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Podcast #32: Getting started with health insurance

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In this episode, Deepak and Shray invite Ruchir, co-founder of OneAssure, to walk us through how to get started with health insurance.

Transcript

Shray Chandra: Hi everyone and welcome to episode 32 of the Capitalmind podcast. Deepak is back. He’s done with his MBA exams and he’s started work on a new book about finance and investing called “Suckered” that he’s going to be publishing with Juggernaut, but we stole him away from his writing duties today to record what is a fascinating podcast about a topic that’s been intensely debated and discussed in our customer forums for the last couple of weeks and months.

So today we have got Deepak, and we’ve even brought in a Capitalmind Premium customer Ruchir, who’s founded a health insurance tech start-up named OneAssure that helps you find, manage, and make sense of your health insurance.

So, I would just like to start out, Deepak, can you just tell me a bit about health insurance from a financial point of view? Why or how much do I need [of] health insurance? You know, it is a bit of a pain. There’s so much fine print. 

Monika Halan, she wrote this excellent book called “Let’s Talk Money” and there while she had advice for so many things of your financial life, even there she was a bit defeatist on the health insurance front. So, can you help us put this in perspective? We talk all the time about stocks, bonds, the economy. Can you just put this in perspective? How big a deal is health insurance or insurance for that matter, from a financial planning or investments point of view?

Deepak Shenoy: Hey Shray, one of the things that I’ve noticed in, you know when it comes to investments is that there is you know there’s a lot of things we talk about stocks and investments, but before you get there, I think the main thing that you have to think about is what is the bare necessities? The protection that you actually need before you start thinking of savings and investments. We talk about emergency funds. Things that happen if you lose your job, but you’re healthy and you lose your job. You need some money to survive.

Until you get to a certain point but what if you’re not healthy beyond the emergency fund, you’re going to need a health insurance plan. This is very critical, right? Because if something happens to you and whether you have a job or not, you’re going to need to get covered. This is even more evident in today’s Corona age. We’ll come to that.

As you know, if you look at what happens after you die to your family, you’re looking at term insurance. So, health insurance, term insurance and an emergency fund are the key parts of a financial plan more evidently now in Corona times when things have changed quite dramatically. Seven years ago, my mom had a heart attack, we went to the hospital. We spent probably 7 or 8 Lacs in total.

For the hospital bills in my mind, that was the kind of numbers you needed, you know, 7-8 lakhs around for health insurance, but with Corona you’ve seen things where bills have gone to 25 or 30 [lakhs]. Things have changed quite dramatically. Hospitals have increased their fees in response to Covid. You’re going to need a lot more money, so it’s a more critical part of your life today than it used to be. Of course, the details of which and how and why and when are going to be something that you know Ruchir is probably far more, is far more knowledgeable about, so I think I’ll leave it to him to explain all the details around that.

Ruchir Kanakia: Sure, thanks Deepak. I think that health insurance is something like rightly Deepak mentioned – it’s when you think about the protection layer of your financial planning. And I guess anyone should start investing in health insurance when they are salaried or when they have a consistent source of income and that would be the right time to start.

So, let me start with explaining what kind of plans are available in health insurance and what do these plans mean, right? So, there are two types of plans. One is an Indemnity plan and the second one is a fixed benefit plan. An Indemnity plan is a plan which covers you for actual cost of hospitalization up to the limit for which you subscribe to the health insurance product.

A fixed benefit plan, irrespective of the expenses you incur, will give you a lump sum payment in your bank account when the incident occurs, or a health scare occurs in your life. So, let me give you an example of an Indemnity plan and a Fixed Benefit plan for you to understand this better.

An Indemnity plan is like a comprehensive health insurance plan, which is available right from one lakh rupees to about one crore rupees which covers only inpatient hospitalization expenses. When you get hospitalized in a hospital for more than one day and the rest of the treatments are covered under day care procedures.

A Fixed Benefit plan is something like a critical illness plan or personal accident plan or hospital cash plan where there is a fixed limit or an amount which is paid to you on the occurrence of the incident. So, if you get into an accident and a death occurs, and you’ve bought a personal accident plan of ten lakh rupees, 10 lakhs is deposited into your nominee’s bank account in case of a death, so the entire amount of the plan is directly transferred.

DS: Ok Ruchir just to interject – This means that if I get Corona and get cancer, if I have a critical illness plan, regardless of whether I’ve spent any money on that cancer, they will transfer that, come out to me.

