MEDICLAIM INSURANCE

DESIGN OF STUDY

SCOPE:

Human resources management starts the moment an employee joints an

organization and continues till he leaves the organization either on account of

retirement, registration and death or otherwise. It covers every aspects of employee

training, manpower planning etc…

OBJECTIVES:

Human resource management is a fascinating and important subject. The

fascinating lies in fact that it involves people and decision involving people at

work. It is human resources that determine the fact of an organization.

I have selected the topic of job satisfaction and communication management

because the quality of human resources is a critical factor in the success of any

organization and more in service organization like banks.

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METHODOLOGY

In order to conduct the research an appropriate methodology became necessary. In

this direction both primary and secondary data were required to be collected. The

methodology for collecting secondary data was taken from the different published

books, article, journals and relevant websites. The different libraries of the college,

institution were of much great help.

Questionnaire was prepared for the collection of primary data from different banks.

These forms i.e. questionnaire was given to different banks for getting the

information of their report on working of job satisfaction and communication

management along with different other questionnaires. It was prepared to get detail

information of an individual topic so we can get proper information and also the

knowledge of the banks.

After finalization of the questionnaire it was decided to approach different banks in

the near by areas. These questions were presented to the employees.

The primary data collection was restricted only to banks. Thus the methodology

became a preplanned strategy in collecting, editing, tabulating and interpreting the

required information for the research.

Hence, the methodology relied on both primary and secondary data with the help

of questionnaire, discussions observations as well as published work and

unpublished work.

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INSURANCE: AN INTRODUCTION

Insurance may be described as a social device to reduce or eliminate risks of loss

to life and properly. It is a provision which a prudent man makes against inevitable
contingencies, loss or misfortune.

Once Frank H. Knight said "Risk is uncertainty and uncertainty is one of the
fundamental facts of life." Insurance is the modern method by which men make the
uncertain certain and the unequal; equal. It is the means by which success is almost
guaranteed. Through its operation- the strong contribute to the support of the weak
and weak secure, not by favor sent by right duly purchased and paid for, the
support of the strong (Calvin Coolidge.)

Under the plan of insurance, a large number of people associate themselves by

sharing risks attached to individuals. As in private life, in business also there are
dangers and risks of different kinds. The aim of all types of insurance is to make
provision against such dangers. The risks which can be insured against include fire,
the perils of sea (marine insurance), death (life insurance) and, accidents and
burglary. Any risk contingent upon these, may be insured against at a premium a
commensurate with the risk involved. Thus, collective bearing of risks is insurance.

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Definition

Insurance in its basic form is defined as “ A contract between two parties

whereby one party called insurer undertakes in exchange for a fixed sum called
premiums, to pay the other party called insured a fixed amount of money on the
happening of a certain event."

In simple terms it is a contract between the person who buys Insurance and an
Insurance company who sold the Policy. By entering into contract the Insurance
Company agrees to pay the Policy holder or his family members a predetermined
sum of money in case of any unfortunate event for a predetermined fixed sum
payable which is in normal term called Insurance Premiums.

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TYPES OF INSURANCE

Life insurance

Life insurance is an insurance coverage that pays out a certain amount of money
to the insured pr their specified beneficiaries upon a certain event such as death of
the individual who is insured. This protection is also offered in a family tactful
plan, a Shariah – based approach to protecting you and your family.
The coverage period for a life insurance is usually more than a year. So this
requires a periodic premium payment, either monthly, quarterly or annually.
The risks that are covered by life insurance are:
• Premature death
• Income during retirement
• Illness

The main products of life insurance include:

1. Whole life
2. Endowment
3. Term
4. Investment-linked
5. Life annuity plan
6. Medical and health

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General insurance

General insurance is basically an insurance policy that protects u against looses

and damages other than those covered by life insurance. For more comprehensive
coverage, it is vital for you to know about the risks covered to ensure that you and
your family are protected from unforeseen losses.

The coverage period for most general insurance policies and plans is usually one
year, whereby premiums are normally paid on a one-time basis.

The risks that are covered by general insurance are:

• Property loss, for example, stolen car or burnt house
• Liability arising from damage caused by yourself to a third party
• Accidental death or injury

The main products of general insurance include:

• Motor insurance
• Fire insurance
• Personal accident insurance
• Medical and health insurance
• Travel insurance

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HEALTH INSURANCE IN INDIA

The guiding principle enunciated in the Bhore committee of 1946, which states
that `no individual should fall to secure adequate medical care because of inability
to pay for it', looks unreachable even after 50 years of Indian Independence. Some
form of health insurance, either social or private, covers hardly 3% of the Indian
population. The total expenditure on health in India is 6% of the GDP and the
government spending is less than 25% against the average spending of 30-40% in
other developing countries.

In India, health insurance mainly exists in the form of Mediclaim policy

offered to the individuals or group, association or corporate bodies. State
owned insurance companies; covering only about 2.5 mn people of the
country's population, do the penetration of Mediclaim policy. Social insurance
like Employee State Insurance Scheme is available but they have restricted the
coverage to a very small segment of the population that is round 3%.

The government has taken serious interest in the potential of insurance

companies to provide and popularize health insurance coverage at modest rate
of premium. To achieve this goal the government has allowed income tax
rebates for premium paid for health insurance policies.

GIC made some headway under its various health care plans for different
segments of policyholders, by covering more than 2 mn people. LIC and UTI
also made attempt to offer some type of health insurance covers. However,
health insurance could not pick momentum in India due to the following
reasons:

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1. Service costs are out of reach of many people.

2. Lack of good and efficient physician and less

number of hospitals.
3. High illiteracy rate
4. Poor medical equipment and
5. Poor budget allocation towards health
care.

We shall now discuss in detail about the health insurance policies available in
India.

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DECADES OF MEDICLAIM
The concept of health insurance was proposed in 1694 by Hugh the Elder
Chamberlin from the Peter Chamberlin family. In the late 19th century, "accident
insurance" began to be available, which operated much like modern disability
insurance. This payment model continued until the start of the 20th century in
some jurisdictions (like California), where all laws regulating health insurance
actually referred to disability insurance.

Before the development of medical expense insurance, patients were expected to

pay all other health care costs out of their own pockets, under what is known as the
fee-for-service business model. During the middle to late 20th century, traditional
disability insurance evolved into modern health insurance programs. Today, most
comprehensive private health insurance programs cover the cost of routine,
preventive, and emergency health care procedures, and also most prescription
drugs, but this was not always the case.

Hospital and medical expense policies were introduced during the first half of the
20th century. During the 1920s, individual hospitals began offering services to
individuals on a pre-paid basis, eventually leading to the development of Blue
Cross organizations. The predecessors of today's Health Maintenance
Organizations (HMOs) originated beginning in 1929, through the 1930s and on
during World War II.

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MEDICLAIM IN INDIA

In mid 80’s most of the hospitals in India were governments owned and
treatment was free of cost. With the advent of Private Medical Care the need for
Health Insurance was felt and various Insurance Companies (New India Assurance,
National Insurance Company, Oriental Insurance & United Insurance Company)
introduced Mediclaim Insurance as a product.

According to recent news report Health insurance continues to be the fastest

growing segment with annual growth rate of 55%. Health Premium has risen to Rs.
3300 crores in 2006-2007. As per the recent reports from various agencies the
Health sector has the potential to become a Rs. 25000-crore industry by 2010.

On August 15, 2007 Prime Minister has announced Rs 2000 Crores for Health
Insurance for poor citizens. We foresee that this amount will be partly in form of
subsidy therefore during calendar year 2008 we can expect Health Insurance
premium to touch figure in the range of Rs 10,000 Crores.

In 2001 with entry of various private Insurance companies now the customers have
choice of buying this insurance from 14 Insurance companies.

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The Companies, which offer Health or Mediclaim Insurance, are;

Bajaj Allianz General Insurance Company Limited

Future Generali India Insurance Company Limited

HDFC General Insurance Company Ltd.

ICICI Lombard General Insurance Limited.

National Insurance Company Limited

New India Assurance Company Limited

Oriental Insurance Company Limited

Reliance General Insurance Company Limited

Royal Sundram Alliance Insurance Company Limited

Star health and Allied Insurance Company Limited

TATA AIG General Insurance Company Limited. (Overseas Health Insurance

only)

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United India Insurance Company Limited

India is the only country where hospitalization insurance policy was being sold
as Mediclaim Insurance Policies. The very name gives a feeling to the insured that
claim has to be lodged. If motor insurance policy is not sold as motor insurance
claim policy and household insurance policy is not sold as household claim policy
then why this is named as Mediclaim?

