Prefer deductible to co-pay in senior citizen health insurance cover

Around 5-10 years earlier, a senior citizen with a chronic condition like hypertension or diabetes found it difficult to get health insurance cover. Since then insurers' ability to underwrite and issue covers has improved, making it easier for this age cohort to obtain a policy. Increasing life expectancy and rising healthcare costs have made this cover a must-have. Last week Tata AIG General Insurance launched a plan for this group, adding to the considerable number of plans already available.

Flexible plans

Senior citizen plans nowadays offer scope for a lot of customisation. Earlier, co-payment was mandatory for them. But now customers can have the co-payment clause removed by paying an extra premium. They can also opt for a higher co-payment if they want to reduce the premium,”says Siddharth Singhal, business head-health insurance, Policybazaar.com.

The entry age in some of these plans extends to 99 years, which means even people in their 70s and 80s can buy them.  

The standard waiting period for pre-existing ailments used to be four years. “By paying a higher premium, buyers can now get the waiting period reduced,” says Singhal.

Expensive plans  

Plans for senior citizens tend to be expensive.
 

“Many also come with sub-limits and co-payment requirements. Some exclude expensive surgeries from coverage,” says Nayan Goswami, head-sales & service, SANA Insurance Brokers.

Only a limited number of these plans offer OPD (outdoor patient department) coverage.

Key checks you must run

Read the policy wording or customer information sheet carefully. Look out for these issues in particular:

Room rent cap: Some policies could have a room rent cap of 2 per cent of the sum insured. If you go to a top-notch hospital in a metro, the room rent could be higher than this limit, affecting the amount the insurer will reimburse you.

“Choose a plan that at least provides a single, private, air-conditioned room,” says Singhal.

Waiting period: Buyers must check the waiting period for pre-existing conditions. “The majority of products have moved to a two-year waiting period,” says Kapil Mehta, co-founder, SecureNow.

Singhal says it is possible to get the waiting period reduced to 31 days (even one day, in some cases) by paying an extra premium. He suggests that senior citizens who can afford it exercise this option.  

Sub-limits on specific diseases/named illnesses: There could be sub-limits on slow-growing ailments, such as cataract, hernia. Policies also have sub-limits on modern treatments. “Make sure these caps are at least reasonable,” says Mehta.

Deductible and co-payment: Deductible is the portion of the hospital bill the insured must pay from his own pocket. Only when the bill exceeds this amount does the insurer pay. If the hospital bill is Rs 10 lakh and the deductible is Rs 1 lakh, the insurer will pay Rs 9 lakh.

Co-pay also means that the insured pays a portion of the bill. Whereas deductible is an absolute amount, co-pay is stated in percentage terms. If the total bill is Rs 10 lakh and the co-pay is 20 per cent, the insured will have to pay Rs 2 lakh and the insurer will pay Rs 8 lakh.

Premiums tend to be high in the case of senior citizen plans. By opting for a co-pay or deductible, they can reduce their premium.

“In the case of co-pay, the amount the customer has to pay increases as the bill goes up. If he opts for a deductible, his liability gets limited to a fixed amount. Go for the latter option,” says Singhal.

Find out whether the deductible is on an aggregate or per-claim basis. If the deductible is Rs 25,000 and is on an aggregate basis, the customer has to pay only up to Rs 25,000 in a year. But if it is on a per-claim basis, he will have to pay Rs 25,000 for each claim.

“Choose the aggregate deductible option,” says Singhal.