Mediclaim Vs Health Insurance. Which is better? Which one to choose?
For the last few years, there has been tremendous growth in the mediclaim or health insurance business across India. This has primarily been possible due to rapid public awareness in the electronic and print media and also increase in financial literacy amongst the public.
Further, the substantial rise in the cost of medical treatment in recent past has lead to many Corporates, Public Sector Undertakings and other Government organisations choosing this group mediclaim insurance or health protection plans.
But very often you can see that people use the terms mediclaim and health insurance interchangeably. But actually they are different from each other.
Though primarily it appears to be same, there is a very substantial difference between mediclaim and health insurance. Indeed there is a confusion between these two terms.
So, in this post, you would come to know the difference between Mediclaim and Health Insurance. The battle of Mediclaim Vs Health Insurance– Which is the winner? Which one is better and why?
Before going into the detailed comparison on Mediclaim Vs Health Insurance first, let us understand what is mediclaim and how it works and secondly, what is health insurance?
What is Mediclaim? How does it work?
A mediclaim is also known as mediclaim insurance policy. A mediclaim is a health protection insurance to mitigate the risk of incurring the high cost for hospitalisation of the insured person.
The insurance company enters into an agreement with the insured person to pay for the cost of hospitalisation up to a certain limit called the Sum Assured on receiving a certain amount as premium for each and every year.
Therefore, the primary condition of a mediclaim insurance is one needs to get hospitalised. Though it has got some exceptions.
As a general practice, the mediclaim insurance compensates for the amount incurred during one’s hospitalisation and treatment of pre-specified diseases or accidents.
So, mediclaim policy is limited to hospitalisation costs. Also, it compensates for the treatment of some pre-specified diseases. A mediclaim policy is of two types a) Individual mediclaim policy and b) Family floater mediclaim policy.
Generally, in terms of paying for the hospitalisation cost, there are two methods namely Cashless mediclaim and Expense reimbursement.
Cashless Mediclaim policy: In this policy, the insured person is not required to pay any amount to the hospital directly for his or her or their family members treatment cost. So, this is called a cashless mediclaim insurance policy.
Usually, within 24 to 48 hours of hospitalisation, he is required to intimate the enlisted Third Party Administrator(T.P.A) of his mediclaim insurance company regarding such hospitalisation.
The insurance company settles the hospitalisation cost through their enlisted T.P.A and pay the approved amount directly to the hospital only.
Expense reimbursement: Due to this feature this policy is called an expense reimbursement policy. In this case, the insured person is required to pay the cost of hospitalisation out of his own pocket. Thereafter, he may place the claim for expense reimbursement within 24 to 48 hours to the mediclaim company through the TPA.
Features of Mediclaim Insurance Policy:
- A mediclaim policy is meant for the cost of hospitalisation, accident and pre-specified diseases;
- Further, this mediclaim coverage is limited to the sum insured or actual cost of hospitalisation whichever is lower;
- The premium amount depends on various factors such as sum assured, age of the insured person, the geographical location of the coverage and various addons;
- The annual premium might increase substantially with the increase in age and for any existing ailments;
- The maximum sum assured for mediclaim does not exceed Rs.5 lakh in a year;
- The premium paid for the mediclaim policy taken for self/spouse and child is eligible for tax deduction U/S 80D of the Income Tax Act 1961.
What is Health Insurance? How Does Health Insurance Work?
Health insurance is a comprehensive all-round health protection plan that is meant for meeting one’s cost of treatment. Health insurance is a broader package, that considers every medical emergency, unlike the mediclaim policy.
Health insurance usually pays for the pre and post hospitalisation cost, ambulance cost, Doctor’s fees, medicine cost, diagnosis charges, lab test charges and other incidental charges.
The most important feature of health insurance is that it covers more than 30 critical illnesses, on diagnosis any one of these, the insured person would receive the total sum assured amount and not only the hospitalization cost.
