One question that clients keep asking me is this: "Should I buy a cashless health plan or a reimbursement policy?" Since this is a common question I decided to go the article way and discuss the pros and cons of the two policy types. Here we go:
Cashless Health Insurance Plan
Under the cashless plan, the insured does not need to pay healthcare costs. The insurer settles bills directly with the healthcare institution. Since cash payments are not required, this is called a cashless health insurance plan.
1. No Need for Emergency Cash - The most obvious advantage is that cashless policies spare you from the need to run around gathering money during a financial emergency. The scariest thing is when you max out your debit and credit cards, knowing that the bills are yet to end. A cashless policy helps you avoid the stress of having to ask somebody else for financial help.
1. Must Remain within Insurer's Network - The biggest problem with cashless policies is that the insured must remain within the insurer's network of healthcare providers. If the insured chooses to receive treatment elsewhere, then the cashless facility will not work. The insured will then have to go the reimbursement route, paying the bills upfront and filing a claim later.
2. The Problem of Rising Premiums - Given that no payments are required from the insured, the latter often make the mistake of going to an expensive hospital. The service may be better here, but there is a downside. The insurer will examine that amount it has spent, and if this is deemed excessive, the former will pass the burden on to the customer in the form of higher premium.
Reimbursement Health Insurance Plan
A reimbursement policy requires that the insured pay the medical institution, and later claim the amount from the insurer. The insurer then examines the bills and reimburses the insured.
1. Freedom to Choose Healthcare Provider - The biggest plus point here is that the insured is able to get treatment at a hospital of his choice. There is no network to limit the patient's or his doctor's choice. Thus, the insured is able to seek treatment based on the facilities and conveniences offered by a certain healthcare institution without being bound to a set list.
1. Emergency Cash Is Required - The insured will have to shell out cash at the time of admission and as the bills accrue. The reimbursement will come at a later date. Thus, the insured must set aside some cash for medical emergency purposes, and maybe even undergo a period of severe financial strain as a result until the claim payment comes through.
2. Claim Settlement Can Be a Hassle - The insured will also have to hold on to bills and other relevant documents to file a claim. Sometimes, there can be red tape or delays in the final claim payment. This can be stressful for the insured and his family.
So, which of these policies is a better choice? The answer really depends on the customer. If you have money put away for medical emergencies, the reimbursement policy may be a good choice. On the other hand, if you cannot afford high medical bills or an extended hospital stay, go with the cashless option.
The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal
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You may write to the author at Deepak@myinsuranceclub.com