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Project on Mediclaim Insurance

CHAPTER I
INSURANCE: AN INTRODUCTION
Insurance may be described as a social device to reduce or eliminate risks of loss to life and
properly. It is a provision which a prudent man makes against inevitable contingencies, loss
or misfortune. Once Frank H. Knight said "Risk is uncertainty and uncertainty is one of the
fundamental facts of life." Insurance is the modern method by which men make the
uncertain certain and the unequal; equal. It is the means by which success is almost
guaranteed. Through its operation- the strong contribute to the support of the weak and
weak secure, not by favor sent by right duly purchased and paid for, the support of the
strong (Calvin Coolidge.) Under the plan of insurance, a large number of people associate
themselves by sharing risks attached to individuals. As in private life, in business also there
are dangers and risks of different kinds. The aim of all types of insurance is to make
provision against such dangers. The risks which can be insured against include fire, the
perils of sea (marine insurance), death (life insurance) and, accidents and burglary. Any risk
contingent upon these, may be insured against at a premium a commensurate with the risk
involved. Thus, collective bearing of risks is insurance.

Definition

Insurance in its basic form is defined as A contract between two parties whereby one party
called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party
called insured a fixed amount of money on the happening of a certain event." In simple terms
it is a contract between the person who buys Insurance and an Insurance company who sold
the Policy. By entering into contract the Insurance Company agrees to pay the Policy holder
or his family members a predetermined sum of money in case of any unfortunate event for a
predetermined fixed sum payable which is in normal term called Insurance Premiums.

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TYPES OF INSURANCE

Life insurance
Life insurance is an insurance coverage that pays out a certain amount of money to the
insured pr their specified beneficiaries upon a certain event such as death of the individual
who is insured. This protection is also offered in a family tactful plan, a Shariah based
approach to protecting you and your family.
The coverage period for a life insurance is usually more than a year. So this requires a
periodic premium payment, either monthly, quarterly or annually.
The risks that are covered by life insurance are:
Premature death
Income during retirement
Illness

The main products of life insurance include:


1. Whole life
2. Endowment
3. Term
4. Investment-linked
5. Life annuity plan
6. Medical and Mediclaim
General insurance
General insurance is basically an insurance policy that protects u against looses and damages
other than those covered by life insurance. For more comprehensive coverage, it is vital for
you to know about the risks covered to ensure that you and your family are protected from
unforeseen losses. The coverage period for most general insurance policies and plans is
usually one year, whereby premiums are normally paid on a one-time basis.

The risks that are covered by general insurance are:


Property loss, for example, stolen car or burnt house
Liability arising from damage caused by yourself to a third party
Accidental death or injury

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The main products of general insurance include:


Motor insurance
Fire insurance
Personal accident insurance
Medical and Mediclaim insurance
Travel insurance

MEDICLAIM INSURANCE IN INDIA

The guiding principle enunciated in the Bhore committee of 1946, which states that `no
individual should fall to secure adequate medical care because of inability to pay for it', looks
unreachable even after 50 years of Indian Independence. Some form of Mediclaim insurance,
either social or private, covers hardly 3% of the Indian population. The total expenditure on
Mediclaim in India is 6% of the GDP and the government spending is less than 25% against
the average spending of 30-40% in other developing countries. In India, Mediclaim
insurance mainly exists in the form of Mediclaim policy offered to the individuals or
group, association or corporate bodies. State owned insurance companies; covering
only about 2.5 mn people of the country's population, do the penetration of Mediclaim
policy. Social insurance like Employee State Insurance Scheme is available but they
have restricted the coverage to a very small segment of the population that is round 3%.
The government has taken serious interest in the potential of insurance companies to
provide and popularize Mediclaim insurance coverage at modest rate of premium. To
achieve this goal the government has allowed income tax rebates for premium paid for
Mediclaim insurance policies. GIC made some headway under its various Mediclaim
care plans for different segments of policyholders, by covering more than 2 mn people.
LIC and UTI also made attempt to offer some type of Mediclaim insurance covers.
However, Mediclaim insurance could not pick momentum in India due to the following
reasons:

1. Service costs are out of reach of many people.

2. Lack of good and efficient physician and less number of hospitals.


3. High illiteracy rate
4. Poor medical equipment and
5. Poor budget allocation towards Mediclaim care.

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We shall now discuss in detail about the Mediclaim insurance policies available in
India.
DECADES OF MEDICLAIM

The concept of Mediclaim insurance was proposed in 1694 by Hugh the Elder Chamberlin
from the Peter Chamberlin family. In the late 19th century, "accident insurance" began to be
available, which operated much like modern disability insurance. This payment model
continued until the start of the 20th century in some jurisdictions (like California), where all
laws regulating Mediclaim insurance actually referred to disability insurance. Before the
development of medical expense insurance, patients were expected to pay all other
Mediclaim care costs out of their own pockets, under what is known as the fee-for-service
business model. During the middle to late 20th century, traditional disability insurance
evolved into modern Mediclaim insurance programs. Today, most comprehensive private
Mediclaim insurance programs cover the cost of routine, preventive, and emergency
Mediclaim care procedures, and also most prescription drugs, but this was not always the
case. Hospital and medical expense policies were introduced during the first half of the 20th
century. During the 1920s, individual hospitals began offering services to individuals on a
pre-paid basis, eventually leading to the development of Blue Cross organizations. The
predecessors of today's Mediclaim Maintenance Organizations (HMOs) originated beginning
in 1929, through the 1930s and on during World War II.

