Rules to handle more than one health policy

Recent statistic shows that due to shooting healthcare costs and increasing awareness people are buying health insurance policies. Many buy a separate plan despite being covered by their employers under group medical health policies as this ensures coverage in case of job loss or while switching jobs.

Tips to manage multiple policies:

It is indeed a wise decision to invest in an individual cover. You need to keep in mind a few details while making a claim when you have more than one health cover. 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.

Firstly it is important to be open while buying a health cover which is usually not the case. As Anthony Jacob, CEO, Apollo Munich Health Insurance says, “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”. Even Sanjiv Bajaj, managing director, Bajaj Capital agrees that “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”.
Applicability of this clause depends on a variety of factors; this is why this clause is not always clear.

Following is a list of scenarios a policyholder with multiple policies may encounter at the time of making a claim:

• Group & individual cover combo:

You have to inform both the companies when you make the claim unless the terms and conditions of the two policies vary hugely. For instance, pre-existing illnesses is covered under one policy while for some plans this cover is extended only after 3-4 policy years. So, if a claim is regarding pre-existing illnesses which is made before completion of the waiting period, issuer of the individual claim will not share the payout.

For other claims, like in case of cashless claim though one company has to be contacted and provided details of the second policy. From thereon, the two companies will coordinate and settle the claim so both the companies need to be informed.

• Two reimbursement policies:

Excluding critical illness covers, most general insurers offer only reimbursement policies – the ones which undertake to pick up the expenses you may have incurred during hospitalization.

Life insurers also offer reimbursement covers as well as fixed benefit policies. If you have bought two reimbursement covers, the contribution clause will come into effect as the operating principles of the two policies are the same.

• Reimbursement & fixed benefit policy combo:

Fixed benefit covers offered by life insurers hands out a predefined sum upon hospitalization. In this combination, both the companies will settle the claim you are eligible for so you can make the claim under both policies separately.

This is a good combination, as the claim amount from the reimbursement cover will pay for hospitalization expenses while the fixed benefit dole can be used to fund post-hospitalization recovery costs.

• Two policies from one insurer:

This will be similar to buying an individual policy from the same insurer that provides your group cover.

You need to find out first about the accounting procedures, as the insurer could insist on dividing the disbursal between two policies, even if both are issued by it.

• Two polices serviced by common TPA:

If the claim servicing of your health insurance policies is handled by the same TPA (third party administrator), the time taken reduces significantly as time needed to transfer the documents from one TPA to another is saved.

Different TPAs, means more paperwork as well as 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.

Double protection:

o In case of similar principle health policies, the claim payout will be shared between the two. The disbursal will take place in proportion of the sum assured under the two policies.
o 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.
o 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.
o 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.
Conclusion: Even if it is little extra work or few complexities involved, you should opt for an additional individual cover; mainly because, group cover stop 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.