Q-1 Are health insurance premiums tax deductible?

Ans- According to Section 80D of the Income Tax Act,2016, you can claim the income tax deductions subject to the health insurance premiums paid for your family (including your spouse and children) and parents, which are different from the benefits, based on costs related to health check-ups. The deduction limits are as follows:

Let’s understand the deductions under section 80D with the help of an example:-

You live in a family of six members: Self (35), Spouse (33), two children (11 and 7), Father (69), and mother (66). You purchase a family floater health insurance that covers you, your spouse, and children. The yearly premium is ₹ 20,000. Moreover, you paid a yearly premium for your parent’s medical insurance ₹ 32,000. You paid ₹ 10,000 for your health check-up. Furthermore, you paid ₹ 12,000 for your parents’ health check-up.

You are eligible for deduction under section 80D in the following manner:-

So, the expenses incurred by you amount to ₹ 74,000 for insurance premium and received a tax benefit of ₹ 60,000 for the year.

Important points to keep in mind while availing deductions under section 80D:-

• In addition to individuals, a HUF can also claim deduction under section 80D for ensuring the health of any of the members.
• Tax reduction is not accessible if the premium is paid in cash. It can be paid through any other mode such as- online banking, cheque, draft, debit or credit cards, etc. by the taxpayer himself, not by any third party.

However, preventive health check-up expenses can be paid in cash.

• Group Health Insurance policies are not liable to attract any tax benefits under Section 80D. However, if taxpayers choose to make the extra premium payments to enhance the group cover, they can claim a deduction for the extra amount.
• Premium paid on the policy of siblings is also not allowed as a deduction under section 80D.
• GST rate of 18% applicable for all financial services effective July 1, 2017, and is not allowed as a deduction.

Q-2 Are health insurance reimbursements taxable?

Ans- Medical Reimbursements are not taxable up to ₹ 15000 provided, all bills for the same are provided by the employer to the employee in a particular financial year for the purpose of obtaining medical treatment of self or of dependent family members like- spouse, children, parents, brothers, sisters etc.

Any amount in excess of ₹ 15000 being reimbursed to the employee by the employer would be added to the income under head salary and at the time of filing of income tax return, he would be liable to pay tax on the same as per the income tax slabs of the individual.

Q-3 What are the exclusions of a health insurance policy?

                                              OR

 In what situations health insurance companies may deny coverage?

Ans- Although, the exclusions vary from insurer to insurer. Some of them which are common to every insurer which you should look for before buying a policy:-

• If you are already suffering from any disease then it will not be covered by the policy. The insurance company will cover pre-existing diseases such as- cataract only with the best LASIK surgeon in Dallas, kidney stones, arthritis, joints treatment and other chronic diseases after a waiting period of 2-4 years or more depending upon the type of disease and risk associated to it.
• Except for accidents and deaths, most insurance companies do not provide the coverage immediately even for those diseases which are not excluded. There will be a waiting period of 1-2 months only after which you will get the benefits of the policy.
• Costs like- pregnancy, childbirth, vaccination etc. could not be covered under your policy. However, you can receive decent benefits if you plan a child after a waiting period of 1-2 years.
• Surgeries such as joint replacement, cosmetic surgery, dental surgery from https://dentistinperth.com.au/ , this is a number of medical procedures that involve artificially modifying dentition; in other words, surgery of the teeth, gums and jaw bones they are usually not covered by a health insurance policy.
• Hospital costs like- sub-limits on room rent, doctor fees, ambulance cost, etc. could also be excluded from your health insurance plan.
• Treatments received outside India are generally not covered by insurance providers in India. If you are planning a treatment abroad, it is advisable to check your insurance plan well in advance.
• Alternative treatment procedures such as- Homeopathy, Ayurveda etc. are on the exclusions list of a lot of health insurance policies.
• There could be some permanent exclusions as well, like- injuries in war, HIV, intentional injuries, hereditary diseases, mental disorders etc.

Q-4 How does health insurance work in India?

Ans- In simple terms, Health Insurance is a contract in which the insurance company agrees to pay for the insured’s hospitalization expenses up to a certain pre-decided limit in exchange for the premium paid by you.

If you choose to get treated in a hospital which is covered in the list of the cashless hospital for your insurance company, then the insurance company will directly pay the claim costs to the hospitals and you won’t have to pay out of your pocket. However, if get hospitalized in a non-network hospital, then you will have to pay the claim costs to the hospital upfront and then get the amount reimbursed from the insurance company after submitting necessary documentation and bills.

Q-5 How are health insurance premiums calculated?

