What Is Health Insurance: Meaning, Types, Coverage and Benefits

  • postauthorOnsurity Editorial
  • postdateJanuary 9, 2025
  • postreadtime14 min read
  • Share

Medical expenses in 2024 have become increasingly unaffordable for most households. With India’s medical inflation rate surging to 14% compared to the previous year, the financial strain on families continues to grow.

Long-term diseases typically raise panic reactions in most people because they are hard to cope with, but most of them also tend to drain the pockets of the entire family. There’s the fear of spending all the savings or accumulating debt due to medical bills.

At this stage, health insurance is important since it helps protect individuals against financial abuse resulting from too much medical care. Today every corporation, both state-owned and private, is most likely to offer medical coverage for their employees as an additional benefit.

This guide explains the meaning, types, and extent of health insurance coverage to assist you and your family in making a sound choice. Keep reading!

What Is Health Insurance?

Health insurance is a risk management process that entails an agreement between an individual, such as a single person, or several individuals, such as a group of people, with an insurance firm that will agree to meet certain expenses within a medical limit.

This includes:

  • Routine health check-ups
  • Hospitalisation for illness or injury
  • Surgical procedures
  • Prescription medication
  • Emergency care and more

How Does Health Insurance Work?

Health insurance operates through a series of steps designed to help you manage healthcare costs.

Here’s a simplified overview:

  • Choosing a Plan: You choose a health insurance plan that satisfies your needs and budget.
  • Payment: You must make a consistent payment to keep your coverage in effect.
  • Finding a Provider: When you require medical care, choose a healthcare provider, preferably one within your insurer’s network to minimize out-of-pocket expenses.
  • Submission of a Claim: After your medical visit, the healthcare provider sends a comprehensive bill, referred to as a claim, to your insurance company, detailing the services you received.
  • Insurance Review: The insurance company reviews the claim to determine what part of the cost they’ll cover according to your plan or policy.
  • Payment Processing: For cashless claims, the insurer pays their share directly to the provider. You are responsible for covering any remaining costs based on your plan’s deductible, copayment, or coinsurance.

Important Note: If you haven’t met your deductible for the year, you might pay more out-of-pocket initially until you hit that threshold.

After this, you will receive an Explanation of Benefits (EOB) document that lists all the inclusions and exclusions, the amount your insurance paid, and any outstanding balance.

Also Read: Top 10 Health Insurance Companies in India

Types of Health Insurance Plans

You must understand the various kinds of insurance plans and choose the best one for you. This decision will depend on several variables, including your age, financial condition, and family health.

Here’s a breakdown of insurance plans:

1. Individual Health Insurance

You are responsible for purchasing this insurance coverage on your own. You pay the insurance company your premiums directly, and you receive benefits when you need them. In this manner, you can pick a plan that precisely suits your requirements and financial constraints.

The policy only covers you as an individual and is more flexible compared to group plans. If you’re someone with no dependents or sudden family, this insurance type is perfect for you.

2. Family Floater Health Insurance

With a family floater plan, you get extended coverage for your entire family under a single policy. The premium sum is shared between all the family members included in this plan. It typically includes spouses, children, and sometimes parents, allowing any family member to use the coverage when needed.

The combined premium is often more economical than individual policies for each member. This plan is ideal for families who want a comprehensive, cost-effective safety net, ensuring medical expenses are covered without worrying about separate premiums.

3. Group Health Insurance

Employers or organisations provide group health insurance to their employees. This insurance offers basic coverage at a lower premium than individual plans.

This insurance type:

  • Extends Coverage to Dependents: Employees can add family members, like spouses and children, often for a small additional fee.
  • Waives Medical ScreeningEnables employees to enrol without medical tests, making it accessible to everyone in the organisation.
  • Covers Pre-existing Conditions: This often includes underlying conditions of insured individuals.
  • Supports Employee Retention: It attracts and retains talent, boosting employee satisfaction and loyalty.

4. Critical Illness Insurance

This insurance covers certain illnesses like cancer, heart attacks, and strokes. If you risk developing a costly sickness requiring extensive treatment and recovery, this insurance is ideal. 