MEDICLAIM IN INDIA

In mid 80s most of the hospitals in India were governments owned and treatment was free of
cost. With the advent of Private Medical Care the need for Mediclaim Insurance was felt and
various Insurance Companies (New India Assurance, National Insurance Company, Oriental
Insurance & United Insurance Company) introduced Mediclaim Insurance as a product.
According to recent news report Mediclaim insurance continues to be the fastest growing
segment with annual growth rate of 55%. Mediclaim Premium has risen to Rs. 3300 crores in
2006-2007. As per the recent reports from various agencies the Mediclaim sector has the
potential to become a Rs. 25000-crore industry by 2010. On August 15, 2007 Prime Minister
has announced Rs 2000 Crores for Mediclaim Insurance for poor citizens. We foresee that
this amount will be partly in form of subsidy therefore during calendar year 2008 we can
expect Mediclaim Insurance premium to touch figure in the range of Rs 10,000 Crores.

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NEED FOR MEDICLAIM INSURANCE

You are expected to live longer than your parents or grandparents. An average Indian used to
live for barely 40 years at the time of Independence. By 2016, an average Indian would live
for about 68 or 70 years.

Life can come at you fast. It's simply impossible to know what's around the corner. This is
why we all have to take necessary precautions. In other words; do you have Mediclaim
insurance? Some people actually have no medical insurance whatsoever. This is completely
absurd in the unpredictable world we live in. That random fall or dreadful car accident could
happen today. Are you prepared to grapple with those hospital bills? The fact is, medical
insurance is just an inevitability of life. You always want to have it just in case. If the time
does arise when you need it, you will thank God you planned ahead.

However, a longer life need not mean Mediclaimier life. Lifestyle-related diseases such as
high blood pressure, diabetes, obesity, and extraordinary stress are all on the rise. In short, we
are looking at a combination of longer but possibly a less Mediclaimy life span. At the same
time, Mediclaimcare costs have been escalating rapidly.

Landing up in hospital is the last thing we want to think about. It happens to someone else not
meyou think. But we all go through tough times and only the ones that plan ahead come
out unscathed. The massive cost of treatment is a double-whammy for many who already
have to contend with the illness. If you become seriously ill, your entire wealth accumulated
over decades can disappear in combating the illness. If your savings can vanish in the blink of
the eye what is the best solution? The answer to this ominous question is opting for
Mediclaim insurance.

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The Companies, which offer Mediclaim or Mediclaim Insurance, are;


Bajaj Allianz General Insurance Company Limited Future Generali India Insurance
Company Limited
HDFC General Insurance Company Ltd.
ICICI Lombard General Insurance Limited.
National Insurance Company Limited
New India Assurance Company Limited
Oriental Insurance Company Limited
Reliance General Insurance Company Limited
Royal Sundram Alliance Insurance Company Limited
Star Mediclaim and Allied Insurance Company Limited
TATA AIG General Insurance Company Limited. (Overseas Mediclaim Insurance
only)
United India Insurance Company Limited
India is the only country where hospitalization insurance policy was being sold as Mediclaim
Insurance Policies. The very name gives a feeling to the insured that claim has to be lodged.
If motor insurance policy is not sold as motor insurance claim policy and household
insurance policy is not sold as household claim policy then why this is named as Mediclaim?
In the recent years the trend has emerged that some Insurance companies have started calling
this product as Mediclaim Insurance. Mediclaim Insurance and Mediclaim are two different
names for the same product. The change has started coming and now we have started calling
it Mediclaim Insurance. ICICI Lombard has even named it as Mediclaim Insurance Policy.
Calling is as Mediclaim Insurance is a positive way of looking at this Insurance. It also
giving us a feeling that we as a society have started moving from curative medical care to
preventive medical care. According to sources in Oriental insurance it is being felt that
mindset has started changing over the last couple of years The new middle- class of India
aspires of quality Mediclaimcare service and doesnt mind going to expensive hospitals like
Apollo or Escorts. There is no reason why Mediclaimcare insurance should not be successful
with this class.

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Principles of insurance Indemnity

A contract of insurance contained in a fire, marine, burglary or any other policy (except life
assurance and personal accident and sickness insurance) is a contract of indemnity. This
means that the insured, in case of loss against which the policy has been issued, shall be paid
the actual amount of loss not exceeding the amount of the policy, i.e. he shall be fully
indemnified. The object of every contract of insurance is to place the insured in the same
financial position, as nearly as possible, after the loss, as if he loss had not taken place at all.
It would be against public policy to allow an insured to make a profit out of his loss or
damage.