Ans- Following factors come into play while calculating health insurance premiums:-

• Marketing and administration expenditure:

Marketing and administration expenditures include cost incurred in designing a medical insurance policy, cost of marketing, commission to brokers, advertisements’ and brochure’s cost, and other general operational expenses. These expenditures are recovered from the premium paid by the policyholder.

• Medical Underwriting:

The process of medical underwriting produces the corresponding eligibility and instances when medical coverage should be denied by analyzing risk from various angles and by taking a broad spectrum of factors into account. This step is essential in preventing the insurance company from making losses and is a costly affair for the insurance company. The cost of underwriting is also recovered from the premium.

• A rate of mortality:

This is the cost that a health insurance company suffers in case something happens to an insured customer. The expense of mortality differs for various age groups and income groups and is generally high for older customers. For instance-

• • • Premiums become higher as one grows old
    • Premiums are higher for customers with lifestyle ailments like- diabetes or blood pressure
    • Premiums are surely higher if sum assured is more

• Personal History:

Insurance providers may or may not conduct a health check-up before providing health insurance policy. However, insurance companies do take into account customer’s health, his/her family’s medical history, personal habits like drinking and smoking and his/her age at the time of availing health insurance policy. All this information plays a key role in deciding the policy premium that an individual is required to pay. Generally, people with issues in medical history or those who smoke and drink regularly are charged a higher premium.

• Savings Part:

This is that part of the regular premium which is put in various public investments, usually not in the private sector. These investments are made based on guidelines issued by the IRDA. Health insurance premiums are calculated based on returns of these capitalizations.

• Modified Community Rating:

The modified community rating takes into account a vast range of factors for calculating the policy premium for an insurance product. This mainly involves the geographical location, political stability of that region, industrial development, trade activities and lifestyle of a particular area.

• Band Rating:

Under this factor, the insurance provider underlines a base rate that can be charged for a particular set who possess similar characteristics like age, gender, geographical region, family size, and profession and so on. For example, a set that has working individuals in the age group of 25-35 years will always pay a lesser premium than a set of working individuals aged between 40-50 years.

Q-6 Does health insurance premium increase with age?

Ans- Yes, health insurance premium do increase with age because the healthcare consumption of individuals increases in line with age, the older the insured person is, the higher the risk that they will develop an illness or condition which will be costly to treat such as- cardiovascular diseases, respiratory problems and other ailments like- diabetes, blood pressure checkups, cholesterol reviews, heart issues etc. also become more frequent.

However, health insurance companies charge the same premiums for specific age groups such as 0 – 18, 19 – 30, 31 – 45, 46 -55, 56 – 60 and 60+. The premium usually remains constant as long as you are in the same age bracket. But once you shift from one age bracket to another the premium will increase.

Q-7 In what ways health insurance premium can be reduced?

Ans- You can reduce your health insurance premium in the following ways:-

• Buy when you are young: The premium you pay is decided by the state of your health and age as well as medical history. The more the number of ailments you have — blood pressure, diabetes, recurring health issues, or other pre-existing conditions — the more premium you will have to pay. So, it is advisable to buy health insurance when you are young when you are relatively healthy and disease-free.
• Compare plans and buy online:  Wide range of health insurance policies available in the market today. By going online, you can access products from multiple insurance providers and compare them all on parameters such as- premium costs, riders, coverage, etc. Moreover, online policies are much cheaper than their offline counterparts, because they are being sold directly to you by the insurer and do not carry the agent’s commission which in turn lowers your premium.
• Opt for family floater policies: By opting for a family floater policy, the overall cost is divided among insured members. As a result, premiums are low as compared to individual health plans.
• Choose a plan with multi-year premium payment: Health plans come with discounts if you choose to pay upfront premiums for two or more years instead of the usual one. This also ensures that the policy is in force for at least two years.
• Go for a high deductible: A deductible is an amount you will pay out of your pocket before your insurance cover starts. By paying a higher deductible, you will be able to reduce the amount you pay as premium for your health insurance coverage. Some policies also offer a voluntary deductible option wherein the customer chooses to pay a part of the medical bills himself before he claims from the insurer.
• Use top-ups for higher coverage: If you think your current health insurance coverage is not enough, then instead of buying a new one, buy a top up of the additional cover required by you. This will significantly reduce the premium. Such plans get triggered only after you have exhausted your base cover, ensuring that you have adequate health insurance.
• Get benefits of a no claim bonus (NCB):  There are various insurance companies which offer a benefit of no claim bonus if there is no claim in the previous year which can be used to get an additional sum insured without paying any extra premium. So, it is essential to check whether the insurer offers a no-claim bonus or not before buying a policy.
• Stay fit and healthy: Leading a healthy life is the most important way in which you can reduce your healthcare costs. Watching your weight, quitting smoking, healthy diet and exercise are simple but effective steps in ensuring good health. It not only reduces premium but is also necessary for personal well-being.

