Do you know the ABCs of health insurance? Terms like claims, premiums, deductibles, co-payments, co-insurance, etc., can feel like tough jargon, but it is essential to choose the right health insurance plans. Knowing these basics can save you from costly mistakes and give you confidence when managing your health coverage. In this blog, we’ll explain common health insurance terms in simple language so you can make informed decisions for yourself and your family. Stay tuned till the end.
Why Health Insurance is Essential?
Before delving into the terminology of health insurance plans, let’s examine their benefits in detail.
Cashless Treatment
You can access quality healthcare without stressing about finances. With cashless treatment, your health insurance company settles the hospital bills directly with its network hospitals. For example, if you need surgery at a listed hospital, you only focus on recovery, and the insurer handles the financial side.
Pre and Post Hospitalisation Cost Coverage
Your policy doesn’t just cover hospital bills but also takes care of pre- and post-expenses. For example, health insurance diagnostic tests before surgery or follow-up medicines after discharge can be included for up to 60 days. This extended coverage protects you from unexpected medical expenses beyond the hospital stay.
Transportation Charges
Health insurance supports covering ambulance costswhere you need urgent transportation to a hospital. Your policy ensures you don’t have to worry about paying for the ambulance service. This benefit saves you from added financial stress when time and immediate care matter most.
No Claim Bonus (NCB)
If you stay healthy and don’t file a claim during a policy year, you get rewarded. Your insurer offers a No Claim Bonus, often in the form of an increased sum insured or a discount on renewal premiums. For example, if you don’t make any claims this year, your coverage amount could grow next year at no extra cost.
Medical Checkup
Regular checkups are vital for prevention, and your health insurance often includes them. Many insurers offer free medical checkups based on your claim history or accumulated No Claim Bonuses. For example, if you haven’t claimed in the past year, you may be eligible for a complimentary annual health screening. This keeps you aware of your health status.
Room Rent
The type of hospital room you choose can significantly impact your bills, but insurance helps here, too. Depending on your premium, your policy covers room rent charges. For example, if your plan includes a single private room, you won’t have to pay extra for choosing it during hospitalisation.
Tax Benefit
Apart from medical security, health insurance also reduces your tax burden. The premium you pay qualifies for deductions under Section 80D of the Income Tax Act. For example, if you pay ₹25,000 annually for your policy, you can claim that amount as a tax deduction, lowering your taxable income and protecting your health.
Basic Terminology of Health Insurance Plans
Here are some basic terms of health insurance are as follows :
Policy holder
A policyholder is a person or policy owner who owns a medical insurance policy. So, if you buy an insurance policy under your own name, you’re the policyholder, and you’re protected by all of the benefits inside
Nominee
A nominee is the person you choose to receive the claim amount or policy benefits if something happens to you. For example, if you name your spouse as the nominee, the insurer will pay the claim amount directly to them in case of your unfortunate demise.
Claim
A payment request you or your healthcare provider sends to the insurance company asking them to pay for covered medical services. For example, after a surgery, the hospital files a claim with your insurer to cover the hospitalisation cost.
Premium
The fixed amount you pay regularly (monthly, quarterly, or annually) to keep your health insurance active. For example, if your family health insurance plan premium is ₹10,000 per year, you must pay this to continue enjoying coverage.
Deductible
The amount you pay from your pocket before your insurer starts paying for covered medical services. If your deductible is ₹5,000 and your hospital bill is ₹20,000, you first pay ₹5,000, and the insurer pays the remaining ₹15,000.
Copayment (Copay)
A fixed fee you pay at the time of using a medical service, while the insurer covers the rest. For Example, you pay ₹500 for a doctor’s visit, and your insurer pays the remaining consultation fee.
Coinsurance
The percentage of medical costs you share with your insurer after meeting the deductible. For Example, if your coinsurance is 20% and your hospital bill is ₹1,00,000, the insurer pays ₹80,000 while you pay ₹20,000.
Network Hospitals
Hospitals and clinics that have a tie-up with your insurer to provide cashless treatment. For Example, if you are admitted to a network hospital, your insurer directly settles the bill with the hospital, and you don’t have to pay upfront (except for non-covered items).
Pre-existing Disease (PED)
Any illness or medical condition you already had before buying the health insurance policy.
For Example, if you had diabetes before taking a policy, it is considered a pre-existing disease, and your insurer may cover it only after a waiting period.
Waiting Period
The time you must wait before certain conditions or benefits become claimable under your policy. For example, if your plan has a 2-year waiting period for maternity benefits, you can claim expenses related to pregnancy only after two years of holding the policy.
Final Thoughts
Understanding the basics of health insurance empowers you to make better decisions for your well-being and financial security. When you know how terms like premiums, deductibles, and co-payments work, you can choose a plan that suits your family’s needs without surprises during emergencies. Trusted insurers like Niva Bupa Health Insurance offer comprehensive plans with wide hospital networks and flexible coverage options, making it easier to manage healthcare expenses.