Utmost Good Faith

Since insurance shifts risk from one party to another, it is essential that there must be utmost
good faith and mutual confidence between the insured and the insurer. In a contract of
insurance the insured knows More about the subject matter of the contract than the insurer.
Consequently, he is duty bound to disclose accurately all material facts and nothing should be
withheld or concealed. Any fact is material, which goes to the root of the contract of
insurance and has a bearing on the risk involved. It is only when the insurer knows the whole
truth that he is in a position to judge

(a) Whether he should accept the risk and


(b) What premium he should charge.

If that were so, the insured might be tempted to bring about the event insured against in order
to get money.

Insurable Interest

A contract of insurance affected without insurable interest is void. It means that the insured
must have an actual pecuniary interest and not a mere anxiety or sentimental interest in the
subject matter of the insurance. The insured must be so situated with regard to the thing
insured that he would have benefit by its existence and loss from its destruction. The owner
of a ship run a risk of losing his ship, the charterer of the ship runs a risk of losing his freight
and the owner of the cargo incurs the risk of losing his goods and profit. So, all these persons

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have something at stake and all of them have insurable interest. It is the existence of insurable
interest in a contract of insurance, which distinguishes it from a mere watering agreement.

Causa Proxima

The rule of causa proxima means that the cause of the loss must be proximate or immediate
and not remote. If the proximate cause of the loss is a peril insured against, the insured can
recover. When a loss has been brought about by two or more causes, the question arises as to
which is the causa proxima, although the result could not have happened without the remote
cause. But if the loss is brought about by any cause attributable to the misconduct of the
insured, the insurer is not liable.

Risk

In a contract of insurance the insurer undertakes to protect the insured from a specified loss
and the insurer receive a premium for running the risk of such loss. Thus, risk must attach to
a policy.

Mitigation of Loss

In the event of some mishap to the insured property, the insured must take all necessary steps
to mitigate or minimize the loss, just as any prudent person would do in those circumstances.
If he does not do so, the insurer can avoid the payment of loss attributable to his negligence.
But it must be remembered that though the insured is bound to do his best for his insurer, he
is, not bound to do so at the risk of his life.

Subrogation

The doctrine of subrogation is a corollary to the principle of indemnity and applies only to
fire and marine insurance. According to it, when an insured has received full indemnity in
respect of his loss, all rights and remedies which he has against third person will pass on to
the insurer and will be exercised for his benefit until he (the insurer) recoups the amount he
has paid under the policy. It must be clarified here that the insurer's right of subrogation
arises only when he has paid for the loss for which he is liable under the policy and this right
extend only to the rights and remedies available to the insured in respect of the thing to which
the contract of insurance relates.

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Contribution

Where there are two or more insurance on one risk, the principle of contribution comes into
play. The aim of contribution is to distribute the actual amount of loss among the different
insurers who are liable for the same risk under different policies in respect of the same
subject matter. Any one insurer may pay to the insured the full amount of the loss covered by
the policy and then become entitled to contribution from his co-insurers in proportion to the
amount which each has undertaken to pay in case of loss of the same subject-matter.

In other words, the right of contribution arises when

(I) There are different policies which relate to the same subject-matter
(II) The policies cover the same peril which caused the loss, and
(III) All the policies are in force at the time of the loss, and
(IV) One of the insurers has paid to the insured more than his share of the loss.

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TYPES OF MEDICLAIM POLICIES


MEANING: Policies under this insurance, the insurer undertakes to indemnity the
assured in consideration of certain payment, up to certain specified amount insured
against for loss arising in respect of hospitalization or injury sustained by the insured
person. Due to rapid population growth and more and more use of contamination of
fond, water, and air etc., which leads to hospitalization are more frequent. To cater to
the varying and increasing needs, different forms of cover are available.

Types of policies:
The following types of policies are issued by the insurance corporation in order to meet
the public at large:

I. Mediclaim policy (Individual):


Coverage: the policy provides for the hospitalization/domiciliary hospitalization expenses
for illness/diseases or injuries sustained.

Expenses on hospitalization is payable when the insured is admitted in the hospital


for a minimum period of 24 hours. An individual can opt for the sum insured
ranging from Rs.15, 000 to Rs.5, 00,000 in multiples of Rs.5, 000.
Eligibility: People in the between age group of 5 and 80 years are eligible for the
policy. Children between the ages of 3 months to 5 years can be covered provided
one or both parents opt mediclaim over.