5. Senior Citizen Health Insurance

This health insurance caters specifically to individuals above 60 years. It covers health issues that are common in older adults.

With benefits catered to senior health requirements, these plans frequently cover hospitalisation, pre-existing diseases, and post-treatment care. Because of the higher risk, the premiums are higher, but the coverage guarantees that older persons can get the healthcare they need without having to rely on family funds.

6. Top-Up and Super Top-Up Plans

Top-up and super top-up plans supplement existing health insurance by covering costs beyond a certain deductible limit. A top-up plan activates once medical expenses exceed the set limit, while a super top-up plan covers cumulative expenses over multiple claims.

These plans are cost-effective options for those with basic insurance wanting extra coverage for high medical costs. They’re ideal for covering large bills without upgrading to a high-premium primary plan.

Also read: Types of Health Insurance in India

Basic Components of Health Insurance

Health insurance plans include various key components that define the scope and limits of coverage. Understanding these elements helps individuals choose the right plan for their needs.

  • Premium: This amount is paid in advance to the insurance company to maintain an individual’s or family’s health insurance coverage.
  • Total Insured/Amount of Coverage: Your level of financial protection is influenced by the sum insured, sometimes referred to as the coverage amount, which is the maximum amount the insurer will pay for authorised medical expenses.
  • Network Hospitals: These are hospitals partnered with an insurer to provide cashless treatment. The insurer directly pays the hospital for the policyholder’s medical bills.
  • Daycare Procedures: Minor but essential medical procedures are made easier to handle by the coverage of treatments or surgeries that don’t necessitate a 24-hour hospital stay.
  • Copayment: A specific amount you agree to pay out of the claim total, with the insurance covering the remaining balance. This splits the cost but helps keep rates under control.
  • Waiting Period: A set period of time that helps insurers manage risk before certain benefits, such as maternity coverage or coverage for pre-existing conditions, become available.
  • No-Claim Bonus (NCB): This benefit is offered by insurers as a reward for a claim-free year to the policyholder, providing added value to the policyholder’s health insurance.
  • Maternity Coverage: This type of insurance covers costs associated with childbirth, such as prenatal and postoperative care; it is essential for family planning but frequently has a waiting time.

Suggested read: Top 10 Health Insurance Plans for Family

Benefits of Health Insurance

Beyond financial security, health insurance offers unique advantages that enhance overall well-being and provide peace of mind. Here are four essential benefits that go beyond the obvious:

1. Get Prioritised Access to Quality Healthcare

Most health insurance coverage allows the members to make use of a wide collection of hospitals and specialists that have a positive reputation. This access means members can focus on the quality of care and especially in the case of emergencies, they are given treatment where there is no waiting, which is a plus for the health of the patients.

2. Ensure Stress-free Medical Planning

The presence of health insurance allows people to be more health-oriented in making health choices without the fear of excessive expenses. As such, they tend to concentrate more on prevention, doing checks regularly, and seeing a doctor on time, which encourages a more even distribution of health care.

3.  Comprehensive Coverage for Modern Treatments

Most health plans include intricate treatments and services like daycare surgeries and high-end diagnostics in their coverage. This enables individuals to take advantage of modern medicine, which may otherwise have been out of reach and thus ensures the best possible care is received in cases of intricate health requirements.

4. Get Incentives for a Healthier Lifestyle

Several insurance providers provide wellness programs and incentives, such as rebates for participating in fitness activities and annual examinations for healthy practices. These rewards help policyholders lead healthier lives, which in turn help promote health in society, especially in the long run.

Also Read: Mediclaim Policy in India

Key Features of Health Insurance

Health insurance policies come with several key features that shape the policy’s coverage, flexibility, and benefits.

Here’s a breakdown of essential features commonly found in health insurance plans:

1. Cashless Treatment

The cashless treatment concept enables policyholders to avail of medical services at affiliated hospitals without pre-paying for the service. Rather than organising payment and asking for reimbursement later, the hospital is paid directly by the insurance company. This ensures timely service provision and reduces the economic burden during emergencies.