RK: Yes, you’re absolutely right. In case of critical illness, most plans have the number of diseases they cover as part of the benefit, so it starts from 6 diseases to up to 65 diseases, and the list of diseases keeps evolving year-on-year. As we see, we never thought Covid was a pandemic or would cause death, right? But we see that today. Tomorrow, insurance companies will put this and cover this under critical illness.

DS: So you know I think the one of the points that we have is that you have indemnity and you have this [fixed benefit] and do you have anything for outpatient coverage as well?

RK: No, so outpatient expenses are expenses when you go to a doctor for a sneeze and a cold, and you take a normal consultation and he may prescribe a medicine or just ask you to take rest for two days and you will be fine after that. Typically, the penetration of outpatient [insurance] plans in this country has been abysmally low for two reasons, right? We tend to go to the doctor whom we trust, and it is very difficult for insurance companies to bring all their doctors on the same platform where we can have a transparent system where an actual consolidation can be determined, but outpatient plans are notorious for fraud. Because you see that a lot of people will end up getting a free consultation for a bill or a lot of consumers will start thinking that since it’s covered in my insurance man, why even for a cold or a sneeze why don’t I go to a doctor and take a consultation?

DS: I see – that’s an interesting point.

SC: Ruchir, one follow-up question I had. You know, many of our customers are young. They assume they’re healthy and they aren’t really thinking about health insurance for themselves. But they are very concerned about their parents, who are obviously [older and not in as great health]. So how would you advise these customers to think about health insurance?

RK: So, for parents right, most parents would be in the age group of say 45 to 65. Now whenever a 25-year-old or a 30-year-old is thinking about buying a policy for their parents, I would recommend that you buy individual policies for each of your parents instead of buying a plan together.

Second thing is you need to figure out if either of them has any pre-existing condition. If they have any pre-existing condition then at the time of buying the plan you should go ahead and declare all these pre-existing conditions and in case of hospitalization submit the discharge report of the previous hospitalization or a surgery or anything that may have happened in their lifespan.

The other thing I would like to mention is that it is always a good habit to have a retail health insurance plan for your parents because you may end up switching jobs. And if you end up switching jobs, you don’t know the next company – will they offer parental insurance or not? And up to what limit?

The third thing we also need to keep in mind is that parental insurance becomes notoriously expensive and scarce in the sense that as you age, your options keep getting limited. So if there are X amount of options at the age of 55, there will be 0.5X options at the age of 60 there’ll be 0.25X options available to you at the age of 65 and beyond that you will have 0.1X options and beyond 65 it becomes really expensive for you as well because you will end up spending ₹30,000 per year for a small cover of five lakh rupees.

So, I would advise that you start investing in health insurance for your parents as early as possible so that you can renew it for life long because all plans are renewable lifelong. So, if you were to ask me what is that one age where I would have to think about my parents and plan their health insurance for the next 10,15, 20 years. I say that would be below 60 years of age. So, between 55 and 60 is the ideal time according to me, when someone should take a look at this. And also, most of your users would have the benefit of claiming tax benefits. If your parents are senior citizens, you can claim up to ₹50,000, if your parents are not senior citizens, you can claim up to ₹25,000 as tax deduction.

DS: I see so just to add a point on this – A, you should get insurance for parents before they turn 60. Or most likely you know they’re also at earning capacities at that time, so it’s possibly better for them to even buy. Or if you turn 55 or 60, it’s better for you also to start to take your own insurance.

RK: Yeah, absolutely right. So I said right, the moment you know that you have a constant source of income, you should, whether self-employed or salaried, you should start investing in a health insurance plan and start with five to 10 lakhs. And depends on the location. If you’re living in a city like Bombay and Delhi, you may want to buy 1.5 X of the coverage you would buy if you were in Bangalore just because the health care costs in those cities are higher than Bangalore.

DS: I see – but you know now we have so many of our customers who are telling us that listen my company offers me some health insurance. They give me 5 lakhs or whatever that number is. What should I need to know about it? And you know what do I do about that?

RK: So, it is always good to understand what you have right? Most of us when we join a company and when we are young right? We don’t end up actually reading the fine prints or bother [about the insurance]. It’s just that health insurance is provided by the company and only at the time when you need it is when you will open that email which your HR has sent you to just see the specifics of the plan, what it covers, what it does not cover.