Benefits: Reimbursement of hospitalization/domiciliary hospitalization expenses as


mentioned above. Family discount- a discount of 10% in the total premium is available if
the policyholder is opting cover under the policy for any one of the following: spouse,
dependent children, and dependent parents. Cost of Mediclaim checkups- this cost is
payable to the insured at the end of every four year block provided there is no claim
reported during the block. The cost reimburse will be the amount equal to 1% of the averages
sum insured during the block. Premium of Rs.15, 000 is exempted under income tax section
80D, if paid by cheque.

Conditions: Any event giving rise to claim under the policy should be informed or

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communicated to the insurance company in writing within 7 days from the date of injury,
hospitalization/ domiciliary hospitalization.

Claim must be filed within 30 days from the date of discharge from the hospital.

The company will not be liable for any payment for claim, which are fraudulent or
supported by any fraudulent device.

II. Group medical policy:


The group medical policy will be available to pay or association, institution or corporate
body of more than 50 persons provided it has central administration point. Each
insurer should cover all eligible candidates under one group policy only which
means that different categories of eligible members are not allowed to be covered
under different group Medicalim policies. The group discount is permissible
depending upon the total number of insured person covered under the group
mediclaim policy at the inception of the policy. It is to be noted that no discount is
offered to a group with less than 101 members.
III. Overseas Mediclaim policy:
Overseas Mediclaim policy was originally introduced in 1984 to provide payment of
medical expenses incurred in respect of illness suffered or sustained by Indian
resident during their overseas trips. The insurance scheme, since 1984 has been
modified several times to provide for additional benefits like in-fight personal
accident, loss of passport etc. in the year 1991, employment of study policy was
introduced for Indian citizens temporarily living abroad.

There are two type of plan under overseas mediclaim policy:

Standard cover.

Videsh yatra mitra.

Eligibility: the policy is available to the following person: Indian residents traveling abroad
for the following purposes:
Business

Official
Holiday tour

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Accompanying spouse and children of the person going aboard will be treated as going
under holiday travel.

Age limit:
Adults: the age limit is 70 years. Adults between the age of 70 and 80 years can be covered at
the discretion of the insurer by loading the premium and persons above 80, years can also be
covered provided the insurance company's head office accepts the proposal.

Benefits:

The following are the important benefits of overseas medical policy:

Reimbursements of medical expenses of the insured during his/her stay


abroad.
Automatic extension of insurance period.
In the event of claim, services will be provided by M/s. Mercury
international assistance and claims limited, whose services are available all over
the world.
If the insured is required to be sent back, to the home country on account
of sickness suffered or injury sustained, the expenses incurred therewith are also
paid.
An amount up to $225 for immediate relief of dental plan is also payable
with the approval of M/s. Mercury.
All the expenses are reimbursed in the local currency of the country
IV. Jan Arogya Bima Policy: the coverage under this policy can be considered, to a
certain extent, along the lines of individual mediclaim policy expect that cumulative bonus
and mediclaim check up benefits are not included. The above plan covers the risks or
reimbursement in respect of hospitalization and domiciliary hospitalization up to
Rs.5000 per person per annum. The salient feature of the scheme is granted only fo r the
benefits of the lower income of society and common masses.

V. Cancer policy: this policy is designed to meet the risks or coverage for the members
of the cancer patient aid association. There are two scheme available for cancer policy:

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a. Indian cancer society


b. Cancer Patients Aid Association.

This policy is introduced in collaboration with Indian Cancer Society can avail of the
benefits of this scheme. The policy lapses immediately if the insured ceases to be a
member of the Cancer society for any reason whatsoever. On payment of the prescribed
membership fees, which is included in insurance premium during the currency of the
policy suffers from cancer; the policy will pay up to Rs. 50, 000 to meet the cost of
diagnosis, biopsy, chemotherapy, hospitalization and rehabilitation.

VI. Bhavishya Arogya Policy: This scheme had been designed so as to enable a
person to provide himself for medical needs during an old age security. Under this policy the
medical expenses to be incurred over the balance life span after a predetermined age of
retirement will be reimbursed up to the amount of the sum insured with a limit of an
amount per any one illness or injury. The amount of maximum total benefits available
under the basic policy is Rs. 50, 000 during the lifetime of the insured commencing
from the policy retirement age and is not to exceed Rs. 20, 000.

VII. Videsh Yatra Mitra Policy: Videsh yatra policy is another overseas mediclaim
scheme introduced by general Insurance Corporation with effect from 1998. This policy
provides the widest cover of personal accident, loss of checked baggage, loss of passport,
medical expenses and repatriation, delay of checked baggage, personal liability etc. insured
person is that person named in the overseas policy schedule, for which the appropriate
premium had been paid. The policy is valued only from the first day of insurance and expires
on the last day of the number of days specified in the policy schedule or on return to India
whichever is earlier.

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MAJOR MEDICAL INSURANCE A NEW TYPE OF INDIVIDUAL MEDICLAIM


INSURANCE

Major medical insurance is designed to pay a high proportion of the covered expenses
of a catastrophic illness or injury. This type of plans is often sold in conjunction with a
hospitalization and surgical plan, and is aimed at covering costs that a normal
hospitalization plan does not cover. Most such plans include the following characteristics:

1. Extensive coverage:
Usually the major medical insurance coverage is wide and includes all the reasonable and
essential medical expenses and other related expenses from a covered illness or injury.

