditions
You should carefully check the terms and conditions to ensure that the insurance policy covers all sorts of treatment one may undergo.
Tip 4: Upgrade Base Cover
Since these health plans provide the same benefits as a base plan, you may want to upgrade your existing plan to get more benefits.
Tip 5: Work Out the Costs Saved
These insurance policies are meant for people who cannot afford more expensive health plans. Hence, it is advisable to calculate the premium costs to select a policy that facilitates the most savings. One can use the Navi insurance premium calculator to determine quotes and plan purchases accordingly.
Also Read: What Is Mental Illness Cover In Health Insurance? What Are Its Benefits?
How to Claim a Catastrophic Health Insurance Policy?
The following are the two ways one can claim a Catastrophic health insurance plan:
Cashless Claims
To avail the cashless facility, you will need to take the following steps:
- Inform the insurer or the Third Party Administrator (TPA) about your hospitalisation a few days in advance. In case of emergency hospitalisation, the TPA should be informed at the earliest.
- Make sure to get admitted to a hospital that is part of your insurer’s network of hospitals.
- After admission, fill out the pre-authorisation form available at the TPA counter in the hospital.
- Submit all the required documents (signed claim form, KYC, prescription, pharmacy bills, etc.) to the TPA counter.
Claim reimbursement
To claim reimbursement, follow the given steps:
- Fill out and submit the reimbursement form to the insurer within a month from your discharge.
- Get your medical bills and prescriptions attested by the hospital and submit them along with the mentioned form.
Remember to check the terms and conditions of your health insurance plan before filing for claims.
Exclusions under Catastrophic Health Insurance Policies
Your catastrophic health insurance policy will not offer coverage till you have met your deductible. There are also some limits on preventive health care besides standard exclusions.
The following are some of the standard exclusions of catastrophic health insurance plans:
- No coverage for pre-existing medical conditions till the end of a certain waiting period
- Some insurers do not offer coverage for pre and post-natal expenses
- Any expenses arising out of hospitalisation without a doctor’s recommendation are not covered
- Self-inflicted injuries or injuries due to suicide attempts
- Many insurers do not offer coverage for overseas treatment
- Cosmetic or plastic surgeries are not covered unless they are for accidents, burns or cancer.
- Injuries arising out of adventure sports are excluded
- Gender change treatments or treatment for infertility
- Any unnecessary treatment
- Expenses of dietary supplements and substances
Also Read: Managed Care Plans: What Is It & How Does It Work?
Who Should Not Purchase a Catastrophic Health Insurance Policy?
The following people may want to avoid opting for a catastrophic health insurance plan:
- People with existing health complications who need to visit a doctor frequently may want to avoid purchasing a catastrophic health insurance policy.
- Those who cannot afford to pay high out-of-pocket costs and expensive premiums will likely not want catastrophic health insurance plans.
- Anyone looking for a health insurance policy to cover costs of minor injuries or routine medical exams may want to avoid these plans.
These health insurance policies often have very high deductibles, which kick in only when the medical bills are too high. Anyone who wants health insurance coverage below this limit will want to opt for other plans.
Final Word
A catastrophic health insurance policy provides a safety net that can cover medical expenses for serious illnesses. These are ideal for those with a basic health plan but cannot afford a high premium.
Navi Health Insurance offers comprehensive policies with a hassle-free claim process that takes only 20 minutes for approval. Download the Navi App and get an insurance policy cover of up to Rs.1 crore for you and your family.
FAQs on Catastrophic Health Insurance
Ans: The major features of a catastrophic health insurance policy include:
– High-cost deductible
– Low-cost premium
– High sum insured
– Given to insured people with a base policy
Ans: Top-up and super top-up health insurance plans are the closest thing to catastrophic insurance in India. Both come with a cheap premium and come into effect when the medical bills cross the deductible.
Ans: Yes, one can set their deductible to an appropriate amount, depending on the policy.
Ans: No, although high deductible health plans (HDHP) carry higher deductibles, these are a special type of health insurance policy. These have standardised limits for the deductible and out-of-pocket maximum. Moreover, they have less stringent age limit requirements, unlike catastrophic health insurance policies.
Ans: Long-term health insurance policies usually have a tenure of 2-3 years, unlike regular health policies which have a tenure of 1 year. This allows you to benefit from discounted premiums. Moreover, you can renew the policy less frequently.
In contrast, the main advantage of a short-term catastrophic plan is that it provides coverage for extremely high medical bills. People who do not have high medical bills throughout the year may want to opt for these plans.
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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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