And then you get a shock that oh, these were the conditions; oh, the room rent is limited to a single private room, but I got hospitalized in a higher category room so I will have to now pay the difference. So, it’s always good to take interest. Be aware about all of those things and the good starting point would be when you get a corporate health insurance policy. Just read the policy’s benefits and get in touch with HR if you don’t understand it and don’t want to invest efforts in understanding your policy get in touch with someone who can help you, or you can read a lot of articles which are out there.

DS: Got it OK, so that’s the point about you knowing what your corporate [policy] covers, but then we hear about these top up super top up plans. This is stuff that I believe works beyond the corporate plan itself. What do they mean?

RK: Deepak, let me start with explaining what a top up is or what a super top up is, and then we’ll jump into when you should opt for one and what other things you should look out for when you opt for one. So, a top up or super top of plan is basically a plan like an Indemnity health insurance plan which pays for actual expenses beyond a particular defined limit or a deductible. Let’s take an example. So, your company provides you a health insurance plan of four lakh or five lakh rupees. Now you buy a top up of another 10 lakh rupees, which is a retail top up with a deductible of four or five lakh rupees, which means that this plan is in effect only after your hospitalization costs have gone above 4 lakh or 5 lakh rupees.

Now the difference between top up and super top up is top up plans would consider every incident or every hospitalization – where the amount would have to be exceeded by three or four or five lakh rupees, which is the deductible or defined limits. Whereas in a super top up, it’s the aggregate of all the hospitalization costs.

What I mean by this is you get hospitalized and you incur a bill of two lakh rupees. It is typically paid by your corporate insurance. Then you can’t claim anything from the top of as it is because it’s not crossed the limit.

And then you again get hospitalized in the same year and you incur a bill of, say, another four lakh rupees. Now the deductible limit was four lacs in a top up. And so again, here also, you cannot claim anything from the top-up plan, but you’ve gone ahead, and the limit left on your corporate plan is only three lakhs, so there’s a shortfall of 1 lakh over here.

Now in a super top up you could have claimed this additional one lakh from the super top up because two less plus four lacks would have taken the total limit spent on hospitalization in that particular year to six lakh rupees and your base plan would cover up to five lakhs and the super top of would cover the balance one lakh and you could file for a reimbursement plan on the super top up.

Now coming to the second part where we can. Who should opt for top ups? What is the amount they should opt for top ups? I would say that you can opt for top ups once you have invested in a good base plan because what ends up happening is if you go ahead, your deductible limit is fixed. Once you’ve taken a top up plan and you cannot change it during the course of the plan or even after that, you will only have to let go of that plan. So, I would recommend once your base plan is fixed, then you know what your deductible limit is.

In case of corporate plans, it becomes very difficult to figure out what your base amount will be covered by a corporate, because as you move jobs, someone will give you 3 lac of coverage, someone will give you 5 lakh of coverage. And if you still want to opt for a plan without actually having to invest in a base retail plan, what I would suggest is take the minimum deductible limit.

So, if three lakhs is the minimum deductible limit, then take three lakh limit and buy a top up of another five lakh, 10 lakh, or 15 lakh based on your age and your lifestyle.

DS: Interesting, so if you had to like, you know one corporate and the top up if you go to hospital, do you need two sets of bills, one to subject to one and one to submit to the other?

RK: Well you will need two sets of bills. What you can do is go back to the hospital and ask for a true copy of the Bills, because any which ways you need to when you try to claim anything from the top up, you need to prove that you paid the five Lacs either using cash, either using your corporate health insurance or using your base health insurance. Only then they will cover the balance amount.

DS: I see, so it’s not just the bill size, it’s also the fact that you’ve paid.

SC: One of the most frequently asked questions in the last few months has been actually about Covid and people keep wondering, how do I know if my health insurance has covered me for Coronavirus and all the various costs and exposures related to it? How would you find out and how do you think about that?

RK: OK, so all health insurance plans by default cover Covid. Now the tricky part here is that when you talk about the typical indemnity health insurance plan, consumables are not covered and the consumables in case of coronavirus tend to be far higher than any normal surgery or any normal hospitalization happens because they need to sanitize the hospital. They need to sanitize your room. PPE kits need to be given to any treating, nurse, doctor or ward boy for that matter, who comes in contact with you and this sort of balloons the cost of hospitalization and since a normal health insurance plan, does not cover for consumables like cotton or a PPE cost. It is on a case by case basis where the claims are getting approved today, so there is no thumb rule. Even Corona specific plans have a limit of PPE cost they cover per day.

