Explanation of Common Health Insurance Terminologies
To make the right choice, one needs to have complete and correct information first. Many people seeking health insurance, couldn’t make prudent decisions due to a lack of knowledge about different clauses of the plan. Even if someone tries to go through the policy wording, he or she might not be able to understand the plan due to confusing terminologies related to health plans.
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Types of Health Insurance terminologies
However, the following is a quick guide to some health insurance jargon to help people understand and make informed decisions when it comes to choosing health policies.
1. Pre-Existing Illness
Basically, pre-existing illnesses are comprised of diseases that a health insurance-seeking individual is already suffering from while buying a health insurance plan. In the past, such ailments were not used to be covered under the plan, but nowadays insurers have started covering them after the completion of a particular period. It is highly suggested that policyholders should mention their pre-existing ailments while purchasing a policy, otherwise it may lead them to face rejection at the time of claim settlement.
2. Waiting Period
It is the tenure for which policyholders are required to wait before getting their pre-existing diseases health insurance covered under the health insurance plan. The time for waiting period of health insurance begins from the moment an individual has purchased a medical policy. This period may be of around 2 to 4 years, which may vary from insurer to insurer and plan to plan. Going through any medical treatment for a pre-existing ailment, before the completion of a waiting period, may result in the rejection of a claim application about the medical expenses incurred for that procedure.
3. Co-Payment
As per the functionality of health insurance plans, they are there to reimburse the hospitalization and medical expenses for which they charge a specific amount of premiums from the policyholders. However, if some people can’t afford the premium amount, there is a health insurance co-payment clause for them. As per this feature, the policyholder will have to pay a share of the hospital bill and the rest will be paid by the insurer. Under this provision, the amount of premium is reduced but the sum insured remains the same. Although there lies no compulsion that this feature will be present in every plan. But it could be a mandatory element in the senior citizen plans, as they are too costly to afford.
4. Portability
Sometimes, policyholders are satisfied with the cost and features of the health plans, but not with the services of the insurers. In such cases, if a person decides to opt for a new policy, then he or she might lose time-bound features in the new plan, such as the waiting period and so on. The concept of health insurance portability is introduced to deal with such conditions. With this feature, any policyholder can get his or her health insurance plan transferred to another insurance company without any hassle or losing any benefits.
5. Grace Period
It refers to a particular period of 15 days after the due date, to pay the renewal premium. It allows the policyholder to make the payment of the premium and to continue the plan without fail and without losing the time-bound benefits, such as the waiting period, etc. Breaching the grace period will result in the end of policy coverage. However, insurance coverage benefits cannot be availed during the health insurance grace period. To avoid such problems, you must keep renewing your policy on time.
6. Free Look Period
Even after purchasing the policy, if a policyholder wants to cancel it, he or she can go for it. To execute this process a certain period is allocated, which is termed as Free Look Period, within which the policyholders are allowed to apply for cancellation and reimbursement for the health insurance policy bought by them. However, the free look period, i.e. 15 day period, starts from the day the insured person receives the documents of the plan, through courier or so, and not from the date of issuance. In addition to these, this feature is only applicable to the initial year of the policy when it is purchased, not in the later years, i.e., post renewal.
7. Deductible
The term deductible works quite similarly to the co-payment feature. In the case of the latter, a particular percentage of the hospital cost is borne by the policyholder while in the former case, a certain amount is fixed, which needs to be shared by the health insurance policyholder. Thus, the health insurance deductible is an expense-sharing instrument under a health plan that makes the policyholder responsible for sharing an amount out of the medical bill, which means before the insurance company pays the amount of a claim, the deductible amount should be subtracted from it.
8. Reasonable charges
Sometimes, a word called reasonable charges is seen mentioned in policy documents, medical bills, etc. The insurance providing firms generally prefer to reimburse the reasonably charged bills or claims, instead of exorbitant ones. Some insurers mention in their policy details that they are only interested in settling the claims about reasonable changes. The reasonability of the expenses can only be determined by the geographical region of the medical services availed and claimed for. As the medical expenses vary from hospital to hospital and city to city, therefore, the reasonable charges may also differ.
Conclusion
Going through these health insurance-related terminologies thoroughly will help the policyholders understand the policy documents correctly and adequately. This doesn’t merely help in lowering the mistakes in choosing the best health plans but also provides assistance in selecting a better health plan, availing the health insurance policy, and making the claim settlement without any hassle.
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