Is an OPD cover useful?

Most people do not know how to use it. At best, it provides tax benefit

Among the innovations health insurance customers can look forward to in 2014 are products focusing on OPD (Out Patient Department) treatment, that is, treatment that does not require a stay in a hospital. These can be visits to the local general practitioner or medical bills from the neighbourhood medical store. A recent report by ICICI Lombard General Insurance company says insurance companies will focus on OPD, in line with changing customer trends and the emergence of shorter treatments.

While opting for such covers, customers should bear in mind that it does not give you the whole sum assured. It is usually a percentage of the sum assured or a fixed amount and can be used for doctor’s consultation, health check-up, pharmacy bills or diagnostic tests like X-Rays or blood tests.

Sanjay Datta, chief, underwriting and claims, ICICI Lombard General Insurance, says that until now, insurance companies were covering limited ailments under OPD or were offering only for treatment at tertiary hospitals. Hence, customers often didn’t find much value in such covers and would drop out. That is why these covers should be brought into mainstream policies.

Amarnath Ananthanarayanan, chief executive officer, Bharti AXA General Insurance, says while OPD covers are useful, customers don’t know how to take the benefit from these. For instance, if you go to your local doctor or medical store, it is possible you won’t get a prescription or receipt. In such cases, the insurance company could reject your claim. “It is important that you always take the receipt from your doctor and medical store to ensure your claim gets reimbursed,” he says. Such covers are very popular abroad, where healthcare is more organised, he adds.

The fact that primary healthcare in India is still largely unorganised is the biggest reason insurers don’t offer or market OPD covers in a big way. That is also why the pricing for such covers tends to be 100 per cent.

For instance, if a family of four members opts for a health insurance policy with a cover of Rs four lakh, the annual premium works out to about Rs 8,000. But if you take an add-on OPD cover worth Rs 10,000, then the price for the cover is around Rs 8,000. So, what you get as cover is only the amount you pay. Hence, the benefit is very marginal, says Mahavir Chopra, a health insurance expert.

“Today, you end up paying close to the entire amount of OPD cover. So, it is not a great advantage. My suggestion is to increase the base cover instead and maybe buy a critical illness policy,” he says. Some customers buy it for the tax arbitrage. For instance, if you pay Rs 15,000 for a Rs 4 lakh base policy plus Rs 10,000 OPD cover, then you can claim tax exemption for your health insurance policy. So, you save about Rs 4,500 and you can claim Rs 10,000 as OPD, provided you make the claims.

“Some companies will not pay for non-prescribed medical tests or medicines bought without prescriptions. So, keep these conditions in mind,” Chopra adds.

Manasije Mishra, chief executive officer, Max Bupa Health Insurance, also agrees insurance companies will offer more OPD covers. But they might insist that the treatment be done at only reputed clinics or medicines be purchased only from reputed clinics. Or restrict it to four doctors’ visits in a year.

“Once the primary healthcare system in India becomes more organised, insurers will be more comfortable in covering such treatment. Once that happens, companies can even bargain with the clinic chains to offer discounts to customers,” he says.