Recently I posted an article on how your employer-provided health insurance leaves your financial plan vulnerable to uncertainties.
If you haven’t read it yet, read: For Salaried Employees: Is Your Employer-Provided Health Insurance Foolproof?
In the article, I addressed all the issues and presented a solution strategy.
However, I felt it will be much more effective to implement the said solution strategy if I can also help you choose the right health insurance plan.
So, how can you choose the right mediclaim policy?
The right mediclaim policy for your financial plan is the coming together of the best mediclaim policy and the best health care provider in your city.
For example: Consider two circles intersecting each other.
Table of contents:
If the left circle represents the best Health Care Providers in your city, and the right circle represents the best Mediclaim Policies. Then, your ideal, right health insurance plan will lie in the intersecting area of these two circles.
Ergo, it is down to simply two things:
1. Identifying the Best Health Care Providers
2. Identifying the Best Mediclaim Policies
1. Identifying the Best Health Care Providers
Assuming you don’t already have a preferred Hospital, consider the following ideas to find the best health care provider for you.
If you do, make sure they satisfy the following recommendations.
Make a list of Hospitals or Medical Centers:
- That provides the best medical care.
- Close to your home for ease of access.
- That has in-house labs and diagnostic centers.
- That enables hassle-free cashless claims.
After creating the list of hospitals, do a little research by yourself.
Check out the online reviews for the hospitals on your list. Enquire your friends or colleagues who have recently had any hospitalization and/or health insurance claim.
Get to know the health care provider you will choose if the need may arise.
Shortlist the hospitals or medical centers which looks that can give you the best care and supports easy cashless insurance claims. Also, make sure your list has two or more hospitals or medical centers that you feel are the best.
It is always better to have multiple options.
2. Identifying The Best Mediclaim Policies
Only a good insurer can provide a good health insurance plan.
We all look for the insurer’s reputation, their good name in the industry by default. However, you must also look into things beyond face value.
To identify the best health insurance providers, you must also look into:
i) Incurred Claims Ratio
ii) Claim Settlement Ratio
iii) Cap on Expenses
iv) Ease of Making a Claim
v) Maximum Coverage
vi) Lifetime Renewability
vii) Waiting Period
viii) No Claim Bonus
ix) Network Hospitals
i) Incurred Claims Ratio:
It is the ratio of total claims paid to the total premium collected in a given financial year.
For example: If a health insurance provider had incurred ₹880 Crores in claims of the ₹1000 Crores net premium earned, then the Incurred Claims Ratio is 88%.
88% is a preferable Incurred Claims Ratio.
A good Incurred Claims Ratio would mean a higher probability of getting your claim approved and an optimal premium price.
Yet, even higher ICR would indicate that the insurer is operating under loss.
Insurers with higher ICR—greater than 90%—could increase their insurance premium price or increase claim rejections just to keep up their business.
Hence, if you go after an insurer with a high ICR and they increase your insurance premium price. It could affect your financial plan in turn. And you will have to start all over again.
Look for an insurer that has an Incurred Claims Ratio in the range—70% to 90%—consistently in the past few years.
Anything in this range is an indication of quality health insurance products and services. They will be worthy enough to consider buying a health insurance policy.
However, keep in mind that Incurred Claims Ratio is not the only criterion to select an insurer or their product.
A quality health insurance plan for your financial plan will need to prove itself in other areas of consideration as well.
ii) Claim Settlement Ratio:
This is the number of claims settled by the insurer over the total claims received. So choose an insurer who has a high claim settlement ratio.
iii) Cap On Expenses Incurred:
Every health insurance policy will have a cap or sub-limit on expenses for different services availed at a hospital.
Choose the policy which offers higher caps for all the services rendered by the hospital.
Mediclaim policies will have a sub-limit for various expenses incurred, often including room rent for in-patients. The sub-limit for room rent is usually set in a percentage of the sum insured.
For example: Let’s say Ram is insured for a cover of ₹5 Lakhs. Ram undergoes a surgery that would require an inevitable room rent. If it was set at 1%, it means Ram is allowed to claim up to ₹5000 for room rent.
If we assume Ram’s room rent went overboard and incurred an expense of ₹6000. In such a scenario, the total expense claimable will be reduced by the factor of 0.833.
i.e., only 83% of the expenses will be payable by the insurer. See the table below.
Similarly, many of the illnesses today are treated on an outpatient basis. Hence, make sure the policy offered by the insurer has a higher cap on per consultation charges too.
iv) Ease of Making A Claim:
Choose the policies that have a simple claim procedure.
Make sure you understand the claims procedure before even considering buying the policy. People often buy a mediclaim policy solely based on its features and overlook the fact that they have to go through the claims procedure to get the benefits.
A complex or tiring claims procedure would result in delayed processing of your claim. That is, assuming it does not affect the probability of your claim approval.
Pay visits to the hospitals you have shortlisted in the first step and enquire helpdesk about the claims procedure. You may also contact the insurer’s customer care to clear your doubts.
The same applies to both cashless claims and reimbursements.
v) Maximum Coverage:
Choose a policy that safeguards you against a wide range of medical problems, and provides benefits including pre and post-hospitalization expenses and illnesses that you may be at the risk of due to your family’s medical history.
vi) Lifetime Renewability:
Always make sure to choose a policy that has lifetime renewability to avoid any hassle.
vii) Waiting Period:
Check the time duration after which the pre-existing diseases will be covered and choose a policy with a minimal waiting period.
viii) No Claim Bonus:
Here the insurer offers additional coverage if you do not make claims during a year. Most insurers provide a 5% increase in the sum assured amount for No Claim Bonus. This bonus can also be availed of while renewing your health insurance policy. Hence choose a policy with a No Claim Bonus.
ix) Network Hospitals:
And the last key criterion is the network hospitals of the insurer.
The more the number of hospitals in an insurer’s network hospitals, the better it is.
It will be particularly helpful if you are a frequent traveler.
Yet, the network hospitals must include all the best hospitals you have shortlisted in the first step.
Make a list of all the mediclaim policies that scores the best in all the above criteria, while also having the chosen hospitals in their network. You can also compare policies on costs and benefits.
Picking the Ideal Mediclaim Policy for your Financial Plan:
Just as seen above, the mediclaim policies that have all your shortlisted hospitals in their network will be your best bet.
However, only one policy from the list can be a part of your financial plan. Picking the best from the bunch is easy. But picking the best from a list of bests often leads to a state of indecisiveness.
But you do not have to be. Remember when I suggested you visit the shortlisted hospital in person to enquire about the claim procedure?
That inquiry will be vital in choosing the ideal mediclaim policy.
Hospitals will see claims and approvals daily. The people at the helpdesk must know which health insurance provider has higher approval rates including which ones approve claims faster.
The ones they suggest and also present in your list of best mediclaim policies should be the ideal one for your financial plan.
Any policy may look good with their features on papers.
But practicality is what you should look for in a mediclaim policy. Inside information to choose the right mediclaim policy can prove to be priceless in combination with a sound strategy.
Whether you want to spend your days worrying about claim approval or getting well in case of hospitalization will solely depend on the efforts you put in today.
How long do you think will it take to choose the ideal mediclaim policy for your financial plan?
A couple of hours on a Saturday afternoon?
If you could spare 30 more minutes, you might as well get started with a personalized Financial Plan by a Certified Financial Planner.
Register below to claim your free 30-minute consultation now.