And the unfortunate part is that we’ve seen that hospitals are billing extremely high on the PPE cost, like I’ve heard in the last few days that someone was charged ₹1200 towards sanitization cost just for the room. Then he was charged another ₹1200 per day for sanitization cost for the common area and the doctor, even though he uses the same PPE to treat like 4 patients or five patients, is charging individually to every patient. The actual cost of the one PPE kit, so that ends up ballooning the cost or hospital bills, and that’s where the insurance companies have now decided to do this on a case by case basis.

In a normal scenario, consumables typically would have cost 5% or 10% of your total claim amount, which in that case you would get 90 to 95%. You can assume that the consumable cost would be double of what it used to be there for the normal hospitalization.

SC: Understood, a bit depressing there but fair point. Ruchir can we back up for a second? Can you tell me what is the best way to buy health insurance? I mean starting back there, what are the different kinds of plans out there? And honestly, who should I be buying this from? Because as you keep saying, This isn’t the most straightforward thing out there.

RK: Yaar, it’s not as complicated as it sounds, frankly. So where to buy? You should buy it from someone who gives you unbiased advice like in stock broking you have a registered investment advisor similarly the way I would say online or offline does not matter here because there is no cost difference in buying online versus offline. So, buy it from someone whom you trust and buy it from someone who gives you unbiased advice and the way to figure that out is if someone is pushing you towards buying a particular plan or a particular product of a particular company, then err on the side of caution. You know that you’re not getting the right advice. 

Secondly, whenever you buy a health insurance plan, be honest about all your health issues or concerns with whoever you’re buying it from. And typically, I see that this happens mostly in case you know the person, or you have some kind of an existing relationship with the person. Hence your friendly neighbourhood guy. Or it can be some online forum where you develop trust by reading their articles and reading their advice over a period of two to three months would be the right place. So just build  comfort and ensure that you’re not buying it from someone who’s giving you unbiased advice.

DS: Interesting, so essentially even if you were a smoker five years ago or four years ago then say that you’re a smoker [in the form] because otherwise it can get rejected.

RK: Yeah, it’s absolutely important Deepak, right? Because half the reasons why claims get rejected is because people don’t end up declaring what they’re supposed to about their lifestyle honestly to the insurance company, and that causes a big problem, right? So, if you declare everything honestly, whether you get a plan or you don’t get a plan you know that the chances of rejection at the time of claim are going to be minimal, and you’ve done everything in your power to ensure that your claim does not get rejected.

DS: Good point, good point. Now we’re coming back to the major subject, which is Corona. There are these plans that have been introduced on Corona Kavach and Corona Rakshak. What are the pros and cons of these plans, and you know who should buy thes?

RK: Good point, Deepak. Corona Kavach and Corona Rakshak should be bought by people who don’t have any [other] kind of insurance. Corona Kavach is an indemnity plan. Corona Kakshak on the other hand is a fixed benefit plan and I’ve earlier covered that a fixed benefit plan typically gives you a lump sum pay-out whereas Corona Kavach would cover for actual hospitalization for up to the insured amount which you bought from the insurance company. Now who should buy this plan will be people who I think don’t have any kind of insurance or the uninsured population of our country and the tenure of these plans is anywhere between three to nine months, which is short term because we don’t know if the vaccine is down the horizon three months, six months, one year, two years, right? So, we also don’t know what is the long-term, whether this product will be out there in the long term, but for the interim for the people who don’t have any kind of insurance, it’s actually a very good investment because it will ensure that they don’t deplete their emergency funds.

DS: Got it.  I mean, let’s work for those segments of people. Aren’t there supposed to be, you know generic non-Corona basic insurance plans as well?

RK: Yes, there are basic insurance plans which they can invest in also, but as we see our economy is not doing that well right? So even spending like you would rather want to spend a small amount today or a lot of people we felt wanted to just think about worrying about the next eight months, nine months get their job back because of all the layoffs which are happening across the board and then invest in a health insurance plan down the line. And people who can afford to buy a normal health insurance plan, I would insist they buy opt for a normal health insurance plan and start their protection layer planning from now rather than wait for a later point in time in future.