Q-8 How can I get a claim in case of emergency/ unplanned hospitalization?

Ans– In case of emergency/ unplanned hospitalization you can follow the steps mentioned below to get a hassle-free claim:-

Step 1: Get admitted to the hospital for emergency treatment.
Step 2: Patient or his family members should approach the hospital counter with patient’s health insurance details (Health Insurance Card) within 24 hours of getting admitted to the hospital.

Step 3: Patient’s family members need to coordinate with hospital and TPA for arranging the pre-authorization request.
Step 4: TPA will process the request as per policy terms and conditions within a defined time period (varies from 1 hour to 1 day).
Step 5: If the request is approved, proceed with cashless services at the hospital else family members need to settle the bills at the time of discharge.
Step 6: If claims were rejected, fill complete details in your claim form within 7 days of discharge and submit it along with other supporting documents in ORIGINAL to your insurance provider/TPA. The list of documents include:

• Hospitalisation discharge slip/card
• Hospital bills with their payment receipts
• Surgical details, in case the Insured has undergone a surgery
• All supporting diagnostic reports and prescriptions
• All Pharmacy receipts and corresponding prescriptions
• Ambulance invoice, if any

Along with Self-attested copies of Health card or Policy document and ID proof of the insured.

However, the insurer may ask for additional documents based on the circumstances of the claim.

Step 7: Your insurance provider/TPA will verify all the documents and settle your claim within 15 days to 1 month of request.

Q-9 How to avail cashless health insurance claim settlement?

Ans- To avail cashless settlement of health insurance claim, you need to follow these steps:

Step 1: you need to approach a Network Hospital of your choice.
Step 2: Contact the Hospital counter that deals with insurance requests, at least 3-4 days prior to the date of hospitalization. Also, produce your health insurance card to identify yourself as the beneficiary for cashless service.
Step 3: The hospital, after verifying your details, sends the request to the insurance company or TPA. Coordinate with network hospital to forward the pre-authorization request to insurance provider/Third Party Administrator (TPA).

Step 4: Insurance company/TPA reviews your request and authorizes cashless claim services as per the policy benefits and its terms & conditions. The time taken for processing and approving cashless claims varies from 1 hour to 1 day (depending on the insurance provider).

Step 5: If your claim is approved, get admitted to hospital without any deposits and avail cashless services as per your plan. On discharge, verify the hospital bills for accuracy. Any amount over the pre-authorized limit has to be paid by you at the time of discharge.

Note: Your claim request may be approved or denied depending on your policy T&C. However, denial of Cashless Facility does not mean denial of treatment. You may continue with the treatment, pay for the services to the hospital, and later submit the claim for processing and reimbursement.

Q-10 How to get reimbursement for the insurance claim?

Ans- To get reimbursement for your insurance claim you need to follow these three simple steps mentioned below:

Step 1: Settle all the hospital bills at the time of discharge as a cash consumer.
Step 2: within 7 days of discharge, fill complete details in your claim form and submit it along with other supporting documents in ORIGINAL as mentioned above to your insurance provider/TPA.

Step 3: Your insurance provider/TPA will verify all the documents and settle your claim within 15 days to 1 month of request.

Q-11 Can I take two or more health insurance policies? How will I make a claim in that scenario?

Ans- Yes, you can definitely take two or more health insurance policies. But according to NatuRoids, it is extremely important to understand that when you take a new health insurance policy, you always have to declare your old health insurance policies which are currently in force.

There have been certain changes in the rules regarding claiming from multiple insurers. The IRDA (Health Insurance) Regulations February 2013 changed the way claims are made from each of the multiple insurers. Prior to these rules, any claim from multiple insurers had to be made according to contribution clause, which means that if there is more than one policy, then in case of any claim situation all the policies will contribute in equal proportion to the sum insured.

For instance, you have two health insurance policies for ₹ 2 lakhs from company A and ₹ 1 lakh from company B, and you make a claim of ₹ 1.5 lakhs. In this scenario, you had to ideally inform both the insurance companies about the claim and they will settle your claims according to the contribution clause, i.e. company A will pay ₹ 1 lakh and company B will pay ₹ 50,000.

As per the new regulations, contribution clause will not be applicable if your claim amount is less than the sum assured of the insurer where you are claiming. However, if your claim amount is above the sum assured of the policy, then the insurance company will impose the contribution clause. You are free to choose which insurer you would like to claim.

Let’s see how the new regulations will work in the above example, if:

If you go to Company A for settlement – In this case, your claim amount (1.5 lakhs) is less than the sum insured (2 lakhs), so company A has to fully settle your claim without applying any contribution clause.