In the recent years the trend has emerged that some Insurance companies have
started calling this product as Health Insurance.

Health Insurance and Mediclaim are two different names for the same product. The
change has started coming and now we have started calling it Health Insurance.
ICICI Lombard has even named it as Health Insurance Policy.

Calling is as Health Insurance is a positive way of looking at this Insurance. It also

giving us a feeling that we as a society have started moving from curative medical
care to preventive medical care.

According to sources in Oriental insurance it is being felt that mindset has started
changing over the last couple of years “ The new middle- class of India aspires of
quality healthcare service and doesn’t mind going to expensive hospitals like
Apollo or Escorts. There is no reason why healthcare insurance should not be
successful with this class.

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Principles of insurance

Indemnity

A contract of insurance contained in a fire, marine, burglary or any other policy

(except life assurance and personal accident and sickness insurance) is a contract of
indemnity. This means that the insured, in case of loss against which the policy has
been issued, shall be paid the actual amount of loss not exceeding the amount of
the policy, i.e. he shall be fully indemnified. The object of every contract of
insurance is to place the insured in the same financial position, as nearly as
possible, after the loss, as if he loss had not taken place at all. It would be against
public policy to allow an insured to make a profit out of his loss or damage.

Utmost Good Faith

Since insurance shifts risk from one party to another, it is essential that there
must be utmost good faith and mutual confidence between the insured and the
insurer. In a contract of insurance the insured knows

More about the subject matter of the contract than the insurer. Consequently, he
is duty bound to disclose accurately all material facts and nothing should be
withheld or concealed. Any fact is material, which goes to the root of the contract
of insurance and has a bearing on the risk involved. It is only when the insurer
knows the whole truth that he is in a position to judge

(a) Whether he should accept the risk and

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(b) What premium he should charge.

If that were so, the insured might be tempted to bring about the event insured
against in order to get money.

Insurable Interest

A contract of insurance affected without insurable interest is void. It means that

the insured must have an actual pecuniary interest and not a mere anxiety or
sentimental interest in the subject matter of the insurance. The insured must be so
situated with regard to the thing insured that he would have benefit by its existence
and loss from its destruction. The owner of a ship run a risk of losing his ship, the
charterer of the ship runs a risk of losing his freight and the owner of the cargo
incurs the risk of losing his goods and profit. So, all these persons have something
at stake and all of them have insurable interest. It is the existence of insurable
interest in a contract of insurance, which distinguishes it from a mere watering
agreement.

Causa Proxima

The rule of causa proxima means that the cause of the loss must be proximate or
immediate and not remote. If the proximate cause of the loss is a peril insured
against, the insured can recover. When a loss has been brought about by two or
more causes, the question arises as to which is the causa proxima, although the
result could not have happened without the remote cause. But if the loss is brought

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about by any cause attributable to the misconduct of the insured, the insurer is not
liable.

Risk

In a contract of insurance the insurer undertakes to protect the insured from a

specified loss and the insurer receive a premium for running the risk of such loss.
Thus, risk must attach to a policy.

Mitigation of Loss

In the event of some mishap to the insured property, the insured must take all
necessary steps to mitigate or minimize the loss, just as any prudent person would
do in those circumstances. If he does not do so, the insurer can avoid the payment
of loss attributable to his negligence. But it must be remembered that though the
insured is bound to do his best for his insurer, he is, not bound to do so at the risk
of his life.

Subrogation

The doctrine of subrogation is a corollary to the principle of indemnity and

applies only to fire and marine insurance. According to it, when an insured has
received full indemnity in respect of his loss, all rights and remedies which he has
against third person will pass on to the insurer and will be exercised for his benefit
until he (the insurer) recoups the amount he has paid under the policy. It must be
clarified here that the insurer's right of subrogation arises only when he has paid for
the loss for which he is liable under the policy and this right extend only to the
rights and remedies available to the insured in respect of the thing to which the
contract of insurance relates.

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Contribution

Where there are two or more insurance on one risk, the principle of contribution
comes into play. The aim of contribution is to distribute the actual amount of loss
among the different insurers who are liable for the same risk under different
policies in respect of the same subject matter. Any one insurer may pay to the
insured the full amount of the loss covered by the policy and then become entitled
to contribution from his co-insurers in proportion to the amount which each has
undertaken to pay in case of loss of the same subject-matter.

In other words, the right of contribution arises when

(I) There are different policies which relate to the same subject-matter
(II) The policies cover the same peril which caused the loss, and
(III) All the policies are in force at the time of the loss, and
(IV) One of the insurers has paid to the insured more than his share of the loss.

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TYPES OF MEDICLAIM POLICIES

MEANING: Policies under this insurance, the insurer undertakes to indemnity

the assured in consideration of certain payment, up to certain specified amount
insured against for loss arising in respect of hospitalization or injury sustained
by the insured person.

Due to rapid population growth and more and more use of contamination of
fond, water, and air etc., which leads to hospitalization are more frequent. To
cater to the varying and increasing needs, different forms of cover are
available.

Types of policies:
The following types of policies are issued by the insurance corporation in order
to meet the public at large:

I. Mediclaim policy (Individual):

Coverage: the policy provides for the hospitalization/domiciliary hospitalization
expenses for illness/diseases or injuries sustained.

Expenses on hospitalization is payable when the insured is admitted in the

hospital for a minimum period of 24 hours. An individual can opt for the
sum insured ranging from Rs.15, 000 to Rs.5, 00,000 in multiples of Rs.5,
000.

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Eligibility: People in the between age group of 5 and 80 years are eligible
for the policy. Children between the ages of 3 months to 5 years can be
covered provided one or both parents opt mediclaim over.

Benefits: Reimbursement of hospitalization/domiciliary hospitalization

expenses as mentioned above. Family discount- a discount of 10% in the total
premium is available if the policyholder is opting cover under the policy for any
one of the following: spouse, dependent children, and dependent parents. Cost of
health checkups- this cost is payable to the insured at the end of every four
year block provided there is no claim reported during the block. The cost reimburse
will be the amount equal to 1% of the averages sum insured during the block.
Premium of Rs.15, 000 is exempted under income tax section 80D, if paid by
cheque.

Conditions: Any event giving rise to claim under the policy should be informed or
communicated to the insurance company in writing within 7 days from the date of
injury, hospitalization/ domiciliary hospitalization.

• Claim must be filed within 30 days from the date of discharge from the

hospital.

• The company will not be liable for any payment for claim, which are

fraudulent or supported by any fraudulent device.

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II. Group medical policy:

The group medical policy will be available to pay or association, institution or
corporate body of more than 50 persons provided it has central
administration point. Each insurer should cover all eligible candidates under
one group policy only which means that different categories of eligible
members are not allowed to be covered under different group Medicalim
policies.

The group discount is permissible depending upon the total number of

insured person covered under the group mediclaim policy at the inception of
the policy. It is to be noted that no discount is offered to a group with less
than 101 members.

III. Overseas Mediclaim policy:

Overseas Mediclaim policy was originally introduced in 1984 to provide
payment of medical expenses incurred in respect of illness suffered or
sustained by Indian resident during their overseas trips. The insurance
scheme, since 1984 has been modified several times to provide for
additional benefits like in-fight personal accident, loss of passport etc. in the
year 1991, employment of study policy was introduced for Indian citizens
temporarily living abroad.

There are two type of plan under overseas mediclaim policy:

• Standard cover.

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• Videsh yatra mitra.

Eligibility: the policy is available to the following person:

Indian residents traveling abroad for the following

purposes:
• Business

• Official

• Holiday tour

• Professional Training

Accompanying spouse and children of the person going aboard will be treated
as going under holiday travel.

Age limit:
Adults: the age limit is 70 years. Adults between the age of 70 and 80 years can
be covered at the discretion of the insurer by loading the premium and persons
above 80, years can also be covered provided the insurance company's head office
accepts the proposal.

Benefits:

The following are the important benefits of overseas medical policy:

• Reimbursements of medical expenses of the insured during his/her

stay abroad.
• Automatic extension of insurance period.

