Your Ultimate Guide to Cashless Health Insurance

A cashless health insurance policy ensures that you get the necessary medical treatment without the hassle of paying out of pocket. Instead of scrambling to arrange funds or having to borrow, a cashless health insurance facility helps you handle a medical emergency without difficulty.

In this guide, I walk you through everything you need to know about cashless health insurance-how it works, its benefits, and tips for choosing the best policy for you.

Whether you are new to health insurance or looking to upgrade your current plan, understanding the advantages of cashless health insurance can provide peace of mind and financial security during challenging times.

What Is a Cashless Health Insurance Plan?

Cashless health insurance enables policyholders to receive hospital treatment without immediate out-of-pocket payments. The insurance company covers the medical expenses directly following treatment completion by choosing a hospital within the insurer's network. All health insurance providers in India have tie-ups with certain hospitals and healthcare facilities to offer this cashless treatment option.

Earlier this year, the General Insurance Council, in collaboration with general and health insurance companies, introduced the 'Cashless Everywhere' initiative.  With this initiative, policyholders are empowered to select any hospital they prefer for medical treatment and are assured that a cashless claim settlement will be available, irrespective of whether the chosen hospital is within the insurer's network.

This represents a transformative shift in the landscape of health insurance, prioritising the needs and preferences of policyholders while ensuring seamless access to high-quality healthcare services.

[Read: How 'Cashless Everywhere' Initiative Empowers Policyholders]

You see, the General Insurance Council (GIC) and the Insurance Regulatory and Development Authority of India (IRDAI) have teamed up to tackle a longstanding issue faced by policyholders: the limited accessibility of cashless medical services.

Thus now, cashless health insurance claims will not just be settled at network hospitals or healthcare facilities but also non-network hospitals and healthcare facilities without the stress of upfront payments for you.

[ Read: A Comprehensive Guide to Buy a Health Insurance Policy in India]

Before we delve into how cashless health insurance works, here are some vital terms related to health insurance you must know...

Network Hospitals:

Insurance companies partner with specific hospitals and healthcare facilities, known as network hospitals, which agree to offer cashless services to policyholders. These hospitals are nationwide and are vetted hospitals after background checks done by the insurance company. The cashless health insurance option is available at these network hospitals, allowing policyholders to benefit from this facility when admitted to one of these hospitals.

Non-Network Hospitals:

These are hospitals that are outside the list of specific hospitals and healthcare facilities that the insurer usually has a tie-up with. The cashless health insurance facility at non-network hospitals is available on intimation as per GIC guidelines.

Pre-authorisation:

The hospital collects the policyholder's details and contacts the insurance company for pre-authorisation. This step involves verifying the treatment required and its coverage under the policy.

Approval:

The insurance company reviews the treatment request and approves the amount covered by the policy, informing the hospital.

Settlement:

The insurance company settles the bill directly with the hospital based on the approved amount. The policyholder may need to pay for expenses not covered by the policy, such as deductibles, co-payments, or non-covered items.

Now coming to the question: How Does Cashless Health Insurance Work?

As per the guidelines issued by the General Insurance Council, the following conditions ought to be met to qualify for the cashless health insurance facility.

• For elective procedures, policyholders must inform the insurance company at least 48 hours before admission.

• In the case of emergency treatment, notification to the insurer should occur within 48 hours of admission.

• The claim must adhere to the terms of the policy, and the cashless facility should align with the operating guidelines of the insurance company.

The Initiation of Cashless Health Insurance Claim

Most hospitals have dedicated insurance claim settlement desks where you can present your policy or an e-card issued by the insurance company. Proof of the policy is necessary to opt for a cashless claim.

Verification and Pre-authorisation

The hospital verifies the policy details and submits a pre-authorisation form to the insurer. Thereafter the insurance company or their Third-Party administrators (TPAs) authenticate the policy details and process the claim according to the policy terms. Once the insurer is notified and the hospital submits the pre-authorisation form, the insurer coordinates with the hospital and informs the policyholder upon claim acceptance.

Pre-planning for Scheduled Treatments

For pre-planned hospitalisations, ideally, you should notify the insurer in advance about the type of treatment or surgery, particularly when you are doing it at a non-network hospital or healthcare facility. This intimation could be done via the toll-free number, email ID of the insurer or by sending a letter to their registered address.

In Case of an Emergency Claim

In an unforeseen medical emergency, the policyholder or their family members must promptly inform the insurance company by calling the toll-free number or via email id. Immediate notification post-hospitalisation is crucial if prior notification is not possible.

Cashless Claim

Upon the requisite process duly followed, the health insurance claim will be settled directly between the hospital and the insurance company. This offers a seamless experience to the policyholder and/or relatives handling this task. The policyholder or his/her relative does not have to pay anything out-of-pocket, except for any applicable deductibles. In other words, it saves you, the policyholder and/or relative from the rigmarole of the lengthy reimbursement processes.