DS: Got it, good point. Now, you know we are fortunate enough to be able to pay for our own insurance plans and perhaps even read about it on the Internet and kind of claim. But we all have household help perhaps, and some of these will not even know what the concept is and how things go or to go about them. And let’s say I want to buy some insurance for my driver. For my household help and I want to insure them or cover them at least to a certain extent. So how do I, you know, go about that? Is it something that I have to give them money and they have to pay? Can I pay for them?

RK: It’s completely your call at the end of the day. So anyway, tax benefits are out of the question here. So finally, it depends on you. You want them to buy it. But one thing I would insist is whenever you’re buying an insurance product for someone else, like a maid or a help or a driver for that matter, I would request you to educate them to some extent about why it is important for them because that way they will go ahead and pass the baton by educating other people around them and like them.

And it is extremely important for us to tell them that they have a tool by which they can ensure that in case of a health scare or medical emergency, they don’t have to deplete their savings and an insurance company can pay for it and they all they need to do is contribute a small amount every year towards this plan.

DS: Interesting, so it effectively means that your maid and any of your household help can be covered and if you just educate them on how this goes. I mean, it’s not just noble but the point is that they don’t get the education and people who know about it should pass it on.

RK: I completely agree, right? I’ll give you an example. We have a corporate health insurance and I ensured that we included the help who cleans our office every day in our plan and we gave her a card and we absolutely explained that she’s covered to what limit and what she can avail and what she cannot avail, and she was so happy because even though she had done her 10th and 12th, she didn’t know something like this by paying such a small amount can actually protect her from the downside what a medical emergency can do to your financials.

SC: Coming back to the mechanics of health insurance, can you talk to me a bit about the claims process? I know there’s a reimbursement track, and then there’s a cash-less track. What are the pros and cons of each and how would you advise or recommend people think through this trade off?

RK: OK, so typically whenever you buy any indemnity health insurance product you get a health card, which basically allows you to go walk into an hospital, go to an insurance desk and claim cashless hospitalization. What that means is once they verify your identity and once they verify that this card actually is, you are the person who this card belongs to, they speak to the insurance company and they figure out what the limits of your plans are and what the sub-limits of your plans are and then the bill is directly settled by the insurance company to the hospital. So, you don’t have to end up spending a dime out of your pocket when you get hospitalized. So that is in case of cashless scenarios.

In case of reimbursement scenarios, it’s your obligation at the time of getting hospitalized. Either you or your family member or anyone intimates the insurance company of the hospitalization. And you can go ahead and file for a reimbursement claim up to the limit of your plan after you’ve discharged, and you have a grace period of anywhere between two weeks after discharge to file for a reimbursement claim. It is completely a personal preference.

Ideally I would say opt for cashless hospitalization, as far as possible, but a lot of times we’re very comfortable with the doctor or with the hospital we’ve been going to, and maybe that hospital is not part of the cashless network of the insurance provider which you bought your policy from. Then. In that case, reimbursement is always an option available at your disposal.

SC: Understood. No, uh, what happens if my claim on my opting for cashless is rejected? I mean, if things don’t work out, which I’ve seen happen, how do I proceed?

RK: We need to first understand why a claim was rejected, right? Is it because there’s a mismatch in the date of birth on the cashless card and the proof which you submitted? Or is it because the insurance company found out that you’re getting hospitalized for something which you have not declared. That was a pre-existing condition you had while giving, so it’s very critical for us to figure out why your cashless claim is getting rejected and that you would know. Max that a company takes is 24 to 48 hours to inform you that your cashless claim is rejected and then the idea is to find out the core reason for it being rejected. A lot of it can be sorted out by speaking to the insurance company, and once you find that out then you can still if it’s just an issue with something as basic as a mismatch of date of birth the insurance company will not have a problem.

They will ask you to go ahead and change your date of birth and take the claim as a reimbursement claim and pay you out for the amount for which you spent at the hospital. But if it’s another serious issue which is like non-disclosure or something, then there is nothing which you can do over here apart from contest this rejection because it is very like he-said she-said sort of a conversation, right? The insurance company needs to rely on the information you gave at the time of buying the policy. You can take it up with the grievance officer of the insurance company to start with.

If you don’t get any support from the grievance officer. You can, you can escalate it to the IRDA Ombudsman of that particular area. If there as well, you are not getting any support you can go to an IRDA consumer redressal forum as well. If over there is, well, you are not satisfied with the response, or you can actually file at a consumer court and then that will take the new form of the judiciary process which we have, which can go right up to the Supreme Court if you want to contest that case.

