How can you reduce your Health Insurance costs

Picture courtesy - GraphicStock

Health insurance is a critical need to protect the health of your family. With the rising cost of healthcare and access to better medical facilities in India, the cost of health insurance or Mediclaim is also rising. Many people do not buy Mediclaim policies because of the premium rates. This is a serious mistake because the treatment cost of a critical illness can be far more than the Mediclaim premiums. On the other hand, if you educate yourself about health insurance you can save on costs while protecting the critical healthcare needs of your family with adequate health insurance or Mediclaim cover. Expenses saved in health insurance can be re-invested in assets that can help you meet your long term financial objectives. In this article, we will discuss ways in which you can reduce your health insurance costs.

Start at a young age:
The premium of a Mediclaim plan depends on the age of the insured. With increasing age health risks also increase and this causes the Mediclaim premiums to be significantly higher. For example a 40 year old insured will have to pay a premium of around Rs 2,600 for Rs 5 lacs cover in the Max Bupa Critical Illness plan. On the hand a 30 year old insured will have to pay a premium of Rs 1,250 only for the same cover. Starting early definitely has its advantages as far as health insurance premiums are concerned.

Avail no claim bonuses:
In certain health insurance plans, if you don't make a claim during a policy year, you are entitled to a no-claim bonus (NCB). Mediclaim buyers should check if your Mediclaim plan offers no claims bonus. No claims bonus is useful if the insured is healthy with low hospitalization risks. No claims bonus can be used to increase your Mediclaim cover at no additional costs, a particularly useful benefit, when you grow older and are exposed to higher health risks.

Opt for two year Mediclaim policies:
Most health insurers offer two year Mediclaim policies. The premium rates of two year policies are lower than the premium rates of one year policies. For example a 40 year old insured will have to pay a premium of around Rs 2,600 for Rs 5 lacs Mediclaim cover in the one year Max Bupa Critical Illness policy. If the insured opts for a 2 year policy, he or she will have to pay a premium of Rs 4,700 only.

Opting for co-payment plans:
In a co-pay option the insured agrees to pay a percentage of the health insurance claim. The percentage of co-pay is in the range of 10 – 25%. If you opt for co-pay, then your Mediclaim premium will be lower. For example, if you opt for 20% co-pay then your Mediclaim premium can be lower by up to 20%. So the insured stands to gain by opting for co-pay if there is no hospitalization in the policy term. However, if there is a hospitalization then the insured has to pay his or her co-pay amount, thereby incurring higher expenses. If you are young and healthy with no medical conditions, you should opt for co-pay because you will save on the cost of Mediclaim premiums. Over a period of time, this cost saving can be quite substantial. However, if you are a senior citizen with known medical conditions, you should not opt for co-pay. The cost of hospitalization for a serious illness can be quite huge, and the co-payment amount will also be quite substantial.

Opting for family floater plans:
If you have dependents, it usually makes sense to opt for family floater plan. In this type of plan, the entire family is covered for the amount they share and the benefit is that, per person premium is lower compared to the scenario if they would have taken individual plans. Since the probability of all your family members getting hospitalized in the same year is low, it makes more sense to buy a family floater plan. However, if a member of your family has a serious pre-existing medical condition, that puts him or her at a higher risk of regular hospitalizations, then you should buy an individual Mediclaim policy for that family member and a family floater plan for the rest of the family. Please read our article, Which health insurance plan makes more sense: Individual Mediclaim or Family Floater, to understand the benefits of family floater plans versus individual Mediclaim plans

Use top ups to increase your Mediclaim cover:
If you think your current Mediclaim cover is not enough, then instead of buying a new Mediclaim policy, buy a top up of the additional cover required by you. This will significantly reduce the cost of your Mediclaim premiums. Such plans get triggered only after you have exhausted your base cover. This will help you save costs while ensuring that you have adequate health insurance

Compare Mediclaim plans before buying:
Like with any form of insurance, you should always compare plans before buying. There are more than 25 General Insurance Companies marketing and selling a large number of health insurance plans. These plans have a wide range of premiums, limits and features. If you buy your Mediclaim policy without adequate research and comparing with other policies, you may end up buying an expensive policy or a policy that is not best suited for your needs. However, you should note that the cheapest policy may not be the best one. Premiums should be commensurate with the benefits offered by the health insurance policy. There are a number of policy features that you should review:-

Treatment wise limits and co-pay policy

Day wise Cash limit

Maximum renewal age

Network of empanelled hospitals

Lead a healthy life:
This is by far the most important way in which you can reduce your healthcare costs. Watching your weight, quitting smoking, healthy diet and exercise are simple but effective steps in ensuring good health. Good health definitely reduces your health insurance and overall health costs. The old proverb, health is wealth is more relevant in these times, than probably ever before.

Conclusion

Health insurance is essential in ensuring our family's critical healthcare needs. In this article we have discussed ways in which you can reduce your health insurance costs. Health insurance is a complex financial product. You should understand the policy features, terms and conditions before buying. It is always beneficial to engage a financial adviser with sufficient experience in health insurance, to help you choose a product that will not only serve your needs but help you save your overall healthcare costs.