2. Generous Maximum Limits:


Many of such plans offered overseas have generous lifetime limits ranging from $300,000
to a million or even more. Locally, the limits offered are often less, but still considered high
relative to the cost of major illness treatments. A high limit is necessary because the
purpose of having such plans is to cover catastrophic losses that a normal hospitalization
plan does not cover.
3. Benefit Period:
A benefit period is the length of time that the plans benefits will be paid after the
deductible is satisfied. At the end of the benefit period, the insured has to satisfy a fresh
deductible in order to establish a new benefit period. The purpose of the benefit period is to
grant a definite period within qualified medical expenses for a particular disease or injury
must be incurred in order to reimburse under the policy.

4. Deductible:
Deductible are the stated amounts each claim has to satisfy before any payments of the
benefits are made. The purpose od deductibles is to eliminate small claims that a pose a
relatively high processing cost to insures. This will help insurers keep the premiums for
major medical plans reasonable.

5. Co-Insurance:

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A co-insurance is a policy provision that requires the insured to pay a certain percentage of
the eligible medical expenses in excess of the deductible. The purpose of this clause is to
reduce premium and prevent over utilization of policy benefits. Since the insured has to pay
part of the bill, premiums can be offered at cheaper rates. Another purpose of the provision
is to discourage the patients from simply choosing the most costly medical services while
lower-cost versions are available and are just as good.
6. Exclusions:
Like all types of insurance policies, major medical plans contain exclusion clauses. Some of
the common exclusions that are found in such plans are as follows:

Expanses incurred as a result of war or military conflict.

Optional cosmetic surgery.

Normal dental care.

Pregnancy and childbirth, except for complication that arises as a result of childbirth.

Experimental surgery

To further control cost, internal limits are sometimes imposed on the plan. There may be in
the form of annual or lifetime limits on the amount paid for certain diseases.

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The New India Assurance Co Ltd

Who can take this policy


This insurance is available to persons between the age of 18 years to 60 years. Children
between the ages of 3 months to 18 years can be covered provided parents are covered
simultaneously. The persons beyond 60 years can continue their insurance provided they are
insured under Mediclaim policy with our Company without any break.

What does this policy cover?

The policy covers hospitalization expenses for the treatment of illness/injury provided
hospitalizations is more than 24 hours. Pre-hospitalization expenses for 30 days and post
hospitalization expenses for 60 days are also payable.
Day-care treatment - The Medical expense towards specific technologically advanced day-
care treatments / surgeries where 24 hour hospitalization is not required.

Ambulance Charges for shifting the insured from residence to hospital are covered up to the
limits specified in the policy.
Ayurvedic / Homeopathic and Unani system of medicine are covered to the extent of 25% of
Sum Insured provided the treatment is taken in the Government Hospital.
Pre-existing diseases are covered only after 4 continuous and claim free renewals with our
Company.

Pre-existing conditions like Hypertension, Diabetes, and their complications are covered after
two years of continuous insurance on payment of additional premium.
Exclusions:

Diseases contracted within 30 days of insurance


Dental treatment except arising out of accident.
Debility and General Run down Conditions.
Sexually transmitted diseases and HIV (AIDS)
Circumcision, Cosmetic surgery, Plastic surgery unless required to treat injury or
illness
Vaccination and Inoculation

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Pregnancy and child birth


War, Act of foreign enemy, ionising radiation and nuclear weapon.
Treatment outside India
Naturopathy
Domiciliary Treatment
Experimental or unproven treatment
All external equipments such as contact lenses, cochlear implants etc.

Premium:
Premium is based on age of the proposer and geographical area of treatment.
Special features of the policy:

Discount in premium for family cover


Loyalty Discount
Good Mediclaim Discount
Cumulative Bonus
Cost of Mediclaim Check up
Income Tax Benefit under Section 80D of IT Act.

National Insurance

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Salient Feature

Hospitalization for illness,


Disease
Accident, including surgery

2. Scope of Cover

Medicaid insurance policy has been devised under the aegis of the Government of India.
The policy provides the following benefits.

1) Reimbursement of hospitalization expenses which are reasonably and necessarily incurred,


Under the following heads:
a) Room, boarding expenses as provided by the hospital/nursing home.

b) Nursing expenses.
c) Fees of surgeon, anesthetist, medical practitioner, consultant and specialist.
d) Expenses on account of anesthesia, blood, oxygen, operation theatre charges, surgical
Appliances, medicines and drugs, diagnostic material, X-ray, dialysis, chemotherapy,
Radiotherapy cost of pacemaker, artificial limbs and cost of organs and similar expenses.