I hope this clarifies all the questions you had, Shray.

SC: I hope it never ends up in that second escalating hierarchy of how you address it.

DS: So yeah, I think you know Shray we’ve seen cases in the past in Capitalmind itself. We’ve written articles about this so Ruchir, I think one of the things that we’ve discovered now is that you can move between health insurance providers. You can go to a different one from the one you are in. That’s called Portability, and when you port you just start paying the new insurance company the next set of premiums. But you know there are these things called pre-existing of waiting periods or something like that. How does this all work in the concept of portability, and how does portability work in the first place?

RK: OK, so Deepak portability is actually a very good thing for all we consumers because for us, it allows us to change our provider and carry forward all the benefits from our existing provider to the new insurance provider. Typically, the way it works is you would carry forward all your benefits from your existing plan to the new plan, which you are going to opt for.

Let’s take a simple example. I have a 5 lakhs plan from HDFC Ergo and now I need to port it to a 5 lakhs plan from ICICI Lombard. I spent two years paying premium to HDFC Ergo and I had some pre-existing conditions say which is hypertension and the pre-existing waiting period in HDFC Ergo was three years whereas in ICICI Lombard it’s only two years and I’ve already paid for 2 years at the time of porting.

So when I put into ICICI Lombard, I will have all the benefits and my pre-existing illness will be covered from day one because I’ve already paid 2 years of premium and the new policy which I’m going into has a pre-existing waiting period of only two years which I’ve already spent with the previous insurer. So, I will carry forward all those benefits along with no claim bonus if I have accumulated any with the previous insurer into the new insurer which I port into, so that’s brilliant, right? Like now from day one, your retail plan is acting like a corporate plan. Once the pre-existing waiting periods and all waiting periods are over in the incoming insurance company.

DS: Which is great. Actually, you have a situation where a lot of these so. If I were to summarize the new plans pre-existing waiting periods will start to apply what they will carry forward the waiting periods you already incurred in the existing plan. If the new plan has a four-year waiting period, the current plan has a two year, so you’ve actually done two years here. When you move, you’ll have only an additional 2 years, but not an additional four.

RK: I agree, completely agree with you and it’s actually really good here for consumers because at the end of the day that we – how we could switch our SIM cards in telecom from one operator to another operator. So, it also holds a company accountable that if you don’t provide a proper service – what you promise – the consumer jas an option to just move out.

SC: Ruchir, to start  wrapping things up a bit. You’ve mentioned a few times during this conversation that you should think of health insurance – a bit like an agreement or a contract between you and the health insurance provider. So if you were to tell us what are the key points or the fewest or simplest number of things that you need to keep in mind when you’re either picking or evaluating health insurance, So that we can make this into a sort of a checklist and share this with the world. What comes to mind? How would you define this process?

RK: OK, so the way I would go about doing this is first of all be very honest about declaring any health issue or your lifestyle choices which you made on your application form before while you’re buying your health insurance policy, whether you’re buying it for yourself, whether you’re buying it for your parents, don’t try to hide anything from the insurance company to start with as a rule of thumb. 

Then when you’re looking at folks who have pre-existing conditions and we’ll talk about folks who don’t have pre-existing conditions, there’s only one difference which when it comes to when you have pre-existing conditions – you need to declare your current medication. 

You need to also ensure that you optimize for plans or products where the pre-existing waiting period is minimal. So, the average retail plan has a pre-existing waiting period of two to four years. Whereas a corporate plan covers pre-existing illnesses from day one. That is the advantage of corporate plans over a retail plan.

I would optimize the pre-existing waiting period in case of anyone who has any pre-existing condition and that is the first feature I would look at for people who have pre-existing conditions.

Now when it comes to in general if I were to look at what other plans I would want to choose and what are the things I need to keep in mind while I’m choosing the plan – I would start with you ensure that you don’t have any room rent limits because it helps you give that peace of mind that when you’re getting hospitalized, you don’t have to worry what room you’re getting hospitalized into. So ideally, offer plans with no room rate limits. But if you can’t, because such plans tend to be a little more expensive compared to your normal plans which have limits, then you figure out a plan where it limits you to a certain type of room. Which is like a single private AC room, and if that is also outside your budget, then you think about going for plans which cover maximum cost when it comes to room rent, where the limit is higher. Like 2% of sum insured or 4% in case of ICU. So, pick plans in that order.

