Most people start paying for insurance when they don’t actually need it. You are unlikely to be able to opt in to a good health insurance policy while you are sick.
The reason is simple - insurance companies only make money if their revenue through premiums is higher than the cost of claims. As a result, it never makes sense for them to offer insurance to people who are certain to make a large claim. One of the other, unfortunate conclusions we can draw from this is that insurance companies have a clear incentive to try to deny claims.
The tendency to delay or deny claims is not unique to any one insurer. Instead, it is a feature of the system, because profitability is directly tied to minimizing the cost of claims. As a result, it’s important that we, the consumers of health insurance, empower ourselves to side-step all the pitfalls of a broken claims process.
The following three-part checklist will help you through the process:
- Making sure your policy actually provides the coverage you believe it does.
- Having a clear emergency execution plan
- Consulting experts who are on your side
Let’s go over these in details:
Making sure your policy actually provides the coverage you believe it does
The likelihood of a good claims experience goes up exponentially if you select the right policy. To the extent possible, select a policy without hidden restrictions, and with the widest network of cashless hospitals close to your home. To understand insurance policies in depth, please refer to this guide.
But, briefly, these are the things to keep in mind:
- Avoid room-rent limits: this helps you to take the doctor’s advice about the standard of care required without having to worry about the price of a general room vs a private room. For example, if your room rent limit is INR 5,000, and you opt for a private room which costs INR 10,000- you will end up paying the balance out of your own pocket. Worse, you will pay a part of all associated costs such as the surgeon’s fee, consultant’s fee, and so on, because you picked a room priced higher than the limit. The total cost could be quite substantial.
- Avoid disease wise sub-limits: Again, this helps you get the best possible care irrespective of the specific nature of the emergency. For example, if you have a coverage of INR 5 lakhs, but with a limit of 2 lakhs on specific diseases like knee replacements or slipped disk surgery, you may end up footing a quite substantial bill.
- Avoid co-payment clauses: Co-payment basically requires you to foot a percentage of the bill in cash- which could once again force you to make uncomfortable trade-offs during a health emergency
- Daycare coverage: You wouldn’t want to find out after an emergency appendicitis surgery that you have to foot the entire bill because the entire process took less than 24 hours.
- Reputed hospitals close to your home that are a part of your insurers cashless network. Cashless claims are by far the best- you don’t have to wait for reimbursement, you never have to pay for your treatment in the first place.
Of course, inclusion of all of these will result in higher premiums. Insurance agents frequently offer to insert such clauses to lower your premium. But ultimately, if a INR 2000 reduction in annual premium results in paying INR 20,000 out of pocket, your insurance investment would have failed you when you actually needed it.
Preparing in advance gives you the best chance of a hassle-free claims experience. This is a one-time activity at the point of purchasing the policy. Many of these points are easier for companies to negotiate through their group health insurance. Group health insurance, for multiple employees, gives companies leverage while negotiating with insurance companies in a way individuals will never have. As a result, while taking up a job offer, make sure you have a conversation with your future employer about the details of their insurance policy. It’s best to be informed before you have to use the policy.
Having a clear emergency execution plan
The fact is, that no matter how well you are prepared, emergencies can make it very hard to think. Period. When you or your loved ones need to be rushed to the hospital, it might be very difficult to recall which hospitals are cashless, and which ones aren’t, or to carry all the necessary documentation upfront. This is when you need a support system around you.
The simplest version of this is a short document that neatly summarizes everything you need to know- choice of hospitals, document checklist, etc. Keep this prepared in advance and consult it so that you don’t have to rely on your memory, or on a complicated insurance policy document.
It’s equally important to make sure that your loved ones are also in a position to understand these basic details. If it is you who has to be hospitalized, you may not even be in a position to ensure that the required documents are being carried to the hospital.
Consulting experts who are on your side
An optional add-on that we recommend is to avail the services of claims advisors. This is different from the claims support team of your insurer- remember how we discussed that insurance companies have structural incentives to deny claims?
Unless you are an insurance expert, it will be difficult for you to make sure your paperwork is in order during an emergency. It may also be difficult for you to ensure that you actually got the policy terms you wanted.
It gets worse if you aren’t able to get a cashless transaction. All your paperwork- policy documents as well as the documents generated at the hospital become critical towards ensuring that your insurance claim gets processed. Having the ability to call someone who you trust and whose job is to ensure that they vet documents before submitting the claim can be a massive relief, because you don’t have to worry about the bill, just the standard of care.
Similarly, after your reimbursement claim is filed, there might be delays from the insurers end. Unless you have the bandwidth to keep following up, you may end up giving up on the claim or accepting a reduced claim. Having someone follow-up on your behalf, who also speaks the language of insurers and can call them out on their delaying tactics, could be the difference between getting the reimbursement amount you deserve, and settling for a poor experience.
Finally, even Hospitals (private hospitals) have an incentive to upsell services. It’s useful to be sure if every line-item in your hospital bill will end up being covered, and to make those choices without getting blindsided later on.