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• In the event of claim, services will be provided by M/s. Mercury

international assistance and claims limited, whose services are available

all over the world.
• If the insured is required to be sent back, to the home country on

account of sickness suffered or injury sustained, the expenses incurred

therewith are also paid.
• An amount up to $225 for immediate relief of dental plan is also

payable with the approval of M/s. Mercury.

• All the expenses are reimbursed in the local currency of the country

IV. Jan Arogya Bima Policy: the coverage under this policy can be
considered, to a certain extent, along the lines of individual mediclaim policy
expect that cumulative bonus and mediclaim check up benefits are not included.
The above plan covers the risks or reimbursement in respect of hospitalization
and domiciliary hospitalization up to Rs.5000 per person per annum. The
salient feature of the scheme is granted only for the benefits of the lower
income of society and common masses.

V. Cancer policy: this policy is designed to meet the risks or coverage for the
members of the cancer patient aid association. There are two scheme available for
cancer policy:

a. Indian cancer society

b. Cancer Patients Aid Association.

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This policy is introduced in collaboration with Indian Cancer Society can avail of
the benefits of this scheme. The policy lapses immediately if the insured ceases
to be a member of the Cancer society for any reason whatsoever. On payment
of the prescribed membership fees, which is included in insurance premium
during the currency of the policy suffers from cancer; the policy will pay up to
Rs. 50, 000 to meet the cost of diagnosis, biopsy, chemotherapy,
hospitalization and rehabilitation.

VI. Bhavishya Arogya Policy: This scheme had been designed so as to

enable a person to provide himself for medical needs during an old age
security. Under this policy the medical expenses to be incurred over the
balance life span after a predetermined age of retirement will be
reimbursed up to the amount of the sum insured with a limit of an
amount per any one illness or injury. The amount of maximum total
benefits available under the basic policy is Rs. 50, 000 during the
lifetime of the insured commencing from the policy retirement age
and is not to exceed Rs. 20, 000.

VII. Videsh Yatra Mitra Policy: Videsh yatra policy is another overseas
mediclaim scheme introduced by general Insurance Corporation with effect from
1998. This policy provides the widest cover of personal accident, loss of checked
baggage, loss of passport, medical expenses and repatriation, delay of checked
baggage, personal liability etc. insured person is that person named in the overseas
policy schedule, for which the appropriate premium had been paid. The policy is
valued only from the first day of insurance and expires on the last day of the
number of days specified in the policy schedule or on return to India whichever is

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earlier.

MAJOR MEDICAL INSURANCE – A NEW TYPE OF

INDIVIDUAL HEALTH INSURANCE

Major medical insurance is designed to pay a high proportion of the covered

expenses of a catastrophic illness or injury. This type of plans is often sold in
conjunction with a hospitalization and surgical plan, and is aimed at covering
costs that a normal hospitalization plan does not cover. Most such plans include
the following characteristics:

1. Extensive coverage:

Usually the major medical insurance coverage is wide and includes all the
reasonable and essential medical expenses and other related expenses from a
covered illness or injury.

2. Generous Maximum Limits:

Many of such plans offered overseas have generous lifetime limits ranging from
$300,000 to a million or even more. Locally, the limits offered are often less, but
still considered high relative to the cost of major illness treatments. A high limit
is necessary because the purpose of having such plans is to cover catastrophic
losses that a normal hospitalization plan does not cover.

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3. Benefit Period:

A benefit period is the length of time that the plan’s benefits will be paid after the
deductible is satisfied. At the end of the benefit period, the insured has to satisfy a
fresh deductible in order to establish a new benefit period. The purpose of the
benefit period is to grant a definite period within qualified medical expenses for a
particular disease or injury must be incurred in order to reimburse under the
policy.

4. Deductible:

Deductible are the stated amounts each claim has to satisfy before any payments
of the benefits are made. The purpose od deductibles is to eliminate small claims
that a pose a relatively high processing cost to insures. This will help insurers
keep the premiums for major medical plans reasonable.

5. Co-Insurance:

A co-insurance is a policy provision that requires the insured to pay a certain

percentage of the eligible medical expenses in excess of the deductible. The
purpose of this clause is to reduce premium and prevent over utilization of policy
benefits. Since the insured has to pay part of the bill, premiums can be offered at
cheaper rates. Another purpose of the provision is to discourage the patients from
simply choosing the most costly medical services while lower-cost versions are
available and are just as good.

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6. Exclusions:

Like all types of insurance policies, major medical plans contain exclusion
clauses. Some of the common exclusions that are found in such plans are as
follows:

• Expanses incurred as a result of war or military conflict.

• Optional cosmetic surgery.

• Normal dental care.

• Pregnancy and childbirth, except for complication that arises as a result of

childbirth.

• Experimental surgery

To further control cost, internal limits are sometimes imposed on the plan. There
may be in the form of annual or lifetime limits on the amount paid for certain
diseases.

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Different policy offered by companies

The New India Assurance Co Ltd

Who can take this policy

This insurance is available to persons between the age of 18 years to 60 years.
Children between the ages of 3 months to 18 years can be covered provided parents
are covered simultaneously. The persons beyond 60 years can continue their
insurance provided they are insured under Mediclaim policy with our Company
without any break.

What does this policy cover?

The policy covers hospitalization expenses for the treatment of illness/injury

provided hospitalizations is more than 24 hours. Pre-hospitalization expenses for
30 days and post hospitalization expenses for 60 days are also payable.

Day-care treatment - The Medical expense towards specific technologically

advanced day-care treatments / surgeries where 24 hour hospitalization is not
required.

Ambulance Charges for shifting the insured from residence to hospital are covered
up to the limits specified in the policy.

Ayurvedic / Homeopathic and Unani system of medicine are covered to the extent
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of 25% of Sum Insured provided the treatment is taken in the Government

Hospital.

Pre-existing diseases are covered only after 4 continuous and claim free renewals
with our Company.

Pre-existing conditions like Hypertension, Diabetes, and their complications are

covered after two years of continuous insurance on payment of additional
premium.

Exclusions:

• Diseases contracted within 30 days of insurance

• Dental treatment except arising out of accident.
• Debility and General Run down Conditions.
• Sexually transmitted diseases and HIV (AIDS)
• Circumcision, Cosmetic surgery, Plastic surgery unless required to treat
injury or illness
• Vaccination and Inoculation
• Pregnancy and child birth
• War, Act of foreign enemy, ionising radiation and nuclear weapon.
• Treatment outside India
• Naturopathy
• Domiciliary Treatment
• Experimental or unproven treatment
• All external equipments such as contact lenses, cochlear implants etc.

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Premium:

Premium is based on age of the proposer and geographical area of treatment.

Special features of the policy:

• Discount in premium for family cover

• Loyalty Discount
• Good Health Discount
• Cumulative Bonus
• Cost of Health Check up
• Income Tax Benefit under Section 80D of IT Act.

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National Insurance
. Salient Feature

Hospitalization for illness,

Disease

Accident, including surgery

2. Scope of Cover

Medicaid insurance policy has been devised under the aegis of the Government of
India.
The policy provides the following benefits.

1) Reimbursement of hospitalization expenses which are reasonably and

necessarily incurred,
Under the following heads:
a) Room, boarding expenses as provided by the hospital/nursing home.

b) Nursing expenses.

c) Fees of surgeon, anesthetist, medical practitioner, consultant and specialist.

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 MEDICLAIM INSURANCE

d) Expenses on account of anesthesia, blood, oxygen, operation theatre charges,

surgical Appliances, medicines and drugs, diagnostic material, X-ray, dialysis,
chemotherapy, Radiotherapy cost of pacemaker, artificial limbs and cost of organs
and similar expenses.

2) Introduction of Sub-Limits:

The following provisions have been introduced:

A. Room, Board and Nursing Expenses as provided by the Hospital /Nursing

Home- Room Rent limit: 1 % of the Sum Insured per day subject to maximum of
Rs.5000./-. I.C. Unit Expenses: 2 % of Sum Insured per day subject to
maximum of Rs. 10,000/-. Over all limits under this head: 25% of S.I. per illness.

B. Surgeon, Anesthetist, Medical Practitioner, Consultants Special fees –

maximum limits per Illness – 25% of S.I.

C.Anesthesia, Blood, Oxygen, OT charges, Surgical appliance, Medicines, drugs,

Diagnostic Material & X-Ray, Dialysis, Chemotherapy, Radiotherapy, cost of
pacemaker, artificial limbs And cost of stint and implant. Maximum limit per
illness – 50% of Sum Insured.