2) Introduction of Sub-Limits:
The following provisions have been introduced:
A. Room, Board and Nursing Expenses as provided by the Hospital /Nursing Home- Room
Rent limit: 1 % of the Sum Insured per day subject to maximum of Rs.5000./-. I.C. Unit
Expenses: 2 % of Sum Insured per day subject to maximum of Rs. 10,000/-. Over all limits
under this head: 25% of S.I. per illness.
B. Surgeon, Anesthetist, Medical Practitioner, Consultants Special fees maximum limits per
Illness 25% of S.I.
C.Anesthesia, Blood, Oxygen, OT charges, Surgical appliance, Medicines, drugs, Diagnostic
Material & X-Ray, Dialysis, Chemotherapy, Radiotherapy, cost of pacemaker, artificial limbs
And cost of stint and implant. Maximum limit per illness 50% of Sum Insured.

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D. Ambulance services - 1% of the sum insured subject to maximum of Rs 1000/-


provided Registered ambulance is used for shifting patient from residence to hospital if
admitted to ICU or emergency ward OR from one hospital to another subject to sub-limits
under c above.
E. Hospitalization expenses of person donating an organ during the course of organ
transplant Will also be payable subject to the sub-limits under c above.

3) Premium paid for the policy towards self, spouse, dependent children and dependent
parents are exempt from Income Tax under Sec. 80D of the l.T. Act.

4) Cost of Mediclaim Check Up and Cumulative Bonus - Benefits will accrue only if the
Policy is a renewal Of National.

3. Additional Features
1) Definition of Family:
A) Self (Primary Insured).
B) Spouse.
C) Dependent Children (i.e. legitimate or legally adopted children). Children above 18 years,
if employed, can not be covered. Male children, if not employed, but a bonafide student can
be covered up to age of 25 years. Female children, if not employed, can be covered until the
time she is married.
D) Dependent parents.
All members of the family must be covered under one policy.
2) Entry Age:
This insurance is available to a person between the age of 18 to 59 years. However, the
Policy can be renewed upto the age of 80 years as stipulated in the premium chart above.
a) Children above the age of 3 months can be covered provided parents are covered
concurrently and suitable premium is paid. If the child above 18 years is employed or if the
Girl child is married, he or she shall cease to be covered under the policy. However male
child can be covered up to the age of 25 years if he is a bonafide regular student and fully
dependent on primary insured. Female child can be covered up to the time, she is unmarried.
b) If the insured has taken continuous Mediclaim insurance policy with us for at least 5 years
prior to attaining the age of 80 years the policy can be renewed beyond the age of 80 up to

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the age of 90 years as a special case with the approval of Regional In charge on case to case
basis. The premium chargeable shall be 10% of the premium for 75-80 years age slabs for
proposers above 85 and 20% of the premium for 75-80 age slabs for proposers above 90.
c) No inclusion of family member during currency of policy is permissible except for a new
born child between the age of 3 months to 6 months and newly married spouse within 60
days of marriage. Otherwise inclusion of family member shall be allowed only at the time of
Renewal. Prorata premium shall be charged for such inclusion during the currency of the
policy for the unexpired period.

3) Sum Insured:
Minimum sum insured shall be Rs 50,000/- and can be increased in multiples of Rs 25,000/-
upto Rs 5 lacs. The sum insured must be identical for primary insured and the dependents.
However, the children may be covered for 50% Sum Insured as per item no. 2 above.
4) TPA option:
The premium includes cashless facility through TPA. If the policyholder does not require
cashless facility then 6% discount on premium may be given.
5) Pre -Acceptance Mediclaim Checkup:
Pre acceptance Mediclaim check-up is mandatory when age is 50 years and above and he/she
is seeking insurance cover for the first time as an individual or as member of a family where
there is break in Insurance increase in sum insured on renewal. Propose/Insured Person will
be required to undergo the following Medical Check-up or any other medical test as required
by the Company either on his/her own or from its authorized Network Diagnostic Centre in
prescribed format. The cost shall be borne by the insured.

Age (in years) 50 and above


PHYSICAL EXAMINATION
BLOOD
URINE SUGAR
BLOOD PRESSURE
MEDICAL
ECHO CARDIOGRAPHY
TEST
EYE CHECK UP INCLUDING
RETINOSCOPY

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If the insured was covered under any Mediclaim Insurance Policy of National
uninterruptedly for Preceding 3 years, no pre-acceptance Medical check up is required.
4. Exclusions
The most important exclusion relates to pre-existing illness. If the insuring person had a
Mediclaim condition, existing prior to taking the policy, which required medical treatment,
the same gets automatically excluded in the policy. To ensure that in subsequent renewals
medical conditions
Incepting since the policy was taken do not get excluded, the insuring person must renew the
policy without break. The other exclusions for illustrative purposes are:-

a) Exclusion of certain named diseases in the first year of the policy.


b) Congenital external disease, sterility, venereal disease, intentional self-injury, use of
drugs, Alcohol, rest cure etc.
c) AIDS
d) Charges primarily for diagnostic, laboratory examinations, and not related to any
treatment in hospital. So also for vitamins and tonics unless prescribed for treatment.
e) Dental treatment not requiring hospitalization.
f) Treatment arising from or traceable to pregnancy, childbirth, including caesarean.
g) Naturopathy treatment.