The other thing you need to look for is to pick plans without any sub limits. A lot of plans have notorious ways of putting sub limits on expenses like maternity, cataract, knee replacement, even in case of cancer – some of these plans would put a sub limit of 2.5 Lacs on 5 Lacs. So be very clear or opt for plans which don’t have any of these sub limits right because it is in your interest to do that.

Third thing I would want you to think about is the location where you stay right? Like if you’re living in a city like Bangalore and you’re buying X premium. And if you’re buying X sum insured and if you are in Bombay or in Delhi, you should buy 1.5 X because the cost of hospitalization is much higher in these two cities. Also, if you’re someone who travels then go ahead and pay the premium for the highest tier because your premium in most insurance companies gets defined based on this city where you live in. So, my advice would be that if you’re someone who travels, then buy a plan of the highest year which is Bombay and Delhi. If you are in living in Bangalore and you don’t expect and you sparingly travel to Bombay or Delhi, then go ahead and buy plan as of Bangalore.

And realize that in those edge case scenarios where you’re in Bombay, you need hospitalization, there will be a co-pay element which means that the insurance company may not cover 100% of the cost. They will cover 90% or 80% depending on the city because the hospitalization costs in those cities will be higher compared to the base city where you were in.

So, I hope that like sort of sums it up so it’s not as complicated as we think it is. There are a few rules we can follow, like in math. Most of us here are engineers (hmmm…not really), so I guess we can try to find our way and create some sort of a formula down the line and that’s the hope.

SC: OK, well we’ll take your help to make this checklist thing happen first. So Ruchir, this has been fascinating. If people want to learn more and read up about this, where do you recommend they go?

RK: So our blog [on OneAssure] also covers a lot of these things, but otherwise there are a lot of resources available online when you just Google it. And you can Google simple things like – what does co-pay mean? How does it impact you? You can Google things like – how do I think about room rent limit? Or why do sub limits matter in an insurance plan?

And I guess we can educate ourselves slowly and steadily. You may not want to know everything on day one right? Because even for a guy like me who does not have any insurance background, it took two, two-and-a-half years and I’m still learning. Just depends on us when we want to start learning. It is absolutely critical for you to start. Once you decide to start, you have taken the reins in your own hand and no one can stop you and you can learn more each day.

SC: OK, well that’s a: positive thought.

DS: Just a small point here. I learned about it the hard way, perhaps myself when my first son was born. We went to the hospital thinking that we had covered maternity expenses in our corporate plan, but it turned out it was written in the contract except in the last page and somewhere it was written clause 7 is excluded [which turned out to be maternity], so I realized that you can’t just look at, you know the first page and say oh well it’s good, you want to read the last page as well.

RK: Yeah, because as Shray rightly mentioned, health insurance is a legal contract and not all of us are lawyers or are well equipped to understand or interpret a lot of these contracts.

And one thing I have been told to be very cautious by my lawyer is that always read the fine print. So whether you read the policy document or not, but be sure to read the fine print and exclusions so that will help you understand what it does not cover so that that is an easy, easier way to tackle this problem, right? So, then you automatically know what is covered.

SC: Sounds good, Deepak over to you…

DS: Thanks, thanks so much Shray and thanks for Ruchir. It’s been lovely having you on the show. I know that you’re on Capitalmind premium on slack. All of our people you know continuously ping you for questions but where else can we reach you at?

RK: So you can just reach me at ruchir@oneassure.in. Or look me up on Twitter @ruchir_89, but I’m not that active on Twitter. It was really nice of you to do this because I guess we need to get the word out there and educate as many people as possible and do our bit in doing so. Thanks, Deepak, for inviting me and having me at your office on a Saturday. All of us have taken our valuable time out from our schedules to come here and do this for a much greater cause and a greater benefit to all the people who will hear this podcast.

DS: Thanks so much, Ruchir, in fact it’s been enlightening for us as well. It’s a pleasure having you here and to all of you listening. Thanks for listening. If you have any more questions, of course you can contact Ruchir. You can contact us. We’re @capitalmind_in on Twitter. We’re at capitalmind.in for all the articles we write. There’s oneassure.in for health insurance and more that Ruchir’s company has to offer and we’d love to see you more. That’s the end of episode 32. Thanks for listening.

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