"I have health insurance," says Mr. X who has only just purchased a medical insurance policy. He is brimming with a newfound financial confidence because, as he puts it, "Medical emergencies will never scare me again."
A health insurance policy is certainly a safeguard for your finances during times of medical crisis. However, as many have discovered during and after hospitalization, even good medical insurance plans do not cover everything. Do you know whether your policy covers joint replacement? What about infertility treatments? Or something as common as cataract surgery?
All health insurance plans have their share of exclusions and restrictions on coverage. There is only one way to ensure that you are not in for a rude shock when filing a claim: read the policy bond with a fine-tooth comb. Before you do that, however, let us try to understand what is meant by exclusions and restrictions in health insurance.
What Are Exclusions?
Exclusions, as the name suggests, are medical conditions or procedures that are not covered by the policy. Suppose that Mr. X filed a claim with his insurer to cover the costs of a knee replacement only to find that the procedure comes under the "exclusions" category.
Some medical treatments-for example, cosmetic surgery, certain optical procedures and obstetrics-might come under the list of exclusions within your policy. If you require coverage for these procedures, either shop around for a policy that offers such coverage or purchase suitable add-on insurance. For instance, if Mr. X and his spouse were planning to have a baby, they would benefit from purchasing a separate or add-on maternity insurance plan before the pregnancy.
What Are Restrictions?
Restrictions in a health insurance policy refer to limitations on the extent of coverage available. For instance, if Mr. X has any pre-existing medical conditions, there may be a waiting period of a few years before his insurance plan begins to cover the treatment costs for these conditions. Another type of restriction would involve caps on the coverage provided for certain procedures. Some policies may even have limits on the amount that can be claimed per day of hospitalization.
What about Out-of-pocket Expenses?
Exclusions and restrictions in your policy place a higher financial burden on the insured. An excluded medical condition or procedure implies that the insured will have to bear all related medical expenses with no help from the insurer. In the case of restrictions, he will have to bear part of the expenses in the event of a claim.
In addition, the insured may have also opted for certain out-of-pocket expenses such as deductibles, co-payments, co-insurance and so on. Insurers encourage the insured to assume a higher share of the medical costs in return for a lowered premium. The expectation of a discount on the premium, however, may lure customers into opting to bear higher out-of-pocket expenses than they can realistically afford.
You Can Benefit from These Limitations
Exclusions, restrictions and higher out-of-pocket expenses can lower your annual premium amount considerably. As long as you do not chase policies with the lowest premium, you can use these limitations to your advantage and find insurance that provides you adequate coverage at affordable rates. Only, make sure to review your policy and changes in your medical needs at least once a year.
The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal
For more articles by Deepak Yohannan, please visit MyInsuranceClub.com
You may write to the author at Deepak@myinsuranceclub.com