2. Preventive Care and Wellness Benefits

Many group health insurance plans prioritize preventive care to help avoid illnesses before they start. These benefits often include regular check-ups, vaccinations, and health screenings, which can detect potential health issues early on.

Emphasising wellness, some insurers also offer programs or discounts for gym memberships and fitness classes like Onsurity, supporting overall health maintenance beyond just treating illnesses.

3. No Claim Bonus (NCB)

The No Claim Bonus rewards policyholders who don’t make any claims during a policy year. Insurers may offer a discount on the renewal premium or increase the sum insured at no additional cost. NCB encourages responsible use of the policy, enhancing coverage or reducing costs over time.

4. Daycare Procedures Coverage

Modern health insurance plans include daycare procedures that don’t require an overnight hospital stay. These can range from minor surgeries to advanced diagnostics. Coverage for daycare treatments enables policyholders to access necessary care without needing prolonged hospitalisation, which aligns with evolving healthcare practices.

5. Coverage for Domiciliary Treatment

Domiciliary treatment refers to medical treatment provided at home when a patient is unable to be hospitalised due to his or her condition or the unavailability of a bed.

This feature is particularly important for those who want to undergo rehabilitation or are undergoing treatment at the convenience of their homes, thereby making healthcare not limited to hospitals only.

6. Maternity and New Born Cover (if applicable)

A few schemes provide maternity care benefits, which include care throughout pregnancy, labour, and several months of care for the baby after delivery. This allows families to cope with the financial burden associated with childbirth, which is quite expensive, provided the newborn is covered immediately in case of any health treatment needed.

7. Regular Health Evaluations

Health insurance provides annual health evaluation services to its covered members, particularly when the latter has a good claiming history. These check-ups allow for preventive intervention as they detect health problems and risks at a controlled stage that ensures better management of ailment by the clients.

8. Restoration of Health Benefits

The restoration benefit resets the sum insured of your health insurance policy up to the maximum limit once it is used up after a claim. It is available in plans for both individuals and families.

9. Coverage of Other Treatment Modalities (AYUSH)

Alternative treatment is, however, included in some policies within the AYUSH (Ayurveda, Yoga, Naturopathy, Unani, Siddha and Homoeopathy) coverage. This feature is advantageous for people who do not wish to undergo allopathic treatment because it allows for treatment patterns outside the conventional health care system.

10. International Coverage (if applicable)

Choose health insurance plans that include global or international coverage for critical illnesses or emergencies that occur abroad. This benefit is especially useful for frequent travelers and expatriates, providing health protection even when abroad.

11. Flexibility in Sum Insured Enhancement

Certain plans allow policyholders to increase the sum insured upon renewal, which can be beneficial in adapting to changes such as medical inflation or enhanced coverage needs. This flexibility helps maintain adequate coverage to keep pace with rising healthcare costs over time.

12. Ambulance Charges

The majority of health insurance plans incorporate ambulance services in the case of an emergency for their policyholders and beneficiaries. This feature ensures that policyholders can receive emergency transport without incurring additional costs, which is often a critical need in emergencies involving health complications.

What Is Covered in a Health Insurance Plan?

Health insurance plans typically cover a range of healthcare needs, providing comprehensive support across different types of medical expenses.

Here are the key coverages:

  • Hospitalisation expenses, including room charges, nursing, and medical procedures.
  • Pre- and post-hospitalisation costs, covering medical expenses incurred before admission and after discharge for a specified period.
  • Domiciliary hospitalisation if the patient cannot be moved to a hospital due to severe illness.
  • Doctor consultations and diagnostic tests for preventive care, diagnosis, and treatment.
  • Surgical procedures, ranging from minor surgeries to major operations.
  • Maternity and newborn care, often covering delivery expenses and infant care.
  • Prescription medications for prescribed drugs as part of treatment.
  • Ambulance services for emergency transport to healthcare facilities.
  • Daycare procedures for treatments that don’t require overnight stays, like chemotherapy or dialysis.

Suggested read: Nominee in Health Insurance

What is Not Covered in a Health Insurance Plan?

