A health insurance plan is a contract between an individual and the insurance company in which the latter agrees to cover the medical expenses of policyholders. Insurance companies will have tie-ups with network hospitals – where the insured can avail of cashless Mediclaim. In other hospitals, the policyholder needs to settle the hospital bills and then make a claim. Health insurance companies offer numerous benefits, including in-patient hospitalization, pre- and post-hospitalization, ambulance, daycare treatment and preventive health check-up expenses under their covers. When an individual is planning to purchase a health insurance policy, they have two options. They can either purchase on-exchange or off-exchange health insurance plans. Let’s read about them in detail.
Understanding off-exchange health insurance plans:
Off-exchange health insurance plans are nothing but policies that are brought directly from private insurance carriers or through licensed brokers. It means that the policies are not purchased from the government-run insurance marketplace. On the other hand, an exchange health insurance plan is health insurance coverage purchased at a government-run insurance marketplace. On-exchange plans are likely available at cheaper rates for the public. Off-exchange policies also offer more flexible choices in terms of coverage and premiums. Some of the health insurance policies that are available under off-exchange in the country are listed below:
1. Individual health insurance policy: Individual health insurance plans are specially designed to provide health insurance coverage to an individual. The plans can be customized based on their medical requirements and financial affordability. One can also enhance the extent of coverage of the policy by paying for add-ons. A policyholder can make multiple claims yearly, and many insurance companies will offer a cumulative bonus for every no-claim year. The plan, most of the time, comes with lifetime renewability.
2. Family floater: It is a type of health insurance plan that covers different family members under a single coverage, and the insured sum is shared among the insured family members. If one of the insured members claims a certain amount from the policy, only the remaining amount will be available for the rest of the family members.
3. Senior citizen health insurance policy: Senior citizen health insurance is a specially designed insurance plan to address the healthcare needs and medical expenses of individuals aged above 60 years. It helps them cover medical treatment and hospitalization costs at the hospital of their choice. It offers numerous benefits like pre-existing disease coverage, cashless hospitalization coverage, pre- and post-hospitalization coverage, preventive health check-ups and tax benefits.
4. Group insurance policy: A group health insurance policy is an employer-sponsored policy that companies offer to their employees as a compensation benefit. Simply put, it is a type of coverage undertaken by employers for their employees. It means that the employer will pay the premium for the policy on behalf of their employees. Usually, the plan can be extended to the immediate family members of employees – spouse, children and dependent parents – by paying an additional premium amount from employees’ pockets. This policy covers hospitalization expenses, maternity costs, critical illness coverage and pre-existing disease coverage, among others.
5. Cancer health insurance policy: It is designed to provide extensive coverage for the costs of cancer treatment and care. This plan helps the policyholder by financially preparing them for the expensive treatments related to cancer, including radiation therapy, chemotherapy, medications and surgery. The policy will extend financial support to the insured during the crisis, thereby allowing them to focus on availing quality treatment and recovery without worrying about the expenses.
Things to consider while purchasing an insurance policy through off-exchange:
1. Claim settlement ratio: It denotes the ratio of claims settled successfully by an insurer against the total number of claims that they have received. The number not only talks about the financial capacity of the insurer to pay claims but also gives an insight into their consistency level in settling claims. Since a high claim settlement ratio indicates the insurer’s commitment to settle claims, it always plays a vital role in choosing the policies. CSR is considered fair if it falls between 75% and 90%, though a higher ratio is better for the policyholders.
2. Incurred claim ratio: The total amount of money paid by an insurer as claims against the unlimited premium collected from policyholders. It helps policy seekers understand the insurance company’s financial stability and reflects its long-term financial credibility. The ratio is the company’s ability to pay equal importance to policyholders’ and economic well-being. It is considered ideal if it falls between 50% and 100%.
3. The right combination of premium and coverage: It may be lucrative to buy health insurance coverage with the lowest premium. But it has its advantages and disadvantages. It will be good if the insurer offers extensive coverage for the lowest premium, but in most cases, a lesser premium means more inadequate insurance coverage. So, purchasing a policy that provides adequate coverage at an affordable premium is better.
4. Waiting period clause: Most insurance companies have a waiting period clause in their policies. It prevents the insured from availing of all the health insurance policy benefits right after purchasing it. It is a period policyholders need to wait before enjoying the policy’s benefits. The waiting period starts from the date of policy commencement, and it usually ranges between two and four years. So, purchasing a plan with a minimal waiting period is better.
5. No-claim bonus: One of the remunerative benefits the insurers offer policyholders for every claim-free year is a no-claim bonus. Since it provides a monetary benefit for every no-claim year, it will help increase the insured amount. The insurer can either offer a cumulative bonus – under which policy holders’ insured amount will increase by a certain percentage – or a considerable discount on premiums – under which the premium rate of policies will come down by a certain percentage.
Though off-exchange plans offer flexibility in terms of premium and coverage, it is always recommended to analyze and understand several other factors to avoid last-minute hassle. One should remember that purchasing a health insurance policy is to ease the financial burden off the shoulders during a medical crisis.