The Role of Third-Party Administrator (TPA) v/s In-house Claim Settlement:

Third-Party Administrator (TPA)

Several insurers collaborate with Third-Party Administrators (TPAs) authorised by the Insurance Regulatory and Development Authority of India (IRDAI). TPAs serve as intermediaries, streamlining the claim settlement process by handling documentation. However, they do not have the authority to approve or deny claims, as this responsibility lies with the insurer.

There are over 25 licensed TPAs in India, primarily assisting public sector health insurance companies. TPAs often feature extensive networks of hospitals, facilitating the settlement of cashless claims.

In-House Claim Settlement Department

Many insurers, particularly private ones, now have their in-house claim settlement departments. With no intermediary involved, the process is seamless and expedited, directly overseen by the decision-makers. This provides the policyholder with a single point of contact, enhancing convenience throughout the claim settlement process.

What Are the Benefits of Cashless Health Insurance?

The "Cashless Everywhere" has adduced several benefits for policyholders...

1) Reduced financial burden on the policyholder and relatives due to streamlined and seamless claims processes

2) Saved policyholders the rigmarole encountered in the case of reimbursement

3) Improved access to healthcare services, even at non-network hospitals

4) One gets immediate access to treatment at hospitals and healthcare facilities

5) Enhanced freedom of choice in choosing hospitals for treatment (nationwide), thus offering convenience and flexibility

6) Has made health insurance claim settlement easier and less stressful

In short, it has enhanced customer experience.

Moreover, cashless health insurance fosters trust in the insurance system and potentially eliminates fraud that could take place in the case of reimbursement cases.

In other words, cashless health insurance is a win-win for all -- the policyholder, the insurance company, and healthcare providers.

In this day and age when healthcare is becoming expensive and we may be vulnerable to some diseases, make sure to have optimal or respectable health insurance coverage. The premium paid for a health insurance policy is eligible for tax exemptions under Section 80D of the Income Tax Act.

[Read: The Tax Benefits of Insurance You Need to Know About]

This means you can reduce your taxable income by the amount you pay in premiums, making cashless health insurance a wise choice. These tax benefits apply whether you are purchasing insurance for yourself, your family, or senior citizens, providing additional financial relief and incentives to invest in health insurance.

Here Are the Factors to Consider When Choosing a Health Insurance Policy...

1. Coverage Amount

Ensure that the sum insured coverage for the health insurance policy is adequate to meet your and your family's medical needs during emergencies. You must have a respectable sum of health insurance coverage.

2. Review the List of Network Hospitals

If the insurer has higher and reputed hospitals and healthcare facilities in their network, it is always beneficial for cashless health insurance claims. It is advisable to opt for an insurer with network hospitals conveniently located near your area for medical emergencies.

3. Co-payment and Sub-limits

Pay attention to co-payment percentages and sub-limit clauses. Co-payment refers to the percentage of the claim that the policyholder is responsible for, which is not covered by the insurance company.

4. Waiting Period for Pre-existing Illnesses

Note that cashless facilities for pre-existing illnesses or treatments are typically applicable only after the waiting period for pre-existing illnesses is completed. Choose a policy with the shortest waiting period for optimal coverage.

5. Check the List of Exclusions

Exclusions are medical treatments and situations that insurers do not cover. Before selecting a health plan, carefully review the list of exclusions based on your family's medical history.

6. Day Care Procedures Coverage

Cashless health insurance policies provide coverage for various daycare procedures. Prioritise plans that offer a wide range of daycare treatments to ensure comprehensive coverage for your family's healthcare needs.

[Also Read: 10 Mistakes to Avoid When Buying Health Insurance for Senior Citizens]

Note, that the adoption of the 'Cashless Everywhere' initiative has been slow due to low consumer awareness of cashless hospital facilities, the lack of standardised rates for treatments and medical procedures across Indian hospitals, and the slow implementation by medical institutions. This facility was introduced earlier this year by the GIC and IRDA. Nevertheless, choose a health insurance policy sensibly.

[Download Our Free Guide Now: All You Need to Know About Top-up Health Insurance Plans]

To conclude:

Safeguarding the health and well-being of your family is a paramount responsibility that should never be taken lightly. Cashless health insurance emerges as a crucial facility to reduce financial stress in case of medical emergencies and ensures that the investments you may be making to fulfil other financial goals are untouched or undisturbed, whereby you are on track to achieve those envisioned goals.

[Read: How to Make Multiple Health Insurance Claims]

Keep in mind, that by selecting the appropriate policy, you not only secure your health in case of emergency, but it also paves the way for your happiness and prosperity in the years ahead.

Be thoughtful in your approach.

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Disclaimer: This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes. Use of this information is at the user's own risk. The user must make his own investment decisions based on his specific investment objective and financial position and use such independent advisors as he believes necessary.