Rising healthcare costs and inadequate cover for out-patient treatment can erode your savings.

Do you really need health insurance to pay for your treatment? Agreed, healthcare costs are going through the roof and there are gaps in your health plan since even a comprehensive policy will not pay for a tooth filling or a broken finger. Besides, the cost of dental treatment, diagnostic tests, periodic doctor consultation, preventive check-ups, medicines and medical equipment, which are usually out-of-the-pocket expenses, can burn a hole in your pocket. Still, are you willing to pay 20,000 more every year towards your health policy to get an additional OPD (out-patient department) benefit of just 17,000? This is where health cards come in as a better alternative. Here's how.

Insurance is expensive

Apollo Munich's Maxima Complete health plan covers both hospitalisation and OPD treatment costs on a cashless basis in network hospitals and clinics. This plan also offers coverage for pharmacy bills, diagnostic tests, outpatient dental treatment, contact lenses, spectacles and health check-ups. However, while a 3 lakh cover under the company's standard health plan, Easy Health Family Floater, costs 8,258 for a family of four (two adults and two children, with the eldest member being 35 years), a similar coverage under the Maxima plan would cost you a whopping 29,000. This, in spite of the riders that come with it—doctor consultations are limited to eight per year and a sub-limit of 7,000 on various expenses, including diagnostic tests, pharmacy bills, dental treatments and eye care (spectacles and contact lenses). Health check-ups are also limited to two per year. If you take all this into consideration, according to the company brochure, the total benefit adds up to 17,200 per year, in case you avail of the optimum limits under the policy.

Similarly, Bajaj Allianz's Tax Gain Plan, a health policy with OPD benefits will cost you and your spouse 15,000, but the OPD benefits have a yearly sub-limit of just 7,500. Moreover, the exclusions list is pretty extensive for this plan.

In short, an OPD cover is expensive. Why? Health insurers say out-patient healthcare services and their coverage typically involves small ticket, high-volume transactions. "The numbers make the insurer vulnerable to fraud and mis-utilisation and, therefore, the products have to be priced accordingly. Antony Jacob, chief executive officer of Apollo Munich Health Insurance, agrees. The propensity for a person to use the cover multiple times throughout the policy period is also greater. Hence, the financial value that a customer can avail of from such a policy is higher than a basic health insurance policy.

Due to the higher assumption on incidence rates (nearly 100%), the OPD premium is often more than 50% of the sum insured and, with increasing age, becomes more than or equal to the sum insured.

Most insurers, therefore, offer it along with the base indemnity plan. Moreover, there is lack of substantial data pool on OPD treatments, on which the underwriting is based. An insurance product pricing depends on data as well as experience, both of which are scanty for this product at this stage. Also, the treatments under OPD are yet to be standardised.

This is where healthcare cards—provided by a few companies as well as established hospitals—can be a more cost-effective alternative.

Health Insurance Cover ALTERNATIVE:

Discount cards or health cards are not a substitute for hospitalisation cover, but are special schemes that typically give you discounted rates on medical, health and drug expenses for a monthly or annual membership fee. Also, unlike a health plan, there are no caps or sub-limits in a health card plan.

Health cards cover overall healthcare expenses, including cosmetic treatments. It is also of great help to high-risk people, such as those with pre-existing conditions, and those who are denied health insurance, especially senior citizens, who face prohibitions or have to pay extremely high premiums for a policy loaded with too many clauses and exclusions.

While a loyalty programme from a hospital chain, such as Apollo, Max or Fortis, will limit your options to the concerned group's facility, a health card from an independent company that has a tie-up with multiple hospitals, nursing homes, individual medical practitioners, pharmacy chains, pathology labs and diagnostic centres gives more flexibility of choice.

Apart from IHO, the companies that provide these cards, include WizzCare, Sharak Healthcare and EasyLife Care (operates only in Delhi/ NCR). In July 2013, E-Meditek Global, in association with Ratnakar Bank and Visa, had launched a reloadable prepaid card, 'Medicash Plus Card', which offered an automatic discount of up to 40% for availing of medical services, along with a few additional services, such as access to gyms, spas, beauty salons, restaurants and lifestyle centres.

The membership fee of these cards varies from 1,000 to 8,000 depending on the plan you choose and the number of members registered. A basic plan offers a 15-30% concession on consultations and 10-20% concession on OPD treatments and procedures at hospitals. For dental care, you get benefits of free check-ups and up to a 50% discount on the total cost of treatment. IHO also offers up to 50% discount on doctor consultations at a few network clinics. There are some special add-on benefits as well, including 24x7 dial-a-doctor and chat service, free second opinion before a major surgery, discount on ambulance charges and online tools like symptom tracker and health records log.

Most variants of the plans offer preventive health check-ups as part of the product. Therefore, the members are eligible for tax benefit of up to 5,000 under Section 80D.



Unlike insurance, which is a regulated industry, any dispute with the health card provider would have to be contested before a consumer court. So, do due diligence on the company's background before buying a membership. Is it a registered company? For how many years has it been in business? Trawl the Internet for feedback on consumer complaints forums to ensure you are buying the right product. Don't forget to check the network quality and number of partners the health card provider has. Make sure it has tie-ups with a few reputed names in your city. If the company is not upfront in disclosing the network size and partnerships, check out a customer loyalty membership of the hospital in your vicinity.