EXCLUSION 4.a, 4.b & 4.c have been amended. Pre-existing diseases shall be covered
after 4 continuous claims free Policy years with National. However, in case of exclusion
4.3, for renewals, Existing condition shall apply, i.e. the one year exclusion applicable earlier
shall be valid.

Benefits of mediclaim

Benefits of a Mediclaim policy are many. Some of which are listed below.

First and foremost the Mediclaim policy offers you a chance to get your medical expenses
covered under a policy. Thus it takes care of the hospitalization fees. Protects the person or
family (in case of family plan) for hospitalization expenses as a result of any specific injury
or illness which has taken place during the period of insurance and on the advice of a doctor
requires hospitalization.

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Pre hospitalization expenses for the person or the insurer and also to go with it Post-
Hospitalization Expenses: Post Hospitalization expenses are medical expenses incurred
during a period up to a specific number of days after hospitalization for the particular ailment
disease or injury is over but still needs expenditures in order to completely become normal. If
you have a Mediclaim insurance policy that supports cashless Mediclaim, it means that you
can get medical treatment just by displaying your insurance card without paying any cash to
the hospital. Most Mediclaim insurance companies offer this benefit. Some times the benefits
may be applicable only to a certain number of hospitals or medical centers. Some of the
insurance policies also provide tax benefits. These tax benefits are provided to the person
under the name of whom the insurance policy has been assigned. Under the Section 80D, tax
benefits are provided to people who get a Mediclaim policy done in their n

WIDER MEDICLAIM COVER FOR POOR

New Delhi: With assembly elections in six states and general elections just months away, the
government is planning to expand the scope of its Mediclaim insurance schemes for the poor.
At a marginal premium, families above poverty line (ALP) could also get the benefit of
insurance cover if the proposal goes through. The Mediclaim ministry is planning to modify
the scope of its yet-to take-off Rs 8,000-crore National Urban Mediclaim Mission (NUHM)
for the urban poor to cover services like outpatient care, which are not covered by the
Rashtriya Swasthya Bima Yojana (RSBY). Mediclaim secretary Naresh Dayal told ET that
his ministry was exploring the option of modifying the proposed insurance scheme under
NUHM so that the urban poor can get additional benefits. The government is also examining
the possibility of raising the cover from Rs 30,000 initially proposed. These suggestions came
up at a meeting of senior government officials last week. APL families are not covered under
RSBY. NUHM was announced in March this year by Mediclaim minister Anbumani
Ramadoss and was to be launched in four months. However, in April, the labour ministry
operationalised RSBYannounced last year for workers in the unorganized sector. Now,
the Mediclaim ministry, which was all set to kick start NUHM on the lines of the National
Rural Mediclaim Mission, is thinking of re-designing the insurance component of this
ambitious programmed. We are looking at a variety of options. We may either launch the
programmed with better reach and coverage or will modify it and cover those areas that have
been left out by the labor ministry. Once things get finalized, we will take it to the Cabinet for
approval. All this may take 3-4 months, Mr Dayal told ET.

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DATABASE OF MEDICLAIM INSURANCE

General Insurance Corporation through its four subsidiaries: Oriental Insurance, New India
Assurance, National Insurance Company, United India Insurance.

Age:
Between 5 - 80 years.

Children between 3 months and 5 years can be covered provided one or both parents are also
covered.

Coverage:
Insures against any hospitalization expenses that may arise in future. The scheme reimburses
hospitalization expenses for illness, diseases or injury sustained, excludes any disease
existing before taking the policy.

Cost:
Sum insured can be anywhere between Rs 15,000 - Rs 500,000. Rate of premium ranges
between Rs 175 per year to Rs 2,500 per year depending on the age and capital sum insured.

Amount:
Compensation up to the extent of sum insured.

DOCUMENTS REQUIRED

Given below is a general list of documents that are required in case of a claim.

1. Duly completed claim form (available with all network hospitals).

2. Original bills, receipts and discharge certificate / card from the hospital.

3. Bills from chemists supported by proper prescription

4. Investigation test reports and payment receipts, supported by the note from attending
medical practitioner / surgeon prescribing the test.

