investing in health insurance

What is meant by cashless facility in Health Insurance?

What exactly is a cashless facility?

In this time and age of COVID-19; diseases abound, hospitalization is not as far as we initially thought it was. When hospitalization becomes inevitable and you get admitted to a network hospital in an emergency, the immediate challenge that arises is of paying to the hospital and settling the bills. Now, the role of Mediclaim is to reimburse and cover for any expenses that you may have incurred in the process of getting admitted to the hospital. But what about the stress which arises due to such hospitalization and the impact that it would have on your budgets and your available liquidity?

Fortunately, there is a solution to this, which is the cashless facility. It provides a unique advantage where you need not worry about your immediate cash in-pocket or even your bank balance, especially since hospitalization happens in an emergency, and is not always something that can be planned in advance.

Before delving into understanding the cashless facility, let us understand the concept of “network hospital”.

What is a network hospital?

The first thing one needs to consider before availing of the cashless facility in their health policy is that it is available only in network hospitals. In a cashless facility provided by your insurer, the insurance provider would have had arrangements in terms of integration with certain hospitals or chains of hospitals and their different branches, this chain or a single part of it is what is considered to be known as a “network hospital”. It is this arrangement with its terms agreed between the two parties – the insurer and the hospital chain, that gets executed for customers’ convenience when someone gets hospitalized and when the insurer is specifically looking for a cashless facility.

It becomes necessary to note that you need to get admitted only to a network hospital that has made prior arrangements in place with the insurance provider. If you plan to get admitted or get admitted by chance in any other hospital other than the network hospitals you won’t be able to claim the cashless facility. 

Furthermore, it is important that you also be well advised to check with your insurance company, and check the terms of your health insurance policy as well as the official websites and forums of the hospital as well as your health insurance provider so that you are assured fully that the hospital of your choice is a network hospital and has all the required authorizations, in order to avoid any claim rejection later.

What about a non-network hospital?

If at all you happen to get admitted in a hospital that is not a part of the insurer’s network and which does not have prior arrangements in place for cashless facility, you will anyways be eligible for Mediclaim. In such cases, you will be able to get your medical expenses compensated.

It is necessary to keep your insurance policy active by completing timely premiums payments and stick to the terms and conditions as provided in your health insurance policy in order to avoid any claim rejection in times of emergency, irrespective of whether you get hospitalized in a network hospital or not.

What is authorization?

Authorization refers to the process where your health insurance provider or the Third Party Administrator (TPA) approves of the claims that have been put forward by you for availing cashless facilitated hospitalization. It should be noted that it could take a minimum of 24 hours for the claims to be verified and approved by the insurance company.

Suppose the reason why you get admitted into a network hospital through a planned motive say for planned surgeries with prior appointments and following the basic procedure, you will have to keep in mind to get the authorization from your health insurance company. However, if the hospitalization is due to some emergency, the processing of the formalities will be done at the earliest possible timeframe. Lack of authorization from your end, cannot be a reason for any claim rejection in such scenarios. At best your cashless policy will become a reimbursement policy; that is all.

Features of Cashless Hospitalization-

  • Coverage for pre and post hospitalization medical expenses 
  • Proper In-patient care as it would be for normal hospitalization 
  • No-claim bonus
  • Complementary health check up for a limited times
  • Daily cash benefits offered by some insurance companies
  • Cover for ambulance charges included
  • Cover for domiciliary treatment included
  • Cover for varying critical illnesses including cancer, heart attack etc.
  • Tax benefits
  • Free-look periods

Who should buy Cashless Medical Insurance?

If it were to convince someone in enrolling for this system of hospitalization, then just the convenience of cashless insurance is enough to convince anyone of buying or upgrading/changing the specifics of their policy into this policy but those that could benefit the most from these policies are self-employed individuals where there is no regular fixed source of income coming in. For such groups of people, a cashless policy could make a lot of difference in case if there’s any emergency at any point of life. The same can be said for individuals who cannot afford or do not vouch for the costs involved of expensive medical treatments. A cashless policy could also be of helpful when planning to travel abroad on behalf of some companies offer health insurance coverage outside India too.

Advantages of Cashless Health Insurance- 

Cashless health insurance policies by various different insurance companies offer their policyholders a wealth of benefits.

  • With a cashless policy in force, policyholders don’t have to keep funds ready in their hands or even for that matter in their bank accounts at the moment of hospitalization in a network hospital to cover such medical expenses.
  • Certain cashless health insurance policies offered by select insurers will also be valid outside India as well. This is more of a feature which can be added or might depend on the insurer on a case by case basis.
  • It will provide for tax benefits for its holders under section 80D of the Income Tax Act 1961. The limits defined are Rs. 20,000 per year, for senior citizens and Rs. 15,000 for all others.
  • Often, insurers also provide policyholders free medical check-ups at regular intervals but it again depends upon the insurer. Nowadays, many insurers provide this facility integrated with their network hospitals.

Common exclusions while applying for the cashless facility in health insurance

While most health insurance plans do offer to cover most of the medical emergencies and conditions mentioned in their policies, the coverage is at times subject to exclusions, which the holder must be totally aware about. There two types of exclusions, temporary and permanent. Temporary exclusions are expenses that the policy won’t cover for a period defined by the insurers according to insurance principles while permanent exclusions are those expenses that the policy will never cover, and in turn never settle or entertain no such claims against these. The permanent exclusions could be:

  • Pre-existing illnesses insured bares from birth
  • Congenital diseases
  • HIV / AIDS
  • Non-médical expenses such as hospital canteen expenses and others
  • Injuries of any sort of ailments as a result of illegal activities
  • Injuries under the influence of alcohol or psychotropic substances
  • Routine medical examinations
  • Dental procedures fall under the category of common ailments
  • Joint replacements in old or young insured person, unless necessitated by an accident
  • Experimental treatments 
  • Fatalities or medical issues caused by terrorist acts or acts of war

FAQs: Cashless Facility in Health Insurance

What are the facilities offered by a TPA from a network hospital?

1. A 24 X 7 facility for claims assistance to all the Health policyholders through toll-free number of the TPA
2. Online assistance during hospitalization and filing of claim documents
3. Cashless facility and Claims processing at network hospitals up to limit as per the health insurance plan
4. Claims Processing for non-network hospitals

During the course of my treatment, can I change the hospitals while availing cashless facility?

Yes, it is very much possible to shift to another hospital for reasons pertaining to better medical treatments. In such situations, a new cashless request needs to be made to the authorized TPA as per the procedure for the 2nd admission.
If there is any kind of discrepancy in the information given by the policyholder in the ‘pre-authorized’ form then the benefit of the cashless facility would become null and the policyholder will have to bear the whole cost of expenses as the request would stand rejected.

Can the cashless facility authorized amount be different from the actual expenses?

In reality the authorized limit of availing cashless amount would be dependent upon the proposed number of days of known hospitalization. Actual expenses may differ from hospital charges for each day, number of days of hospitalization, nursing, consultation and other charges. This may vary from one network hospital to another depending on the severity of the case too.

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