If you go to Company B for settlement – But, if you choose to go to company B for settlement, then your claim amount (1.5 lakhs) is more than the sum insured with them (1 lakh), so company B, has the right to apply the contribution clause and then they will have to pay only ₹ 50,000 i.e. one-third of the claim amount, since, they have the sum assured of only ₹ 1 lakh out of your total sum assured of ₹ 3 lakhs and will ask you to claim the rest from company A .

Now let’s consider two different scenarios in the same example:

Scenario-1: If your claim amount is ₹ 75,000 then, none of the companies will apply contribution clause because your claim amount is less than the sum assured of both the companies.

Scenario-2: If your claim amount is ₹ 4 lakhs then, both the companies will apply contribution clause because your claim amount is more than the sum assured of both the companies.

Q-12 How to settle the claim in case of multiple health insurance policies?

Ans- To settle the claim in case of multiple health insurance policies, you need to follow the procedure mentioned below:-

• Intimate all the health insurance companies at the time of hospitalization
• Now you first have to choose the company from which you will claim first.
• Take additional attested copies of the bills and documents from Hospital for the no. of insurance companies you are likely to claim from.
• Fill up the claim form, attach all the bills and documents required by them in ORIGINAL.
• Insurance Company will now issue you a statement saying that they have all the original proofs and documents and they have settled the claims.
• Once, the claim is settled by the first company then you move to the next company, you need to get a claim settlement summary which mentions about the claim made, deductions made, and claims settled etc.
• Fill up their claim form, attach the claim settlement summary and attested copies of all the bills and documents.
• Provide a covering letter explaining that you have earlier claimed from the first Insurance Company, and the details of documents enclosed.
• If you still want to claim it from more companies, take the claim settlement document from the second company also and repeat the same process.
• All the documents will be verified and your claim will be settled by the insurance companies within 15 days to 1 month of request.

Q-13 Is it better to have multiple health insurance policies?

Ans- It is advantageous to have a big enough cover from a single insurance company, rather than having small covers from multiple insurance companies, because You will face a lot of documentation issues if your claim amount is large because then the contribution clause will apply. 

Q-14 Whom can I approach in case of a conflict with the insurance company with regards to my claims?

Ans- To monitor policyholder’s grievances, IRDA has implemented the Integrated Grievance Management System (IGMS). IGMS provides a gateway for policyholders to register complaints with insurance companies first and if needed, their complaints are sent to the IRDA Grievance Cells. IRDA Grievance Call Centre (IGCC) can be accessed through a toll-free number “155255” for voice calls.

Q-15 How can health insurance be canceled?

Ans- You can cancel your health insurance policy by giving a written approval to the insurance company. If it is canceled within the free look period of the policy i.e. 15 days in case of offline policy and 30 days for online policy, then you are entitled to 100% refund of premium.

After the expiry of free look period the premium is refunded on pro-rata basis:

Up to 30 days- 90 days premium is deducted, remaining is refunded.

After 3 months- 6 months premium is deducted, remaining is refunded.

After 6 months- Cancellation is possible but no refund is given.

However, it should be noted that the above clause applies only to fresh policies but not on renewals, provided that there is no claim under the policy.

Q-16 During the course of my treatment, can I change the hospitals?

Ans- Yes, it is possible to shift to another hospital for the requirement of better medical procedure. However, this will be evaluated by the TPA on the merits of the case and as per policy terms and conditions. However, it would be prudent if you check the network hospital list and go to the best hospital in the beginning itself rather than changing it in the middle of the treatment.

Q-17 What is Domiciliary Hospitalization? How to get the claim in such a case?

Ans- Domiciliary Hospitalization means medical treatment for a period exceeding three days for such illness/disease/injury which in the normal course would require care and treatment at a Hospital/Nursing Home but actually taken at home in India due to any of the following circumstances, namely:

• The condition of the patient is such that he/she cannot be removed to the Hospital/Nursing Home or
• The patient cannot be removed to Hospital/Nursing Home for lack of accommodation therein

For smooth claim process, take care that all your documents are in place and to be on a safer side have a report from the doctor conducting the treatment, stating the contingencies under which the person cannot be moved to the hospital. Note that every company does not offer this facility, you should check your policy document carefully.

Q-18 Do we have to notify the insurance company about any illness or habit developed in between?

Ans- No, we are not required to notify the company regarding any complication or health issue. Actually, whether you tell them or not, it’s the same thing. The company will automatically come to know of it when you will get hospitalized. Since they have a panel of doctors with whom they will check your details and the claim will be settled accordingly.

However, if you notify the company, your premium for the year after notification will increase, if it is on their list of illness to be checked.