Explained: How to reduce out of pocket expenses in health insurance claim

• Out-of-pocket medical expenses refer to the costs that are not covered under health insurance policies.
• Insurers typically do not cover medical items and supplies that are used during hospitalisation or medical procedures.
• Opting for certain add-ons will help ensure that most of the out- of-pocket expenses are covered under your health insurance policy.

Ahmedabad-based Neeraj Patel who has a health insurance cover of ₹10 lakh, was admitted to a hospital a few months ago for a surgery. While the hospitalisation was cashless, Patel had to pay ₹35,000 out of the final bill of ₹1,60,000. On analysing his bill he figured out certain expenses were not covered under the policy.

Like Neeraj, you may also be caught unawares by a substantial bill even after having a surgery under a health insurance.

General health insurance doesn’t cover everything

A health insurance policy is taken to ensure all expenses related to hospitalisation are covered by the insurer. However, that may not always be the case.

“Out-of-pocket medical expenses refer to the costs that individuals pay for healthcare services and treatments directly from their own pockets and are not covered under health insurance policies,” says Parthanil Ghosh, president, retail business, HDFC ERGO General Insurance Company.

Certain costs are not covered under a normal health insurance policy (see box), while there could be some costs that are not covered because the policy comes with certain features to keep the premiums affordable.

Possible out of pocket expenses:

OPD (Outpatient department expenses): A health insurance policy typically does not cover OPD expenses undertaken by the policyholder, as per Digit General Insurance. This includes expenses related to doctor consultations, pharmacy bills, diagnostic tests, investigative tests, among others.

Consumables: Insurers typically do not cover medical items and supplies that are typically used during hospitalisation or medical procedures. These include any administrative charges, gowns and gloves used by medical staff, surgical blades, syringes, other disposable materials, among others.

Admission for investigation and evaluation: Expenses related to any admission primarily done for any diagnostics and evaluation purposes might not be covered by the insurer and one may have to incur such costs out of their own pocket.

Hospitalisation due to PED or Specific Illnesses: If you have a Pre-existing disease (PED) or get admitted for some specific illness, there might be a waiting period for the same. If the specified waiting periods have not been completed, the hospitalisation costs under such scenario would have to be borne by the policyholder.

It is important to be aware that some health insurance policies have limitations on what they cover, including room rent and ambulance fees. “If these expenses exceed the predetermined amount outlined in your policy, you may have to pay the additional costs out of pocket, even if you haven't exhausted all of your insurance funds,” says Siddharth Singhal, Business head, health insurance, Policybazaar.com.

For example, if your health insurance policy has a room rent cap of ₹10,000 and your room costs Rs 13,500, you have to pay ₹3,500 from your own pocket. Thus, if you are in the hospital for six days, you’ll have to shell out ₹21,000 from your own pocket.

Also, in case you have taken a health insurance policy with co-payment (wherein you agree to bear a specific portion of the incurred medical expenses) or with deductibles (where you are required to pay a certain amount before the insurance company starts paying up for the treatment expenses), you may have to pay a portion of the bill on your own.

Add-ons you can consider

Health insurance policies offer riders or add-on options to cover specific out-of-pocket expenses. They would require you to pay an additional premium but will take care of most of your out of the pocket expenses. Here are some key add-ons.

Consumables cover: This add-on offers coverage for consumable medical items and materials utilised during a patient's hospital stay or treatment.

“Non-medical expenses like PPE kit, gloves, etc are considered consumables and are not covered by the insurer. This typically amounts to about 6-14% of the overall hospitalisation expenses. Adding a consumable cover ensures the insurer also pays for all such expenses as well. Adding a consumables cover may increase your premium by 8-12%,” says Vivek Chaturvedi, CMO and head of direct sales, Digit General Insurance.

OPD Cover: Adding this feature to your health insurance can be really useful. It goes beyond the typical hospital stays and covers you for medical costs when you visit the doctor, get tests, or need medications. Even those minor procedures that don't require a hospital bed are included.

Whether it's a routine check-up or something more serious, this add-on has your back.

Add-ons to reduce the waiting period: Health insurance usually has a waiting period of 3-4 years for pre-existing diseases(PED) and 2-3 years for specific illnesses. “However, one can take an add-on by paying a higher premium and reduce the waiting period,” says Chaturvedi.

For example, reducing a PED waiting period of 3 years and specific illness waiting period of 2 years to a year each for a 40-year-old can increase your premium by 18%.

Select a comprehensive health insurance policy

Selecting insurance plans that do not include sub-limits and deductibles is a prudent choice as it allows you to fully utilise the insured amount and will cover your medical bills as long as they do not surpass the sum assured.

“Choose a health insurance policy that explicitly covers out-of-pocket expenses as well so that you don’t need to bear the extra burden of arranging money to pay for such expenses,” says Ghosh.

However, it's crucial to strike a balance, ensuring that the added coverage doesn't come at the expense of unaffordable premiums as you get older. The key is to consider add-ons carefully, focusing on those that have the potential to significantly increase your out-of-pocket expenses.