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How to Increase you Medical Coverage without much Increase in Premium

Last Updated: Jan 30, 2013 | 1,073 Views

Most people are very concerned about Health Insurance Plan in today’s world since the medical expenses have rocketed sky high and are unavoidable and neither can the same be delayed. On one hand Health Insurance Plans should not be delayed (Read The cost of delaying your health insurance plan) and on the other hand the Insurance Companies are taking full advantage of increasing premiums! (Read Health Insurance to become more expensive). 

Hence the regular man is at a Catch 22 situation! He intends to purchase a Health Insurance Plan but is worried about the high premium. Now, for those who already have a basic Health Plan and is contemplating for another one or an increase in coverage, there is some good news for them. There is a new concept in the health industry called Top Up policy and Super Top Up policy

What is a Top Up policy?

Top Up policy is for people who already have an existing Individual Mediclaim or from his employer and needs only enhanced benefits. It is meant to provide for reimbursement of medical expenditure which arises out of a single illness beyond the threshold level (or the existing Mediclaim coverage). 

Thus, if you already have a Health Plan of Rs 2 lakhs, then you can opt for a Top Up policy of Rs 5 lakhs with Rs 2 lakhs deductible. It means that the initial Rs 2 lakhs would have been paid by his existing Mediclaim and the remaining Rs 3 lakhs would have been borne by this Top Up plan. 

This type of plan is very beneficial for policyholders since it is at least 20-30% cheaper than a fresh Mediclaim policy and it is beneficial for insurers since the claim arising in Top Up policies is much less since it only comes into play beyond the ‘threshold level’. Most claims in the Health Insurance industry are usually in the range of Rs 2-3 lakhs only.

However, if you are again hospitalized for some other reason and incurs an expense of say Rs 1.5 lakhs in the same year, then the Top Up policy will not pay the claim, since it covers ‘reimbursement of medical expenditure which arises out of a single illness’ ONLY. In this case, Super Top Up policies come handy.

What is a Super Top Up policy?

Super Top Up policies also provide for reimbursement of medical expenditure beyond the threshold level but it covers any number of illnesses and is not restricted to only one illness per year. 

Thus if you opt for a Super Top Up policy of Rs 5 lakhs with Rs 2 lakhs deductible, then the initial Rs 2 lakhs would have been paid by his existing Mediclaim and the remaining Rs 3 lakhs would have been borne by the Super Top Up plan. And this expense can be made in one or numerous hospitalizations. 

Some basic FAQs regarding Top Up Plans:

1. When does buying a Top-Up Plan make sense? 

You should buy a Top-Up Plan only when you want to increase your coverage from your existing Mediclaim coverage such that you can avail benefits from both plans.

2. What are the things to keep in mind (policy details such as threshold limit, sub-limits, day care, pre and post hospitalization and donor expenses , pricing, etc.) while buying a Top-Up Plan?

Certain things to be kept in mind are:

  • Continuity of Waiting Periods, so that fresh waiting period is not applicable
  • Pre-existing diseases coverage
  • Exclusions like dental treatment, spectacle cost, etc.
  • Coverage limits inclusive of pre and post hospitalization expenses, threshold limits
  • The deductible coverage provided for a single illness
  • Concept of a single illness- if the relapse of the illness happens within 45 days of discharge, it is usually considered as single illness. However, if the discharge happens after 45 days, it is usually considered as a fresh illness
  • Who all can be covered under the plan, since parents are usually not included

3. Is it compulsory to have a base reimbursement insurance policy to buy a to-up plan? If not, is it advisable to have one? 

No it is not compulsory, but it is advisable to have one so that the additional cost of the hospitalization can be covered by the Top Up Plan.

4. Does buying the individual reimbursement policy and a top-up plan from the same insurer have any advantage? What if the plans are from different insurers? 

Whether it is from same health insurance company or different, you would still receive the same benefits of first exhausting the limit of the Basic Health Insurance Policy and if there is additional hospitalization expenses from the same illness, then you would be able to claim from the Top-Up Health Insurance Plan and not otherwise

5. Can definite benefit plan be an alternative/competitor for top-up plans to extend health insurance coverage? When should one go for a definite benefit plan over a top-up?

A Top-Up Plan should be opted for only when there is a strong base coverage. The Top-Up Plan is not an extension of a regular plan. 

In a regular plan of say Rs 5 lakhs, you can get hospitalized ‘n’ number of times in a year where the cumulative expense reimbursement would be upto rs 5 lakhs. But for a Top Up Plan to be even triggered, the expenses of a SINGLE ILLNESS HOSPITALIZATION needs to cross the base limit.

For example, if you have a Base Plan of Rs 5 lakhs and incur an expense of Rs 3.5 lakhs in first hospitalization, which is paid by the base plan and again for Rs 3 lakhs in the second.  That means only Rs 1.5 lakhs would be paid (out of Rs 3 lakhs as expense) from the base plan (since total cumulatively Rs 5 lakhs would be paid) and NOTHING is payable from the Top Up Plan since none of the 2 hospitalization expenses have crossed Rs 5 lakhs

United India, Star Health and Bajaj Allianz provide these types of Top Up and Super Top up policies. Bajaj Allianz Extra Care Top Up Plan, Star Health Super Surplus Plan, United India Top Up Plan and United India Super Top Up Plan. 

A 30 year old male would have to pay about Rs 5000-6000 of premium for Rs 5 lakhs Mediclaim coverage. However, if he combines his a Mediclaim of Rs 3 lakhs along with a Super Top Up plan of Rs 2 lakhs, then his premium reduces by minimum of Rs 500-600. So, get smarter when you think of health insurance by option for Top Up and Super Top Up policies.

Deepak Yohannan
Deepak Yohannan is the CEO of MyInsuranceClub. He enjoys writing on Personal Finance and contributes regularly on sites like Reuters & Moneycontrol. He is a strong proponent of online insurance and is often found pointlessly babbling about it!

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