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An indemnity-based health insurance plan makes the insurer liable to pay for the policyholder’s medical expenses. It covers pre and post-hospitalisation expenses, including room rent, diagnostic tests, ICU, and other charges.
Nowadays, healthcare costs are rising, while sedentary lifestyles are resulting in more frequent trips to the emergency room. This has made a health insurance policy a necessity.
There are many options when it comes to selecting a health insurance plan from various insurers in the country. Here, your choice should be based on the type of coverage and premium payment suitable to you.
Health insurance is an additional expense, making many reluctant to buy a high-premium plan despite the wide-ranging health coverage. An indemnity health insurance plan is what can cave you here.
Indemnity health insurance allows you to benefit from extensive coverage without paying a high premium regularly. Let us find out more about it.
What is Indemnity Health Insurance
Let us first define indemnity health insurance. Indemnity-based health insurance is a medical insurance policy covering the policyholder for hospitalisation expenses incurred during the treatment. Its terms and conditions allow you to claim up to the limit of the sum insured. Thus, the insurance company will reimburse the treatment cost within the limit of the coverage amount of the sum insured. You can buy a health insurance indemnity policy as an individual or a family floater plan.
If you own an indemnity plan, you can opt for cashless claims at the time of hospitalisation. You pay a certain fixed amount (deductible) to the hospital while the insurance company clears the bill for the remaining amount. If you do not opt for cashless hospitalisation, you pay the bills at the hospital and then provide all the necessary medical reports, hospital bills, and other documents to the insurer for reimbursement.
How Do Indemnity Plans Work?
Let us understand the working of an indemnity health insurance plan with an example.
Suppose you have a health insurance policy with ₹12 lakh as the sum insured. You undergo treatment at a hospital, and the expenses amount to ₹3 lakh. The insurance company will clear the hospitalisation bills for ₹3 lakh as per the policy causes. You can use the remaining ₹9 lakh for further hospitalisation during the policy term.
The above example explains how indemnity health insurance covers you for hospitalisation expenses. However, it does not cover copayments or deductibles included in the policy.
So, if you have a 10% co-pay, the insurance company will bear 90% of the claim amount while you pay for the rest. Conversely, if you have a deductible of ₹50,000, the insurance company will deduct the amount before settling the claim.
Why Should You Choose Indemnity Health Insurance?
Many individuals wonder if they should invest in hospital indemnity insurance. The following reasons support its need.
To tackle rising healthcare costs
Medical costs in India are rising at a rate of 8 to 10% annually. If you need to undergo a complicated surgery, it can cost lakhs of rupees. With an indemnity plan, you can tackle these medical expenses easily. You do not have to pay from your pocket, as the indemnity-based plan takes care of everything. But, do note that it does not cover deductibles and other expenses excluded from the policy terms.
To Reduce out-of-pocket expenses
An indemnity health plan clears all medical expenses except the deductibles. The policy works in both planned or sudden hospitalisation. Thus, you do not have to pay from your pocket, and your financial burden decreases.
Advantages of Indemnity Health Insurance
An indemnity health plan offers plenty of benefits. Here is a description of each of them:
Wide coverage
If you read through the inclusions of this type of policy, you will realise that it has an extensive scope for treatment expenses. It covers you for a claim on the actual hospital bills for a maximum limit of the sum insured. This coverage includes room rent, diagnostic test and ICU room charges, medicines, treatment expenses, and other costs.
Cashless treatment
An indemnity-based plan holder can opt for cashless treatment at one of the network hospitals. In a cashless claim, the insurer directly settles the medical bill with the hospital. In this case, the policyholder does not need to pay anything except deductible or other costs not included in the policy.
Flexibility to choose hospitals
Insurance companies offering the indemnity health policy have hospitals in their network. Most policyholders like to choose a preferred doctor or hospital for treatment, making this benefit essential. Moreover, you can avail of cashless facilities at these hospitals without stressing about the bills.
Before undergoing surgery, check with the hospital’s information desk or TPA department if it has a tie-up with your insurance company. The TPA desk can help you file a cashless claim before hospitalisation. Submit all the essential documents to acquire insurance approval before admission.
Low premium payment
The premium outflow is a vital consideration to buy health insurance. An indemnity plan has a deductible that a policyholder needs to pay during the claim process. As a result, the insurance company’s risk is reduced, and they can offer a lower premium to the policyholder.
Co-payment feature
Co-payment is a feature of health insurance wherein a part of the medical bill is paid by the policyholder instead of the insurer. The policy terms define it as a fixed amount or percentage of the treatment expense.
Generally, indemnity health plans have a co-payment option. If the co-pay component of the plan is higher, the premium payout requirement is lower.
For example, imagine your health insurance policy provides a health cover of ₹7 lakh, with a co-payment of ₹70,000. You have a medical emergency requiring hospitalisation, and your medical bills are worth ₹7 lakh. Out of the total bill of ₹7 lakh, you pay ₹70,000, and the insurer pays ₹6.3 lakh.
Inclusions Of Indemnity Health Insurance
If you are wondering what is covered under the indemnity health plan, here is the list:
Pre-hospitalisation expenses
Post-hospitalisation expenses
In-patient treatments such as doctor’s fees, ICU room charges, medicines, diagnostic tests, surgery, etc.
Daycare treatment
Note: You are eligible for in-patient hospitalisation expenses with a minimum of 24 hours of hospitalisation.
Exclusions Of Indemnity Health Insurance
The indemnity health plan does not include the following:
Post-operative expenses
Incidents occurring under the influence of alcohol or narcotics
Medical treatments related to AIDS, plastic surgery, etc.
Criminal acts
Loss of goodwill
How To File a Cashless Claim with An Indemnity Health Plan?
The general steps for most insurers to initiate a claim are as follows:
Step 1: Search for the nearest network hospitals and notify your authorised TPA about the hospitalisation.
Step 2: Submit your valid ID proof at the hospital insurance desk.
Step 3: You will receive a cashless claim form to initiate the claim.
Step 4: The hospital will submit your duly filled cashless authorisation form.
Step 5: After approval of pre-authorisation from the insurance company or TPA, you can plan your hospitalisation within 15 days.
Summing Up
An indemnity insurance plan is the ideal choice if you want to invest in a health insurance plan with optimum medical protection. It provides comprehensive coverage against many ailments and covers maximum hospitalisation charges at an affordable premium. Moreover, it helps you enjoy the benefits of cashless claims, which means you need not pay for medical bills upon hospitalisation with a network hospital.