D. Ambulance services - 1% of the sum insured subject to maximum of Rs 1000/-

provided Registered ambulance is used for shifting patient from residence to
hospital if admitted to ICU or emergency ward OR from one hospital to another
subject to sub-limits under ‘c’ above.

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E. Hospitalization expenses of person donating an organ during the course of

organ transplant Will also be payable subject to the sub-limits under ‘c’ above.

3) Premium paid for the policy towards self, spouse, dependent children and
dependent parents are exempt from Income Tax under Sec. 80D of the l.T. Act.

4) Cost of Health Check Up and Cumulative Bonus - Benefits will accrue only if
the Policy is a renewal
Of ‘National’.

3. Additional Features
1) Definition of Family:

A) Self (Primary Insured).

B) Spouse.

C) Dependent Children (i.e. legitimate or legally adopted children). Children

above 18 years, if employed, can not be covered. Male children, if not employed,
but a bonafide student can be covered up to age of 25 years. Female children, if not
employed, can be covered until the time she is married.

D) Dependent parents.
All members of the family must be covered under one policy.

2) Entry Age:

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This insurance is available to a person between the age of 18 to 59 years.

However, the Policy can be renewed upto the age of 80 years as stipulated in the
premium chart above.

a) Children above the age of 3 months can be covered provided parents are covered
concurrently and suitable premium is paid. If the child above 18 years is employed
or if the Girl child is married, he or she shall cease to be covered under the policy.
However male child can be covered up to the age of 25 years if he is a bonafide
regular student and fully dependent on primary insured. Female child can be
covered up to the time, she is unmarried.

b) If the insured has taken continuous Mediclaim insurance policy with us for at
least 5 years prior to attaining the age of 80 years the policy can be renewed
beyond the age of 80 up to the age of 90 years as a special case with the approval
of Regional In charge on case to case basis. The premium chargeable shall be 10%
of the premium for 75-80 years age slabs for proposers above 85 and 20% of the
premium for 75-80 age slabs for proposers above 90.

c) No inclusion of family member during currency of policy is permissible except

for a new born child between the age of 3 months to 6 months and newly married
spouse within 60 days of marriage. Otherwise inclusion of family member shall be
allowed only at the time of Renewal. Prorata premium shall be charged for such
inclusion during the currency of the policy for the unexpired period.

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 MEDICLAIM INSURANCE

3) Sum Insured:
Minimum sum insured shall be Rs 50,000/- and can be increased in multiples of Rs
25,000/-upto Rs 5 lacs. The sum insured must be identical for primary insured and
the dependents. However, the children may be covered for 50% Sum Insured as per
item no. 2 above.

4) TPA option:
The premium includes cashless facility through TPA. If the policyholder does not
require cashless facility then 6% discount on premium may be given.

5) Pre -Acceptance Health Checkup:

Pre acceptance health check-up is mandatory when age is 50 years and above and
he/she is seeking insurance cover for the first time as an individual or as member of
a family where there is break in Insurance increase in sum insured on renewal.

Propose/Insured Person will be required to undergo the following Medical Check-

up or any other medical test as required by the Company either on his/her own or
from its authorized Network Diagnostic Centre in prescribed format. The cost shall
be borne by the insured.

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 MEDICLAIM INSURANCE

Age (in 50 and above

years)
PHYSICAL EXAMINATION
BLOOD
URINE SUGAR
BLOOD PRESSURE
ECHO CARDIOGRAPHY
MEDICAL EYE CHECK UP
TEST INCLUDING
RETINOSCOPY

If the insured was covered under any Health Insurance Policy of ‘National’
uninterruptedly for
Preceding 3 years, no pre-acceptance Medical check up is required.

4. Exclusions

The most important exclusion relates to pre-existing illness. If the insuring person
had a health condition, existing prior to taking the policy, which required medical
treatment, the same gets automatically excluded in the policy. To ensure that in
subsequent renewals medical conditions
Incepting since the policy was taken do not get excluded, the insuring person must
renew the policy without break. The other exclusions for illustrative purposes are:-

a) Exclusion of certain named diseases in the first year of the policy.

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 MEDICLAIM INSURANCE

b) Congenital external disease, sterility, venereal disease, intentional self-injury,

use of drugs, Alcohol, rest cure etc.

c) AIDS

d) Charges primarily for diagnostic, laboratory examinations, and not related to

any treatment in hospital. So also for vitamins and tonics unless prescribed for
treatment.

e) Dental treatment not requiring hospitalization.

f) Treatment arising from or traceable to pregnancy, childbirth, including

caesarean.

g) Naturopathy treatment.

EXCLUSION 4.a, 4.b & 4.c have been amended. Pre-existing diseases shall be
covered after 4 continuous claims free Policy years with ‘National’. However, in
case of exclusion 4.3, for renewals, Existing condition shall apply, i.e. the one year
exclusion applicable earlier shall be valid.

Benefits of mediclaim
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 MEDICLAIM INSURANCE

Benefits of a Mediclaim policy are many. Some of which are listed

below.
1) First and foremost the Mediclaim policy offers you a chance to get your medical
expenses covered under a policy. Thus it takes care of the hospitalization fees.
Protects the person or family (in case of family plan) for hospitalization expenses
as a result of any specific injury or illness which has taken place during the period
of insurance and on the advice of a doctor requires hospitalization.

2) Pre hospitalization expenses for the person or the insurer and also to go with it
Post-Hospitalization Expenses: Post Hospitalization expenses are medical expenses
incurred during a period up to a specific number of days after hospitalization for
the particular ailment disease or injury is over but still needs expenditures in order
to completely become normal.

3) If you have a health insurance policy that supports cashless Mediclaim, it means
that you can get medical treatment just by displaying your insurance card without
paying any cash to the hospital. Most health insurance companies offer this benefit.
Some times the benefits may be applicable only to a certain number of hospitals or
medical centers.

4) Some of the insurance policies also provide tax benefits. These tax benefits are
provided to the person under the name of whom the insurance policy has been
assigned. Under the Section 80D, tax benefits are provided to people who get a
Mediclaim policy done in their n

37
 MEDICLAIM INSURANCE

WIDER HEALTH COVER FOR POOR

New Delhi: With assembly elections in six states and general elections just months
away, the government is planning to expand the scope of its health insurance
schemes for the poor. At a marginal premium, families above poverty line (ALP)
could also get the benefit of insurance cover if the proposal goes through.
The health ministry is planning to modify the scope of its yet-to take-off Rs 8,000-
crore National Urban Health Mission (NUHM) for the urban poor to cover services
like outpatient care, which are not covered by the Rashtriya Swasthya Bima Yojana
(RSBY). Health secretary Naresh Dayal told ET that his ministry was exploring the
option of modifying the proposed insurance scheme under NUHM so that the
urban poor can get additional benefits. The government is also examining the
possibility of raising the cover from Rs 30,000 initially proposed. These
suggestions came up at a meeting of senior government officials last week. APL
families are not covered under RSBY. NUHM was announced in March this year
by health minister Anbumani Ramadoss and was to be launched in four months.
However, in April, the labour ministry operationalised RSBY—announced last
year —for workers in the unorganized sector. Now, the health ministry, which was
all set to kick start NUHM on the lines of the National Rural Health Mission, is
thinking of re-designing the insurance component of this ambitious programmed.
“We are looking at a variety of options. We may either launch the programmed
with better reach and coverage or will modify it and cover those areas that have
been left out by the labor ministry. Once things get finalized, we will take it to the
Cabinet for approval. All this may take 3-4 months,” Mr Dayal told ET.

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 MEDICLAIM INSURANCE

DATABASE OF MEDICLAIM INSURANCE

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 MEDICLAIM INSURANCE

General Insurance Corporation through its four subsidiaries: Oriental Insurance,

New India Assurance, National Insurance Company, United India Insurance.

Age:
Between 5 - 80 years.

Children between 3 months and 5 years can be covered provided one or both
parents are also covered.

Coverage:
Insures against any hospitalization expenses that may arise in future. The scheme
reimburses hospitalization expenses for illness, diseases or injury sustained,
excludes any disease existing before taking the policy.

Cost:
Sum insured can be anywhere between Rs 15,000 - Rs 500,000. Rate of premium
ranges between Rs 175 per year to Rs 2,500 per year depending on the age and
capital sum insured.

