Supplement your health insurance policy with a cash benefit plan

These plans can, at a low cost, help you meet out-of-pocket expenses

It is only when a person falls ill that he realises how efficacious his health policy is in meeting treatment costs. But no matter how comprehensive your health policy is, several expenses have to be borne out of the pocket. Hospital cash benefit (HCB) plans take care of this.

An HCB plan pays a fixed sum of money for each day of hospitalisation. It is a fixed-benefit plan. “The idea is to cover for the loss of income due to hospitalisation. The insured receives the pre-fixed cash amount during ho­s­p­i­t­alisa­­tion, regar­dless of his exp­e­nse. If a pe­r­son has an HCB of Rs 2,000 per day and his actual expense is Rs 5,000, he will receive Rs 2,000 for that day,” says Amit Chhabra, head, health insurance, Policybazaar.com.

Customers have to choose the daily benefit amount and the number of days of benefit. “There is a ceiling on the number of days for which you can avail of this benefit, which could be 30, 60 or 90 days. The daily benefit can range from Rs 500-10,000,” adds Chhabra. The insured need not produce bills, only the proof of hospitalisation. Higher the daily benefit he wants and greater the number of days for which he wants it, higher the premium he must pay.

Some insurers offer varying amounts of money. For instance, the amount paid a day for hospitalisation in an ICU can be double the amount payable for hospitalisation in a normal room. It can be triple if the ICU is situated outside the hometown. Assess your needs before buying a plan. “When buying an HCB plan, consider the amount you may require to pay off unexpected expenses, along with hospitalisation expenses,” says Naval Goel, CEO, PolicyX.com. If you have a health policy, with a high deductible or a co-payment clause, an HCB policy can help bridge the gap. For a brief hospitalisation, a person can avoid using his health plan, and manage from the HCB plan. He will, thus, be able to preserve the no-claim bonus on his plan. Premium paid towards an HCB plan is eligible for deduction under Section 80D of the Income Tax Act.

The insured needs to be hospitalised for at least 24 hours to claim this benefit. These plans don’t cover day care procedures. An HCB is a good-to-have, but not a must-have cover. First, buy a basic health cover, and then buy an HCB plan if your budget permits. “It is not a substitute for health insurance but a supplement to it,” says Goel.