Someone buys a health insurance policy to beat rising medical costs. But life is full of surprises. When you approach your health insurance company with a hospital bill, the insurance company doesn’t pay out of pocket expenses. In such instances, it is not advisable to have daily hospital cash (DHC) packages which can prove to be expensive. Let’s take a look at what a DHC plan is and where it fits into your insurance portfolio.
Certain expenses that are unacceptable such as food, nutritionist consultation, transportation costs, staff fees, etc.; incurred during hospitalization are not covered by the insurance company. All of this comes out of pocket expenses which are excluded from the policy.
So, is there a policy that can cover these costs?
Yes, the daily hospital cash (DHC) package is one of the policies that covers non-medical expenses and replaces the policyholder every day. In this plan, a person gets a certain amount for each day of hospitalization. Payments in the program are not linked to actual hospitalization costs; which means that one can make claims under daily hospital cash plans and medical claims policies.
Let us understand this with the help of an example –
Mr Raj is in hospital since last five days. He holds a medical claims policy of Rs 5 lakh with Daily Hospital Cash allowance of Rs 1000/per day. Suppose the total hospital bill is Rs 35,000. Hers medical claims policy will cover hospitalization costs of Rs 35,000, and he will also receive an additional DHC allowance of Rs 5,000 (5×1000) for 5 days.
However, if Mr Raj holds only the Daily Hospital Cash plan then he is entitled to receive Rs 5000.
How are costs covered here?
Unlike choosing a sum assured based on a medical claims policy, in a DHC policy, determine the amount of daily benefits you want to get. Typically, DHC plans come with daily profits of Rs 500/Rs 1,000/Rs 1,500/Rs 2,500 and Rs 3,000. The actual payout is based on the DHC plan limit, however, in the case of circumstances such as the ICU, the payout can be high.
Benefits of the Daily Hospital Cash Plan:
- Additional costs are borne: Besides the hefty hospitalization costs, some unacceptable expenses that are not covered by a health policy can be reimbursed with the help of this plan. The policyholder gets this daily allowance as a lump sum which he can use as needed.
- Maintaining the No Claim Bonus: If the insured is hospitalized for 2 or 3 days and the bill is not large, the same can be settled with the help of the amount received from the policy in daily cash. In this way, the insured will keep the medical policy untouched, and thus he is entitled to it No claim bonus (NCB) next year. This is a bonus offered to policyholders for not making a claim in the previous policy year and helps cut premiums or increase the amount insured.
Should you buy this package yourself?
No, this is a plan that must be used in addition to a normal health policy as this alone will not cover all costs during hospitalization. The first ring of defense must always be a comprehensive health insurance policy. Then use the DHC package as an additional cover.
Important points to remember:
Although, how the DHC package works may seem simple, here are some points to be aware of:
- Number of days covered: The insurer can limit the maximum stay in the hospital to 30, 40 or 60 days in one policy period
- Benefits during major surgery: Most insurers double the daily DHC benefit if the policyholder is admitted to the ICU. In the case of major surgery involving the heart, brain or liver, the benefits can be more, say 20 times the DHC chosen. Please check with your insurance company about this aspect before you sign on the dotted line
- Minimum days of hospitalization: Like medical claims policies that require a minimum of 24 hours of hospitalization, the policyholder must be in the hospital for a minimum of 3 or 4 days to avail benefits under a DHC plan. Some insurance companies offer Rs 1,000 per day per member for a maximum of ten days with a minimum of three days of hospitalization.
The best way to keep your family safe from a medical crisis is buying a health policy that covers all the risk factors associated with the health of the different members. However, to cover other expenses, add a daily hospital cash ride to your policy as an added benefit.