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Therefore, health insurance is an all-round and complete protection plan. It covers a wide range of medical facilities including some customised options such as Personal accidental cover, critical illness cover, pre-specified existing ailments, accidental disability coverage, maternity coverage.
Under health insurance there is a compulsory waiting period. During this waiting period, no claim is granted to the insured person.
The premium cost for health insurance is much higher than that of the mediclaim policy due to its extensive coverages.
Features of Health Insurance Policy:
- Health insurance is a comprehensive health protection plan with extensive coverages;
- It approves not only the hospitalisation costs but also pre and post hospitalisation cost, ambulance charges, medicine cost, doctor’s fees, lab test charges;
- It offers flexibility in terms of adding additional benefits such as critical illnesses, personal accidental coverages, maternity benefits, accidental disability coverage;
- On diagnosis of any specified 30 critical illnesses, the insured person would receive the full sum assured amount irrespective of the cost of hospitalisation;
- Health insurance offers cashless treatment in its network hospitals across the country;
- It has a compulsory waiting period for some pre-existing illnesses;
- The most interesting feature of health insurance is No Claim Bonus(N.C.B). It means if in a year there is no claim from the insured person, next year he would get a bonus either a reduced premium or enhanced sum assured;
- The premium is expensive due to its all-round coverages;
- The premium paid for the mediclaim policy taken for self/spouse and child is eligible for tax deduction U/S 80D of the Income Tax Act 1961.
What is the Difference Between Mediclaim and Health Insurance Policy? Which One To Choose?
While discussing the difference between Health insurance Vs Mediclaim, we should keep in mind that they are different from each other due to their features, flexibility and coverages.
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- A mediclaim is health protection against the risk of incurring a high cost for hospitalisation.
- The primary requirement is hospitalisation
- Mediclaim policy is limited to hospitalisation costs
- Mediclaim coverage is limited to the sum insured or actual cost of hospitalisation whichever is lower
- Premium amount depends on various factors such as sum assured, age of the insured person, existing diseases
- Premium increases with the increased age
- There is no kind of No Claim Bonus in mediclaim
- Annual premium is very much affordable
- Does not pay for critical illnesses
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- Health insurance is a comprehensive all-round health protection plan.
- Hospitalisation is not the sole requirement
- It covers pre and post hospitalisation cost, doctor’s fees, ambulance cost and lab charges
- In some cases, the full sum assured is paid irrespective of hospital cost
- Premium amount depends on types of coverages, add-ons benefits and existing ailments
- Premium does not increase with age
- No Claim Bonus is the primary feature
- Annual premium is quite expensive
- If critical illness coverage is taken,on diagnosis it pays full sum assured
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How is health insurance policy different from Mediclaim policy?
The objective of both the insurance is to protect an insured person from incurring high cost in hospitals. But a health insurance policy takes into consideration a wide range of medical benefits and therefore, it is a more comprehensive one.
On the other hand, mediclaim insurance is more concerned about the hospitalisation cost. It covers only the basic needs of health care with great affordability in terms of the premium cost.
Mediclaim neither permits pre and post hospitalisation cost nor any incidental costs associated with hospitalisation such as ambulance cost, doctor’s fees, medicine cost, diagnosis charges, unlike health insurance.
So you can see that health insurance is different from a mediclaim policy in terms of coverages only. Health insurance allows the incorporation of more than 30 critical illness in ints coverage with additional premium payment.
However, both the insurance allows payment for some pre-existing diseases with some waiting period for health insurance.
The premium amount for both the insurance is admissible for tax deduction U/S 80D of the Income Tax Act,1961.
After considering the difference between a Mediclaim and Health Insurance, if one has to choose between the two, it must be based on his age, the status of existing illnesses, premium amount and the coverages he wants to take.
Therefore, it is quite difficult to declare a clear winner for the battle between Mediclaim Vs Health Insurance.
However, health insurance is a complete solution for one’s health protection. It takes into consideration a variety of medical facilities that is not possible for mediclaim policies.
But the premium cost in case of health insurance is quite expensive as compared to mediclaim policies. So one needs to choose as per his needs.