Health insurance plans come with certain exclusions—specific conditions or treatments that aren’t covered. Here are common exclusions to be aware of:

  • Pre-existing Diseases (during the Waiting Period): Conditions diagnosed before buying the policy usually aren’t covered until after a waiting period, typically 2–4 years.
  • Cosmetic and Aesthetic ProceduresTreatments purely for cosmetic or aesthetic purposes, such as plastic surgery (unless medically necessary due to injury), are generally excluded.
  • Dental and Vision Care: Routine dental and vision treatments, including procedures like teeth cleaning, braces, or glasses, are usually excluded unless covered by a specific rider.
  • Self-inflicted InjuriesInjuries resulting from self-harm or attempted suicide are typically not covered.
  • Injuries from Hazardous Activities: Medical expenses from injuries related to high-risk activities like skydiving, bungee jumping, or car racing are generally excluded.
  • Substance Abuse Treatments: Medical expenses related to substance abuse, such as alcohol or drug addiction treatments, are usually excluded unless specifically covered under a specialised plan.
  • Maternity Costs (during the Waiting Period): Many plans have a waiting period for maternity-related expenses, and coverage begins only after this period ends.
  • Experimental and Unproven Treatments: Treatments that are experimental or not medically approved by recognised authorities are usually excluded from coverage.

Recommended read: 10 Most Common Exclusions in Health Insurance

What is the Health Insurance Claim Process?

When policyholders need to use their health insurance, they can do so through two primary claim processes: cashless and reimbursement.

Cashless Claim

In a cashless claim, the insurance provider directly settles the bill with the network hospital, meaning the policyholder doesn’t need to pay out of pocket (except for non-covered expenses). Here’s how it works:

  • Pre-authorisation: Obtain pre-authorisation from the insurer before treatment, usually within 24 hours in emergencies.
  • Documentation: Submit required documents like ID proof, health insurance card, and pre-authorisation form at the hospital.
  • Insurer ApprovalThe insurer reviews and approves the claim based on policy terms.
  • Bill SettlementOnce approved, the insurer settles the bill with the hospital directly.

Reimbursement Claim

Policyholders can file a reimbursement claim for treatments outside network hospitals or if the cashless claim process isn’t possible.

Here’s the step-by-step process:

  • Payment: Pay all medical bills out-of-pocket.
  • Documentation: Collect all relevant documents like hospital bills, prescriptions, discharge summaries, and diagnostic reports.
  • Claim Submission: Submit the claim form along with documents to the insurance provider.
  • Insurer ReviewThe insurer reviews the documents, verifies the claim, and processes it according to the policy’s terms.
  • ReimbursementOnce approved, the insurer reimburses the expenses up to the sum insured, as per policy coverage.

What Documents Do You Need To Claim Your Insurance Benefits?

To file a health insurance claim, whether cashless or reimbursement, the following documents are commonly required:

  • Claim Form: Filled and signed claim form provided by the insurer.
  • Policyholder ID Proof: Identification documents like an Aadhar card, driver’s license, or passport.
  • Health Insurance Card: Provided by the insurer, necessary for cashless claims.
  • Hospital Bills and ReceiptsOriginal, itemised bills and receipts for all medical expenses.
  • Doctor’s Prescription: Original prescriptions of medications, tests, and treatments.
  • Discharge Summary: Hospital-issued summary detailing the treatment and discharge.
  • Diagnostic Reports: Original test reports, including X-rays, MRIs, blood tests, etc.
  • Pre-authorization Form: Required for cashless claims, signed by the hospital and insurer.

Quick read: Documents Required for Health Insurance Claim

How to Choose the Right Health Insurance Plan

Selecting the best health insurance plan goes beyond comparing factors; it involves a strategic approach to ensure lasting coverage.

Here are some best practices to consider:

1.  Map Out Potential Health Expenses by Lifestyle

Think about your lifestyle choices (e.g., fitness level, job environment, and travel frequency) and how these may impact your health. For instance, if you travel often, look for plans with good emergency coverage abroad or plans that cover alternative treatments if you’re health-conscious.

2.  Compare Plans Beyond Premiums

Don’t make decisions based solely on the premium amount. Review the coverage details, exclusions, co-payment terms, and network hospitals. A slightly higher premium for broader coverage can be more cost-effective in the long run.