Amount:
Compensation up to the extent of sum insured.

DOCUMENTS REQUIRED

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 MEDICLAIM INSURANCE

Given below is a general list of documents that are required in case of a claim.

1. Duly completed claim form (available with all network hospitals).

2. Original bills, receipts and discharge certificate / card from the hospital.

3. Bills from chemists supported by proper prescription

4. Investigation test reports and payment receipts, supported by the note from
attending medical practitioner / surgeon prescribing the test.

5. Doctor’s referral letter advising hospitalization in non-accidental cases.

6. Nature of operation performed and surgeon’s bill and receipt.

7. Any other documentation / information as required by the Service

Provider/TPA.

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 MEDICLAIM INSURANCE

MEDICLAIM RENEWAL BY INSURERS MUST BE

AUTOMATIC, RULES BY SUPREME COURT

The Supreme Court has ruled that insurance companies are obliged to renew the
mediclaim policy automatically unless otherwise mutually agreed between insurer
and insured.

A bench comprising Justice SB Sinha and Justice VS Sirpurkar also asked the
regulator (Irda) to lay down guidelines to check the imposition of arbitrary clauses
of mediclaim policy and its renewal. The court said, “Renewal of a mediclaim
policy subject to just exceptions should ordinarily be made”.

But where a renewal is based on mutual consent, there may be no automatic

renewal. A mediclaim policy in which a senior citizen is involved would stand on a
different footing. It will depend upon the contract entered into between the parties
and the statutes operating in the field as also the constitutional scheme, court said.

It rejected the plea of some public sector insurance companies, which had said that
wherever renewal is subject to mutual consent of the parties, it might be at its
whims and caprice to refuse the renewal of the policy.
“The insurance companies cannot, either in their prospectus or in the terms of
policy, lay down any condition which would be derogatory to the terms and
conditions approved by the regulatory authority. If the contract of insurance itself
provides for renewal of an insurance policy the same may not mean that the
assured has a legal right of automatic renewal, but the courts are required to strike

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 MEDICLAIM INSURANCE

A balance” said Justice Sinha writing the verdict. The court asked the authorities
concerned to lay down guidelines in this regard.

“We would like to observe that keeping in view the role played by the insurance
companies, it is essential that the regulatory authority must lay down clear
guidelines by way of regulations or otherwise. No doubt, the regulations would be
applicable to all the players in the field...” the court said. The duties and functions
of the regulatory authority, however, are to see that the service provider must
render their services keeping in view the nature thereof. It will be appropriate if the
central government or the general insurance companies also issue requisite
circulars,” the court said.

It further said, “ We would request the IRDA to consider the matter in depth and
undertake a scrutiny of such claims so that in the event it is found that the
insurance companies are taking recourse to arbitrary methodologies in the matter of
entering into contracts of insurance or renewal thereof, appropriate steps on that
behalf may be taken”.

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 MEDICLAIM INSURANCE

CASHLESS CLAIM PROCEDURE

When should you claim?

There are a host of benefits for having a claim-free policy, the most important
being additional cover at the same premium, but the whole purpose of health
insurance is to provide for your medical expenses. However, you must make your
claims prudently. So, you should not make small claims. To choose which claims
are worth making, get the numbers right! Check if by making a claim, the no-claim
bonus you forfeit and the 10 per cent of cumulative bonus cover you lose will
exceed the compensation you get. If it does, it makes sense not to make a claim but
pay for the expenses you? Claim only if the amount is on the higher side and you it
makes sense to forfeit the no claim bonus. Also keep in mind that in the long term,
it will reflect on your records and will the insurer will penalize you with an extra
load on your premiums.

How would you claim?

1. Select a hospital from your service provider's network hospital tie-ups.

Check the Network Hospitals booklet mailed to you or visits your service
provider's website. However, do note that the hospital booklet might not be
updated. Your provider may include or exclude hospitals without giving
prior information. It is advisable to check the updated list from the website
or contact them directly for information.

2. Produce your cashless card in the chosen hospital prior hospitalization.

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 MEDICLAIM INSURANCE

3. Fill in the Pre-authorization form with the insurance details. The hospital

shall fill in information regarding the diagnosis, treatment plan, past history
and the expected of the cost of treatment. The pre-authorization form can be
availed at the hospital or downloaded from the service provider's website.

4. The hospital shall then fax the signed and stamped form to the service

provider.

5. The service provider then evaluates the documents and classifies the case as

Approved, Queried or Rejected. Accordingly, the Authorization form

would be faxed to the hospital.

6. It is advisable to follow the above procedure and get the Authorization Letter
before getting admitted to avoid any disappointments. However, in case of
an Emergency Hospitalization, the authorization form can be obtained after
admission.

7. Note that the Cashless Authorization does not cover: Attendant/Visitor pass

charges

Ambulance charges—unless covered under the policy

Special nursing charges not authorized by the attending doctor

Charges for extra bed for attendant

Purchase of Medicines not related to the treatment

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 MEDICLAIM INSURANCE

Claims – some important notes

• Telephone/Fax charges. Claims must be authorized by us before

you go ahead with treatment. This can be done by calling Customer Support on
0300 123 3200. By doing so you can go ahead with the treatment, safe in the
knowledge that you are covered
• Emergency treatment is not covered. Once your condition has
been stabilized and if your consultant agrees, you can be transferred (with our
prior approval) to private facilities or become a private patient within the NHS
• Claims will not be paid if your premiums are not up to date
• All claims made in the first year of the policy will be referred to
our Chief Medical Officer
• Additional information may be required from your GP at the
time of claim
• If a claim can be paid under another insurance policy or by
anyone else, we will only pay the proper share.

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 MEDICLAIM INSURANCE

The main reasons for claim not being passed in full are

• Insured has preexisting disease and it was already mentioned in policy

document as exclusion.

• The specific diseases are not covered under the policy

• Disease is a preexisting disease and it was not revealed by the insured at the
time of issue of policy.

• The main reasons for claim being passed in part are :

• Some of the tests conducted/treatment were not relevant to the disease for
which patient was admitted.

• Some costs like consumables are not payable by the insurance company.
Examples are :-

With a view to cover some of these payments some TPA's insist that 5% of the
hospital bill will be paid by the patient. You should not be surprised if you are
asked to pay 5% of the bill even if you are covered under cashless scheme. In the
event of consumables are not 5% or more than 5% there is good possibility that
you may get part of this paid to you at time of finalization of their claim.

• As a customer you should see that information being given at time of

admission into the hospital, discharge certificate, claim form is consistent.
Any follow up letter being sent to the insurance company should be well
drafted and consistent to the claim lodged.

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 MEDICLAIM INSURANCE

NEED FOR MEDICLAIM INSURANCE

You are expected to live longer than your parents or grandparents. An average
Indian used to live for barely 40 years at the time of Independence. By 2016, an
average Indian would live for about 68 or 70 years.

Life can come at you fast. It's simply impossible to know what's around the corner.
This is why we all have to take necessary precautions. In other words; do you have
health insurance? Some people actually have no medical insurance whatsoever.
This is completely absurd in the unpredictable world we live in. That random fall
or dreadful car accident could happen today. Are you prepared to grapple with
those hospital bills? The fact is, medical insurance is just an inevitability of life.
You always want to have it just in case. If the time does arise when you need it,
you will thank God you planned ahead.

However, a longer life need not mean healthier life. Lifestyle-related diseases such
as high blood pressure, diabetes, obesity, and extraordinary stress are all on the
rise. In short, we are looking at a combination of longer but possibly a less healthy
life span. At the same time, healthcare costs have been escalating rapidly.

Landing up in hospital is the last thing we want to think about. It happens to

someone else not me…you think. But we all go through tough times and only the
ones that plan ahead come out unscathed. The massive cost of treatment is a
double-whammy for many who already have to contend with the illness.

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 MEDICLAIM INSURANCE

If you become seriously ill, your entire wealth accumulated over decades can
disappear in combating the illness. If your savings can vanish in the blink of the
eye what is the best solution? The answer to this ominous question is opting for
health insurance.

