Top Up in Health Insurance

A top-up health insurance plan is an additional health insurance policy that offers coverage after a specified deductible amount has been met. The deductible refers to the amount of money one has to pay using their current health insurance policy. It also means bearing medical expenses on your own until the top-up insurance coverage begins.

Suppose you have:

• Base health insurance: ₹5 lakh
• Top-up cover: ₹20 lakh
• Deductible: ₹5 lakh

In this case, the top-up policy will not pay any claim until the first ₹5 lakh of medical expenses has been covered. If you are hospitalised and incur a bill of ₹8 lakh, your base health insurance policy will cover the first ₹5 lakh. Once the deductible limit of ₹5 lakh is exhausted, the top-up policy will cover the remaining ₹3 lakh, subject to policy terms and conditions.

A top-up insurance plan is designed for people who already have a health insurance policy and want additional coverage. It provides a higher sum insured at a lower premium compared to buying a separate high-coverage standalone policy.

In a top-up health insurance plan, the deductible is the most crucial concept. A deductible serves as a limit. The top-up cover is only used when the medical bills surpass the deductible amount.

Deductible can be covered by:

• Current personal health insurance.
• Family floater policy
• Group health insurance is offered by employers.
• Out-of-pocket payment

Most individuals think that top-up and super top-up plans are the same. But the difference in the application of the deductible is quite noteworthy.

When seeking higher health coverage, policyholders often face a choice between enhancing their existing policy's sum insured and buying a top-up health insurance plan. The response is based on excellence, affordability, and claim expectations.

A top-up insurance strategy provides a practical way for families to secure health coverage of ₹25 lakh or more without a significant increase in premiums.

The coverage of most insurers is similar to the regular indemnity health insurance policies after the deductible limit is reached. The coverage depends on the insurer, although most top-up plans cover:

• In-Patient Hospitalisation: Covers reasonable costs incurred in the process of hospitalisation and treatment.
• Room and ICU Charges: Room rent, ICU and other hospital expenses.
• Surgical Procedures: Covers the cost of medically necessary surgeries and procedures.
• Doctor Consultations: This covers consultation fees as long as the insured is hospitalised.
• Nursing Care: Includes nursing and inpatient care expenses in treatment.
• Pre-Hospitalisation Expenses: Covers the qualified medical expenses before admission.
• Post-Hospitalisation Expenses: The cost of follow-up treatment after discharge.
• Day-Care Treatments: Includes those treatments that do not involve a 24-hospital stay.
• Ambulance Services: Covers ambulance expenses within policy limits.
• Organ Donor Expenses: This covers the costs that relate to eligible organ donor expenses within the policy terms.
• Modern Treatments: Covers specified advanced medical treatments.
• Covered Illnesses and Injuries: Covers qualified illnesses, diseases, and accidental injuries.

Similar to regular health insurance cover, top-up plans have exclusions. One must always read through the policy wording before making a purchase:

• Cosmetic Procedures: Medical procedures that are done to improve appearance are not included.
• Experimental Treatments: Treatments that are still being tested or have not yet been approved are generally not covered by health insurance policies.
• Infertility Treatment: Fertility procedures are typically not covered.
• Self-Inflicted Injuries: Intentional Injuries are not covered.
• Substance Abuse Treatment: The claims involving alcohol or drug abuse can be excluded.
• Non-Medical Expenses: Non-medical administrative and consumable costs are not counted as medical treatment.
• Insufficient Hospitalisation: Claims that do not comply with the policy hospitalisation requirements might be rejected.
• Waiting Period Claims: Treatments during applicable waiting periods are generally not covered.
• Pre-Existing Diseases: There are some pre-existing conditions that are not covered until one has served the waiting periods.
• Alternative Treatments: This may exclude treatments that are not included in policy terms.

A top-up health insurance plan is not essential for every policyholder, but it can be a valuable addition for those who want greater financial protection against rising medical costs. Understanding who can benefit most from a top-up plan can help you make a more informed insurance decision.

Another best use of a top-up plan is to make the deductible match the group health insurance you have with your employer.

Example:

• Employer cover: ₹5 lakh
• Personal top-up: ₹20 lakh
• Deductible: ₹5 lakh

In case of a medical bill amounting to 12 lakh:

• Employer cover pays ₹5 lakh
• Top-up policy pays ₹7 lakh

The process of claim is determined by the type of treatment: cashless or reimbursement.

To facilitate a hassle-free process of claims, the policyholders are advised to have the following documents handy when making a claim under a top-up health insurance plan:

• Properly completed claim form.
• Insurance policy document of health insurance.
• Health card/ policy ID.
• Hospital discharge summary
• Doctor's prescriptions
• Original bills and receipts of the hospital.
• Diagnostic test reports
• Pharmacy bills
• FIR or medico-legal documents (where possible)
• Letter of settlement of claims by the Base insurer.
• KYC documents (if required)
• Cancelled cheques/bank details to claim reimbursement.

Choosing the appropriate health insurance top-up plan does not just involve comparing premiums. The plan should support your current health insurance cover and future healthcare requirements.

• Match the Deductible to Your Base Policy: The deductible is preferably equivalent to your current sum insured. This assists in preventing coverage loopholes and unnecessary premium prices.
• Prefer Super Top-Up Over Standard Top-Up: To a majority of families, a super top-up is more protective as it considers cumulative claims within the policy year.
• Check the Waiting Period: Top-up plans typically have distinct waiting periods on pre-existing diseases and particular illnesses.
• Evaluate Network Hospitals: A big list of network hospitals enhances access to cashless treatment facilities.
• Review Room Rent and Sub-Limits: Certain plans can have restrictions on room rent or disease-specific restrictions.
• Consider Family Requirements: Families whose parents are aged or those with chronic illnesses can use increased coverage limits.
• Compare Claim Settlement Performance: Selecting an insurer that has an excellent claim settlement history can enhance the overall claims experience.
• Assess Coverage Amount: Medical inflation is growing at a high rate. According to many professionals, a combined health cover of ₹20-₹50 lakh is recommended, particularly in the metropolitan cities.

A large number of buyers do not understand how top up insurance plans work. The following are some of the mistakes to avoid in order to maximise the benefits of your coverage.

The amount paid as premiums on a health insurance top-up plan is usually subject to tax deductions under Section 80D of the Income Tax Act, subject to the tax regulation. Taxpayers are allowed to deduct a maximum amount of ₹25,000 in any given year on premiums paid on their behalf, spouse and dependent children.

There is also an additional deduction of up to ₹50,000 on premiums for senior citizen parents. Consequently, taxpayers can deduct a maximum of ₹75,000, which includes the premiums paid to eligible top-up and super top-up health insurance plans.

Understanding the concept of top-up coverage can enable policyholders to maximise their health insurance cover at a reduced cost. A top up health insurance is an addition to the base premium that is provided after the deductible is met. Thus, a top-up health insurance is an effective option for increasing the overall cover. It may be especially useful to those who have limited base coverage, employer-sponsored plans or have greater healthcare requirements. Consider the deductible, waiting periods, the coverage, and the claim process before buying a plan.