3.  Evaluate the Insurer’s Track Record for Claim Transparency

Go beyond claim settlement ratios. Research if the insurer has a history of transparent claim processing. This includes clarity on co-payments, pre-existing condition coverage, and how they handle claims for rare conditions. Transparent policies reduce last-minute surprises and instill confidence in the insurer’s support.

4.  Utilize Health Assessment Tools or Advisors

Some insurers offer digital tools to help evaluate your health status or allow consultations with advisors who can suggest tailored options. This gives a more personalised approach to plan selection, aligning coverage closely with individual or family health trends.

5.  Look for Plans with Wellness Benefits

Seek plans that offer wellness incentives, such as discounts for staying active, annual health check-ups, or gym memberships.

For instance, Onsurity’s plan starts at just ₹145 per employee per month. You get monthly healthcare memberships that cover not only in-app health check-ups and free doctor consultations but also gym memberships. These perks not only encourage healthier lifestyle choices among employees but also help reduce the likelihood of future claims, offering long-term savings.

6.  Check for Mental Health and Holistic Coverage

More insurers are offering mental health support and holistic care (like AYUSH) within their plans. Even if you don’t need this now, it can be invaluable later. Comprehensive plans covering mental well-being align with a whole-health approach and can provide broader support for you and your family.

7.  Consider Add-ons or Riders Carefully

While add-ons like critical illness coverage or top-ups can enhance coverage, only add what aligns with your specific health risks or family history. Adding too many riders can increase premiums unnecessarily.

Also read: Room Rent Limit in Health Insurance

Secure Your Health and Peace of Mind With Onsurity Today

In a world where medical bills can hit harder than a Monday morning, health insurance steps in as your trusty financial buffer. Having the right plan not only gives you peace of mind but also ensures you’re prepared for those unexpected health hiccups.

As you navigate options, remember it’s not just about picking any plan—it’s about finding one that works for you.

Onsurity makes this journey seamless with flexible, affordable health memberships designed for businesses of all sizes. With comprehensive benefits, in-app health check-ups, free consultations, and the support of our dedicated Good Doctors team, Onsurity ensures your team has access to the best care.

Ready to elevate your team’s well-being? Get started with Onsurity and join 8,000+ businesses who trust us to keep their teams healthy and empowered.

FAQs:

1. What are the different types of health insurance plans?

Health insurance plans include individual, family floater, group health insurance (GHI), senior citizen, and critical illness coverage, each offering unique benefits.

2. What are pre-existing conditions in health insurance?

Pre-existing conditions are health issues diagnosed before purchasing a health insurance policy, typically covered after a waiting period.

3. What things are covered under the hospitalisation benefit in health insurance?

Hospitalisation benefits include expenses like room rent, ICU charges, surgery, and doctor fees as per the health insurance policy.

4. In India, what is the ideal age to purchase health insurance?

Early in your 20s or 30s is the best time to purchase health insurance in India because premiums are cheaper and there are fewer health risks

5. At what age can I include my children in my health insurance plan?

Depending on the insurer, children can typically be added to family health insurance plans from birth or after a certain waiting period.

6. Can I add family members to existing health insurance?

Yes, most health insurance policies allow you to add family members, subject to certain terms and additional premiums.

7. What is the meaning of a waiting period in health insurance plans?

The waiting period in health insurance is a set time during which specific conditions, like pre-existing diseases, are not covered.

8. Is there a limit on the number of claims that I can avail of in one year?

Generally, the number of claims is unlimited, but coverage is capped by the sum insured in your health insurance policy.

9. Can a person have more than one health insurance policy?

Yes, multiple health insurance policies can be held, and claims can be split based on coverage limits and terms.

10. Can I increase the sum insured on my health insurance policy?

Yes, most insurers allow sum insured increases upon renewal, subject to terms and health insurance benefits eligibility.

11. Does health insurance cover maternity expenses?

Many health insurance plans offer maternity coverage after a specific waiting period, covering prenatal, delivery, and postnatal expenses.

Blogs you may like