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Having more than one health policy will work only if you are aware of the rules applicable in different situations

Thanks to the burgeoning healthcare costs, an increasing number of Indians have become increasingly aware of the importance of having a health insurance policy. Many prefer to buy a separate plan despite being covered by their employers under group medical health policies, as it eliminates the chances of going uncovered in the event of a job loss or while switching jobs.

Managing Multiple Policies:

Sure, opting for an individual cover is indeed a wise decision. However, many people are not aware of the details involved in making a claim when they have more than one health cover. Especially, because 'one plus one' does not necessarily equal two in this case. This is due to the contribution clause in your policy which states that if you have purchased insurance policies from more than one insurance company, all the insurers will share the payout in the ratio of the sum assured.

On your part, you are required to be transparent while buying a health cover. "While signing up for an insurance policy, the individual is under an obligation to declare if s/he is already covered under any other health policy. If s/he acquires another policy during the course of the first one, s/he is required to intimate the latter," says Anthony Jacob, CEO, Apollo Munich Health Insurance. In practice, though, industry-watchers admit that individuals do not always disclose the presence of another policy in their portfolio which, according to them, is not the right approach. "No attempt should be made to withhold the information as it could go against you during processing of the claim. It is best to be transparent," says Sanjiv Bajaj, managing director, Bajaj Capital. Also, the clause will not come into the picture all the time - its applicability depends on a variety of factors. Here's a list of scenarios a policyholder with multiple policies may encounter at the time of making a claim :

Group & Individual Cover Combo:

You must inform both the companies when you make the claim. However, this will not apply if the terms and conditions of the two policies vary hugely. "The group health insurance schemes are pretty wide in terms of coverage and features. For instance, pre-existing illnesses are covered under such policies whereas in case of retail covers, this cover is extended only after 3-4 policy years. If a claim - pertaining to one of these pre-existing illnesses - is made before completion of the waiting period, issuer of the individual claim will not share the payout," says Jacob. For other claims, though, both the companies need to be informed. "Usually, in case of a cashless claim, one company has to be contacted and provided details of the second policy. From thereon, the two companies will coordinate and settle the claim," he says. However, Pawan Bhalla, CEO of third-party administrator Raksha TPA suggests that even in case of a cashless claim, the hospital is required to alert both the insurance companies/TPAs. The procedure may not be smooth all the time. "The issues could be in the nature of both companies insisting on original discharge documents," points out Bajaj.

Two Reimbursement Policies:

Barring critical illness covers, most general insurers offer only reimbursement policies - the ones which undertake to pick up the expenses you may have incurred during hospitalisation. Life insurers, too, offer reimbursement covers, but many also sell fixed benefit policies. If you have bought two reimbursement covers, the contribution clause will come into effect since the operating principles of the two policies are the same. "Irrespective of who the issuer is, if the features are the same, the claim payout will have to be split between the two companies," adds Jacob.

Reimbursement & Fixed Benefit Policy Combo:

Fixed benefit covers, which are typically offered by life insurance companies, promise to hand out a predefined sum upon hospitalisation. In such cases, you can make a claim under both the policies separately - that is, both the companies will settle the claim you are eligible for. Moreover, the issuers of fixed benefit policies usually do not insist on original hospitalisation documents. This could perhaps be the ideal combination, as the claim amount from the reimbursement cover will pay for hospitalisation expenses while the fixed benefit dole can be used to fund post-hospitalisation recovery costs.

Two Policies From One Insurer:

Consider another situation, where you decide to buy a health policy from the same insurer that provides your group cover. Here, it is best to make enquiries first. "Due to the accounting procedures, the insurer could insist on dividing the disbursal between two policies, even if both are issued by it," adds Bhalla.

Two Polices Serviced By Common TPA:

Again, this could help simplify the entire procedure. If the claim servicing of your health insurance policies is handled by the same TPA (third party administrator), the time taken could considerably come down, as the need to transfer the documents from one TPA to another is done away with. If you have to deal with different TPAs, you may need to ask for a certificate from the TPA in possession of your original bills, stating that the documents have been retained for verification of the claim made. This, along with photocopies of the relevant documents, has to be submitted to the other TPA for processing at its end.

Despite the complexities involved, you should opt for an additional individual cover. Especially, since the group will cease with your employment. Besides, if you were to buy an individual mediclaim when you are working, you would have also crossed the milestone of four policy years, which is the waiting period for covering pre-existing illnesses.

Double Protection

If you have two health policies that are similar in principle, the claim payout will be shared between the two The disbursal will take place in proportion of the sum assured under the two policies However, in case one policy covers pre-existing illnesses while the other doesn't, and the claim relates to such an ailment, the former will pick up the entire amount If one policy is reimbursement-based and the other is a fixed benefit one, you can claim the entire eligible amount under both policies You will be better off informing both the insurers while making a claim. It also makes sense to retain copies of all the bills The insurers or the TPAs will then co-ordinate with one another and pay out their respective share

Source: http://epaper.timesofindia.com/