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 MEDICLAIM INSURANCE

WHY MEDICLAIM INSURANCE IS A MUST (Example)

I heard a story recently from an acquaintance of mine who has no medical

insurance. She never expected to use such a thing. Sure, maybe dental on occasion,
but never medical. I mean come on, the girl's only 23 years old. What could
happen? Well, this is what happened. She manages a truck stop, and while
conversing with an employee one night, a brute strolls in with a nasty temper.
Before she knew it, the employee she was conversing with is being attacked by the
brute. Now, when she decided to intervene and be the hero, she was stabbed in the
shoulder. Wow, what a reality check. You try and do the right thing, and life
smacks you in the face. Now comes the problem with having no medical insurance.
After being hospitalized for a couple weeks, her medical bills are now around 30
grand. However, this is not the end of it. She still has to go through physical
therapy; not to mention the mental anguish of almost dying. How much will the
psychiatrist charge? The point is, you simply can't know what's in store for you.
Life is so random for us all. I wanted to use this girl's recent story as an example
because it's true. Sure it's sad, but still reality.

These days, no medical insurance equals trouble down the road. Even a minor
hospitalization can set you back for a long while. The problem is that most of us
don't believe that we will ever use it. Get rid of your fantasies and purchase a
decent medical insurance plan today. Don't end up in the emergency room with no
medical insurance. If nothing else, insurance offers you piece of mind. Although I
have not used my medical insurance yet, I understand I may need it in the future. I
choose to be prepared for what lies ahead.

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PRECAUTIONARY MEASURES TO BE TAKEN

The following must first take root,

• Judicial reforms that clearly link compensation along with avoidable errors.

• Government support for a nationwide response to medical error costs.

• Development of initiatives by health insurance firms to reduce the number of

avoidable errors.

• State and local support for further uniformity in model regulations and rules.

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 MEDICLAIM INSURANCE

IRDA MAY ENSURE AFFORDABLE HEALTH COVER

TO ALL, EVEN AFTER 65 YEARS

Hyderabad: Senior citizens have good chances of getting a health cover even after
they turn 65. Insurance regulator IRDA is vetting a proposal to make health cover
affordable to all senior citizens. A final view will be taken on providing guaranteed
access to health insurance for this segment by the end of this year, said a top
official of the regulatory body. The proposal is based on the recommendations of
an expert panel on health insurance last year. The panel recommended allowing
senior citizens to enter the health insurance system up to 65 years of age — or
higher — at the discretion of the insurer.

If they do so, they should be given guaranteed renewal of their insurance without
any upper age limit. As a transitional measure — since guaranteed access is being
provided to senior citizens for the first time — there should be no upper age limit
for entry or renewal for a period of three years from the date the IRDA issues the
regulations”, the panel had said. It had made out a case for insurers to fix a “base”
price of Rs 3,000 every year for a sum insured of Rs 1,00,000 (at 50 years). “We
are examining these recommendations of the panel we reckon that health insurance
should be made affordable, given the mounting health care-costs,” said DVS
Sastry, director general, IRDA at a seminar on effective cross selling of insurance
and mutual fund products organized by Watson Wyatt and the Indian Institute of
Banking and Finance here. Several senior citizens have registered complaints with
the regulator about insurance companies denying renewals. Industry experts,
however, reckon that people should enter health insurance schemes at an early age

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to enable insurance companies distribute their risks better. Currently, health

insurance penetration is minuscule in India. The total premium from health
insurance stood at Rs 4,970 crore in FY 08, marking a 55% growth over FY07.
Currently, there are only two standalone health insurance companies — Star Health
and Allied Insurance and Apollo DKV — offering pure health products. The
government is looking at raising the cap on foreign direct investment (FDI) in
insurance from 26% to 49%. It is also considering a minimum capital requirement
of Rs 50 crore for health insurance companies to make it attractive for new-
entrants. Consumers are expected to get a better deal in terms of pricing when
competition intensifies among these players.

Deduction U/s 80D for mediclaim premium available to individual

HUF and senior citizen

Deduction in respect of Medical Insurance Premium (Mediclaim) paid to keep in

force insurance by individual either on his own health or on the health of spouse,

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dependent parents and children or HUF on the health of any members of the
family. A Mediclaim policy is a must because should you fall sick or meet with an
accident, your medical bills could wipe out your savings.

Features of Mediclaim policy

1. Premium based on Age: - As in term insurance, the premium rates will vary
among the insurers and will also depend on your age. The older you are, the heftier
the premium. For instance, Mediclaim policy from General Insurance Corporation
has a fixed premium till 35 years and then it changes in 10-year slabs.

2. Who is it available to?

• Individual (resident or non resident, Indian Citizen or foreign citizen):- In

case an individual is taking the deduction, the medical insurance policy can
be taken in the name of any of the following: the taxpayer or the spouse,
parents or dependent children* of the taxpayer.
• HUF(Hindu undivided Family may be resident or non resident) :- In case a
HUF is taking the deduction, the medical insurance policy can be taken in
the name of any member of the family.

Note

• Dependent Children (i.e. legitimate or legally adopted children). Children

above 18 years, if employed, can not be covered. Male children, if not
employed, but a bonafide student can be covered upto age of 25 years.

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 MEDICLAIM INSURANCE

Female children, if not employed, can be covered until the time she is
married.
• Parents need bot be dependent on the Assessee.
• Parents of Individual or Spouse both are covered.

3. Entry Age: This insurance is available to a person between the age of 18 to 59

years. However, the Policy can be renewed upto the age of 80 years.

a) Children above the age of 3 months can be covered provided parents are covered
concurrently and suitable premium is paid. If the child above 18 years is employed
or if the girl child is married, he or she shall cease to be covered under the policy.
However male child can be covered upto the age of 25 years if he is a bonafide
regular student and fully dependent on primary insured. Female child can be
covered upto the time, she is unmarried.

b) If the insured has taken continuous Mediclaim insurance policy with us for at
least 5 years prior to attaining the age of 80 years the policy can be renewed
beyond the age of 80 upto the age of 90 years as a special case with the approval
of Regional Incharge on case to case basis. The premium chargeable shall be 10%
of the premium for 75-80 years age slabs for proposers above 85 and 20% of the
premium for 75-80 age slabs for proposers above 90.

c) No inclusion of family member during currency of policy is permissible except

for a new born child between the ages of 3 months to 6 months and newly married
spouse within 60 days of marriage. Otherwise inclusion of family member shall be
allowed only at the time of renewal. Prorata premium shall be charged for such
inclusion during the currency of the policy for the unexpired period.

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 MEDICLAIM INSURANCE

4. Sum Insured: Minimum sum insured shall be Rs 50,000/- and can be increased
in multiples of Rs 25,000/-upto Rs 5 lacs. The sum insured must be identical for
primary insured and the dependents. However, the children may be covered for
50% Sum Insured as per 4 above.

5. Payment of Mediclaim Premium out of taxable Income:- The amount must

have been paid using the taxpayer’s income chargeable to tax.

6. In addition to deduction u/s, 80C, 80CC and 80CCD,:- This is an

additional deduction available which do not include deduction u/s
80C, 80CCC and 80CCD for which overall limit is is Rs. 1,00,000.

7. Partly contribution: If part payment is done by you and part payment by the
parent, both can claim deduction to the extent of their contribution subject to
maximum allowed but amount should be paid directly to insurance company and
paid through mode other than by cash.

8. Mode of payment: The premium may be paid by any mode of payment other
than cash. Note prior to 1st April 2009, premium payment was required to be done
only by cheque. Credit card or other online payment mechanism where not
allowed. Now all payment modes except cash payment are accepted.

9. Which Mediclaim Premium is allowed? : - Mediclaim premium paid under

Medical insurance scheme of General Insurance Corporation approved by the
Central Government, or any other insurer approved by the Insurance Regulatory &
Development Authority (IRDA).

10. What is the amount of the deduction?

For Individual
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 MEDICLAIM INSURANCE

• Basic deduction: Mediclaim premium paid for Self, Spouse or dependant

children. Maximum deduction Rs 15,000. In case any of the persons
specified above is a senior citizen (i.e. 65 years or more as of end of the
year) and Mediclaim Insurance premium is paid for such senior citizen,
deduction amount is enhanced to Rs. 20,000.
• Additional deduction: Mediclaim premium paid for parents. Maximum
deduction Rs 15,000. In case any of the parents covered by the Mediclaim
policy is a senior citizen, deduction amount is enhanced to Rs. 20,000.

For HUF

• Mediclaim premium paid for any member of the HUF. Maximum deduction
Rs 15,000. In case any member of the HUF covered by the Mediclaim policy
is a senior citizen, deduction amount is enhanced to Rs. 20,000.

Senior citizen: means who is at least of 65 year of age or more at any time during
the previous year.

EXAMPLE- 1
1. An individual assessee pays (through any mode other than cash) during the
previous year medical insurance premium out of his taxable income, as under:

(i) Rs 12,000/- to keep in force an insurance policy on his health and on the health
of his wife and dependent children;

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 MEDICLAIM INSURANCE

(ii) Rs 17,000/- to keep in force an insurance policy on the health of his parents.

Under the new provisions he will be allowed a deduction of Rs 27,000/-

(Rs. 12,000/- + Rs. 15,000/-) if neither of his parents is a senior citizen. However,
if any of his parents is a senior citizen, he will be allowed a deduction of Rs
29,000/- (Rs.12,000/- + Rs.17,000/). Whether the parents are dependent or not, is
not a consideration for deciding the deduction under the new provisions.

Further, in the above example, if cost of insurance on the health of the parents is Rs
30,000/-, out of which Rs 17,000/- is paid (by any non-cash mode) by the son and
Rs 13,000/- by the father ( who is a senior citizen), out of their respective taxable
income, the son will get a deduction of Rs 17,000/- ( in addition to the deduction of
Rs 12,000/- for the medical insurance on self and family) and the father will get
adeduction of Rs 13,000/-.

EXAMPLE 2

An individual assessee pays through credit card during the previous year health
insurance premium as under:

1. Rs. 12,000 to keep in force an insurance policy on his health and on the
health of his wife and children
2. Rs. 17,000 to keep in force an insurance policy on the health of his parents.

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 MEDICLAIM INSURANCE

Under the proposed new provisions, he will be allowed a deduction of Rs. 27,000
(Rs. 12,000 + Rs. 15,000) if neither of his parents is a senior citizen. However, if
any of his parents is a senior citizen, he will be allowed a deduction of Rs. 29,000
(Rs. 12,000 + Rs. 17,000). Whether the parents are dependent or not, is not a
consideration for deciding the deduction under Section 80D.

EXAMPLE- 3

Question:- In the last budget, the finance minister announced exemptions for
Mediclaim charges paid for senior citizens. However, I am not sure if it has yet
been notified and effective. I need to take medical insurance for both my parents,
who are senior citizens. I would appreciate if you can let me know.

Answer:- Earlier Sec 80D deduction in respect of medical insurance premium was
Rs 15,000 for an individual and Rs 20,000 for a senior citizen. However, from this
year, if someone were to buy medical insurance for his parent/s, an additional
deduction of Rs 15,000 (over and above Rs 15,000) will be available. If such
parent/s were senior citizen, the additional deduction would be Rs 20,000. So a
person insuring himself, his spouse, children and parents could potentially get a
deduction of Rs 35,000. This provision is effective from 1.4.08.

Appendix: Section 80D of the Income Tax Act

Deduction in respect of medical insurance premium.

80D. (1) In computing the total income of an assessee, being an individual or a

Hindu undivided family, there shall be deducted such sum, as specified in sub-

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section (2) or sub-section (3), payment of which is made by any mode, other than
cash, in the previous year out of his income chargeable to tax.

(2) Where the assessee is an individual, the sum referred to in sub-section (1) shall
be the aggregate of the following, namely:

(a) the whole of the amount paid to effect or to keep in force an insurance on the
health of the assessee or his family as does not exceed in the aggregate fifteen
thousand rupees; and

(b) the whole of the amount paid to effect or to keep in force an insurance on the
health of the parent or parents of the assessee as does not exceed in the aggregate
fifteen thousand rupees.

Explanation.For the purposes of clause (a), family means the spouse and dependant
children of the assessee.

(3) Where the assessee is a Hindu undivided family, the sum referred to in sub-
section (1) shall be the whole of the amount paid to effect or to keep in force an
insurance on the health of any member of that Hindu undivided family as does not
exceed in the aggregate fifteen thousand rupees.

(4) Where the sum specified in clause (a) or clause (b) of sub-section (2) or in sub-
section (3) is paid to effect or keep in force an insurance on the health of any
person specified therein, and who is a senior citizen, the provisions of this section
shall have effect as if for the words fifteen thousand rupees, the words twenty
thousand rupees had been substituted.

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 MEDICLAIM INSURANCE

Explanation. For the purposes of this sub-section, senior citizen means an

individual resident in India who is of the age of sixty-five years or more at any
time during the relevant previous year.

(5) The insurance referred to in this section shall be in accordance with a

scheme made in this behalf by

(a) the General Insurance Corporation of India formed under section 9 of the
General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and approved
by the Central Government in this behalf; or

(b) any other insurer and approved by the Insurance Regulatory and Development
Authority established under sub-section (1) of section 3 of the Insurance
Regulatory and Development Authority Act, 1999 (41 of 1999).]

FREQUENTLY ASKED QUESTIONS

Q: Why do I need Health Insurance?

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A: The advent, of multi-specialty hospitals equipped with latest technology and

facilities with availability of costly but more effective and newer medicines, lead to
higher cost of treatment to be born by the patient. Health Insurance takes care of
the unforeseen hospitalization expenses, which you may require to incur in case of
any ailment or accident.

Q: What is Mediclaim Policy?

A: Mediclaim Policy is a hospitalization benefit policy, which takes care of

medical expenses incurred during Hospitalization / Domiciliary Hospitalization of
the Insured for treatment of illness / disease / injury contracted during the policy
period.

Pre-hospitalization medical expenses incurred 30 days before admission and Post-

hospitalization expenses 60 days after discharge from the hospital are also covered
under the policy but all such expenses should be consistent with the diagnosis for
which the patient was hospitalized.

Q: What are the medical expenses covered under Mediclaim policy?

A: The policy covers reimbursement of reasonable and necessary expenses for
treatment of illness / disease / injury contracted during the currency of the policy
like room rent, nursing care, Doctor’s fee, investigations charges, medicine
charges, operation theatre and like expenses, which fall within the available limit
up to the maximum of Sum Insured in any one period of insurance stated in the
policy schedule.

Q: What are the expenses not covered under Mediclaim policy?

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A: Mediclaim policy does not cover the following:

1. Expenses incurred on cost of Spectacles, Contact Lenses, Hearing Aids, Dental

Treatment unless requiring Hospitalization, Sterility, Intentional self injury and
other exclusion clauses mentioned in the policy.

2. Expenses incurred at Hospitals/Nursing Homes primarily for Diagnostic, X-Rays

or Laboratory examination, which are not consistent with or incidental to the
diagnosis and treatment of the positive existence of any ailment.
3. Ambulance charges, registration / admission / file charges, extra food charges,
attendant charges etc.

Q: Can my whole family be covered under a single Mediclaim policy?

A: Yes, your spouse, 2 dependent children & dependent parents can be covered and
family discount of 10% is available on the Premium paid for them.

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Q: What is the age limit for Mediclaim policy?

A: The Insurance is available to persons between age of 5 and 80 years. Children
between the age of 3 months and 5 years can be covered provided one or both
parents are covered concurrently.

Q: Can treatment be taken from any Hospital/ Nursing Home?

A: This claim is payable only when the treatment is taken in a
Hospital/Nursing Home in India which is either:

• Registered as a Hospital or Nursing Home with the local authorities, and is

under the supervision of a registered and qualified medical practitioner, OR
• Which complies with the minimum criteria:
• It has atleast 15 beds
• A fully equipped operation theatre of its own where surgical operations are
being carried out.
• A fully qualified nursing staff around the clock under its employment.
• Fully qualified doctor in-charge round the clock.

Q: Are all the systems of medicine covered under Mediclaim?

A: No, Mediclaim policy covers treatment taken from Allopathic, Homeopathic,
Ayurvedic and Unani systems of medicines but it does not cover Naturopathy
treatment

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Q: Does Mediclaim policy cover benefits for treatment taken outside India?
A: No but Mediclaim protection is available for illness / disease / injury contracted
anywhere in the World provided the treatment is taken in India.

Q: What happens when I have to undergo a treatment like dialysis and I am

discharged on the same day?
A: When treatment such as Dialysis, Chemotherapy, Radiotherapy etc. is taken in
the Hospital / Nursing Home and the insured is discharged the same day, the
treatment would be considered to be taken under Hospitalization section of the
policy and the claim would be admissible.

Q: Who can avail group Mediclaim Policy?

A: Any Homogeneous Group / Association / Institution / Corporate body provided
it has at least 100 persons to be covered and a Central Administration.

Q: What will the policy pay?

1. Actual hospitalization expenses, subject to a maximum of Rs. 15,000 to Rs.

3 lakhs, sum insured chosen at the inception of the policy.
2. Actual domiciliary hospitalization expenses limited to Rs.3,000 to Rs.
45,000, depending on the sum insured chosen at inception.
3. Cost of the health check up is reimbursable at the end of four continuous
claim free underwriting years.
4. The sum insured will be increased by 5% as cumulative bonus for every
claim free year.
5. Maternity expenses incurred in hospital or nursing home as in-patient,
subject to the limit specified or Rs. 50,000/- whichever is lower will be paid.
This will be given on payment of extra premium and policy being limited to

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cover maternity benefits. All terms, benefits and conditions of the cover are
subject to the definitions of various terms under the policy.

Q: What will the policy not pay?

Broadly, the policy will not pay claims under the following circumstances:

1. Domiciliary Hospitalization: Pre and post hospitalization treatment,

treatment of asthma, chronic nephritis and nephritis syndrome, gastro-
enteritis, diabetes mellitus, hypertension, influenza, cough and cold, all
psychiatric disorders, tonsillitis and upper respiratory tract infection and
rheumatism or any treatment relating to illness or disease already in
existence at the time of proposal.
2. Any disease or injury during the first 30 days of commencement of the
policy (accidental injury is not exclusion).
3. In the first year of cover, cataract, benign prostatic hypertrophy,
hysterectomy, hernia, hydrocoele, congenital internal diseases, fistula in an,
piles, sinusitis and related disorders or any pre-existing disease or illness,
that is not covered during renewal also.
4. Vaccination, inoculation, circumcision or cosmetic treatment, plastic
surgery, dental treatment, unless requiring hospitalization necessitated due to
the accident or as a part of any illness.
5. General debility conditions, sterility, venereal diseases, intentional self-
injury, use of intoxicants.
6. Any treatment related to pregnancy, childbirth and voluntary medical
termination of pregnancy during the first 12 weeks of pregnancy.

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7. Cost of spectacles, contact lenses and hearing aids.

Case Studies

Case study 1

Claims not allowed in some case

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Case Study - 1 Claim rejected by New India Assurance on the grounds of exclusion
of cancer in the insurance policy In 1998, Mrs. Laxmi Subramanyam's had
carcinoma of left breast and she got treated. In 2001 both husband and wife took a
Mediclaim policy with New India Assurance. The policy excluded carcinoma of
left breast because it was pre- existing. Later, she was diagnosed with carcinoma of
right breast, which was not a recurrence, according to the doctor of Tata Memorial
Hospital, Mumbai, but a new case of carcinoma, so she had a full treatment at Tata
Memorial Hospital. He has submitted his claim of Rs. 80,000 to the Third Party
Administrator of New India Assurance Co. Ltd., i.e., Raksha TPA Private Ltd. but
they rejected the claim on the grounds thats he had claimed for the left breast,
which was an exclusion in the Policy. When he sent his grievance to CNBC Watch,
then they got in touch with the insurance company and the company agreed to
accept claim. Prior to this Mr. K S Subramanyam had written the following letter
to New India Assurance Co. Ltd. My wife and me are covered with New India
Assurance Co. Ltd. for Mediclaim since May 2001. This is the fourth consecutive
year we are insured, with no claims till recently. My wife had cancer on her left
breast in 1993, was operated upon at Tata Memorial Hospital, had a full course of
chemotherapy (in India & UAE), and was having regular check-ups at UAE till
April 2001 (when we returned to India for good). There are two letters from the
hospital where she was undergoing chemotherapy and regular check-ups, to the
effect that as of December1998, she remains a symptomatic and free of any
detectable disease. These letters were attached at the time of applying for the first
Mediclaim Policy in May 2001. Still, they excluded carcinoma of the left breast
and its complication in the Policy, and I had no other alternative but to agree, since
only the four Govt. Insurance Companies offered Mediclaim. Now in December
2004, she had a small lump in her right breast and diagnosis proved it was in the
very early stage of carcinoma. She had the lump removed at Tata Memorial
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Hospital, and as per their recommendation, underwent a full course of

radiotherapy. When I submitted my claim to the Third Party Administrator of New
India Assurance Co. Ltd., i.e., Raksha TPA Private Ltd., in February 2005, first
they rejected the claim on the grounds that I have claimed for the left breast, which
is exclusion in the Policy. This means that they have not scrutinized the claim
properly, and the intention was very clear: not to admit the claim.
When I wrote to them saying that the claim is not for the left breast, but the right
one, now I am given to understand that they are not taking any action, as,
according to them, once a person has cancer,then they don't admit any claim for the
future, even if it not a recurrence. I have a letter issued by the Chief of Surgical
Oncology, Tata Memorial Hospital, clearly saying that this case is a new one and
not a recurrence of the old case of 1993. Nobody gives me a proper reply at Raksha
TPA, and every time they say that the file is "put up for re-processing," but nothing
is happening. This seems just harassing the policyholder with no intention of
settling the claim. Since I have three letters (two from Oncology Consultants in
UAE stating that she was free of any Detectable disease as far back as 1998, and
the letter from Chief of Surgery of Tata Memorial Hospital, stating that this case is
a new one and not a recurrence of the old case), I feel that Raksha TPA may not be
right in rejecting my claim. I shall be thankful to have your advice on how I should
proceed, in getting my claim admitted and settled. Regards, K. S. Subramanyam
Response by the company In cases of cancer the chances of recurrence is 8% to
10% higher but while taking the policy, only cancerof left breast was excluded.
Moreover, the doctor at Tata Memorial Hospital has certified that right breast
cancer was a fresh case of cancer, hence we grant their claim of Rs 80,000.

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Case Study – 2

Deficiency in service

Deficiency in Service Mr. Devinderpal Singh, a resident of Jamalpur, had taken a

Mediclaim policy from the company for his 10-year-old son Raja. He was insured
for Rs 20,000 for the period from October 13, 1998 to October 12, 1999. The
complainant stated before the forum that in the first week of November, 1998, his
son, felt severe pain in his abdomen. After the medical examination, a stone was
found in his kidney. Thereafter, Raja was taken to the Sidhu Hospital for the
treatment and there he underwent treatment in November 1998. The complainant
stated that he had spent huge amount on his treatment but could not preserve all the
bills and submitted the bills for Rs 18,500. The company pleaded that the said
policy was obtained after concealment of the precious disease as the disease was
pre-existing at the time of taking the policy as such the claim was not payable. The
company further stated that Dr Tarsem Lal Gupta who was referred the case for the
medical opinion, said Raja was suffering from pre-existing disease at the time of
taking the insurance policy and as the claim fell within the exclusion clause No.
401 of the policy. The company maintained that the claim was rightly repudiated.
The forum observed, "It appears as if the father of Raja had knowledge of the
disease and as such he took the policy to meet the expenses of the treatment. The
forum stated that the disease was pre-existing and was not covered under the
policy. The forum further added that the company had intimated the complainant
that the claim lodged was considered as 'no claim' as per the rules of the policy.
The forum held that there was a clear deficiency on the part of the company for not
intimating the complainant. CDRF asks OIC to make full payment of Mediclaim

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Case Study 3

3. Consumer Forum Cases (Some Judgments)

The Hindustan Times Chandigarh dt 31st march'2010 .carried the details of the
case; Mr. Ahuja is having Health Insurance from Royal Sundaram. He was
diagnosed with CAD angina, for which he had to undergo Coronary Angiography
and Angioplasty, which was informed to company with proper procedure. But
company rejected the claim on the ground that complainant was known case of
Hypertension since 2000. On explanation by the customer company replied that the
complainant concealed the fact that he suffered from Heart disease along with
Hypertension since the year 2000, which is specifically excluded under policy
terms. Consumer Forum judgment: It cannot be said if the complainant was
suffering from Hypertension nor can it be said that he concealed the disease at the
time of purchasing the policy.” Needless to mention that CAD is totally different
disease than hypertension. The claim for CAD therefore cannot be repudiated on
the ground that the complainant was suffering from Hypertension. We appreciate
this judgment as it has been customary for the insurance companies to reject the
claim on the basis by taking the lea of hypertension.

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