5. Doctors referral letter advising hospitalization in non-accidental cases.

6. Nature of operation performed and surgeons bill and receipt.


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MEDICLAIM RENEWAL BY INSURERS MUST BE AUTOMATIC, RULES BY


SUPREME COURT
The Supreme Court has ruled that insurance companies are obliged to renew the mediclaim
policy automatically unless otherwise mutually agreed between insurer and insured. A bench
comprising Justice SB Sinha and Justice VS Sirpurkar also asked the regulator (Irda) to lay
down guidelines to check the imposition of arbitrary clauses of mediclaim policy and its
renewal. The court said, Renewal of a mediclaim policy subject to just exceptions should
ordinarily be made. But where a renewal is based on mutual consent, there may be no
automatic renewal. A mediclaim policy in which a senior citizen is involved would stand on a
different footing. It will depend upon the contract entered into between the parties and the
statutes operating in the field as also the constitutional scheme, court said.
It rejected the plea of some public sector insurance companies, which had said that wherever
renewal is subject to mutual consent of the parties, it might be at its whims and caprice to
refuse the renewal of the policy.
The insurance companies cannot, either in their prospectus or in the terms of policy, lay
down any condition which would be derogatory to the terms and conditions approved by the
regulatory authority. If the contract of insurance itself provides for renewal of an insurance
policy the same may not mean that the assured has a legal right of automatic renewal, but the
courts are required to strike A balance said Justice Sinha writing the verdict. The court
asked the authorities concerned to lay down guidelines in this regard.

We would like to observe that keeping in view the role played by the insurance companies,
it is essential that the regulatory authority must lay down clear guidelines by way of
regulations or otherwise. No doubt, the regulations would be applicable to all the players in
the field... the court said. The duties and functions of the regulatory authority, however, are
to see that the service provider must render their services keeping in view the nature thereof.
It will be appropriate if the central government or the general insurance companies also issue
requisite circulars, the court said.

It further said, We would request the IRDA to consider the matter in depth and undertake a
scrutiny of such claims so that in the event it is found that the insurance companies are taking
recourse to arbitrary methodologies in the matter of entering into contracts of insurance or
renewal thereof, appropriate steps on that behalf may be taken.

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CASHLESS CLAIM PROCEDURE

When should you claim?

There are a host of benefits for having a claim-free policy, the most important being
additional cover at the same premium, but the whole purpose of Mediclaim insurance is to
provide for your medical expenses. However, you must make your claims prudently. So, you
should not make small claims. To choose which claims are worth making, get the numbers
right! Check if by making a claim, the no-claim bonus you forfeit and the 10 per cent of
cumulative bonus cover you lose will exceed the compensation you get. If it does, it makes
sense not to make a claim but pay for the expenses you? Claim only if the amount is on the
higher side and you it makes sense to forfeit the no claim bonus. Also keep in mind that in the
long term, it will reflect on your records and will the insurer will penalize you with an extra
load on your premiums.

How would you claim?

1. Select a hospital from your service provider's network hospital tie-ups. Check the Network
Hospitals booklet mailed to you or visits your service provider's website. However, do note
that the hospital booklet might not be updated. Your provider may include or exclude
hospitals without giving prior information. It is advisable to check the updated list from the
website or contact them directly for information.
2. Produce your cashless card in the chosen hospital prior hospitalization.

3. Fill in the Pre-authorization form with the insurance details. The hospital shall fill in
information regarding the diagnosis, treatment plan, past history and the expected of the cost
of treatment. The pre-authorization form can be availed at the hospital or downloaded from
the service provider's website.
4. The hospital shall then fax the signed and stamped form to the service provider.

5. The service provider then evaluates the documents and classifies the case as Approved,
Queried or Rejected. Accordingly, the Authorization form would be faxed to the hospital.

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6. It is advisable to follow the above procedure and get the Authorization Letter before getting
admitted to avoid any disappointments. However, in case of an Emergency Hospitalization,
the authorization form can be obtained after admission.
7. Note that the Cashless Authorization does not cover: Attendant/Visitor pass charges

Ambulance chargesunless covered under the policy


Special nursing charges not authorized by the attending doctor
Charges for extra bed for attendant
Purchase of Medicines not related to the treatment

Claims some important notes

Telephone/Fax charges. Claims must be authorized by us before you go ahead with


treatment. This can be done by calling Customer Support on 0300 123 3200. By doing so
you can go ahead with the treatment, safe in the knowledge that you are covered

Emergency treatment is not covered. Once your condition has been stabilized and if your
consultant agrees, you can be transferred (with our prior approval) to private facilities or
become a private patient within the NHS

Claims will not be paid if your premiums are not up to date

All claims made in the first year of the policy will be referred to our Chief Medical Officer

Additional information may be required from your GP at the time of claim

If a claim can be paid under another insurance policy or by anyone else, we will only pay
the proper share.

The main reasons for claim not being passed in full are

Insured has preexisting disease and it was already mentioned in policy document as
exclusion.

The specific diseases are not covered under the policy

Disease is a preexisting disease and it was not revealed by the insured at the time of
issue of policy.

The main reasons for claim being passed in part are :

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Some of the tests conducted/treatment were not relevant to the disease for which
patient was admitted.

Some costs like consumables are not payable by the insurance company. Examples
are :-

With a view to cover some of these payments some TPA's insist that 5% of the hospital bill
will be paid by the patient. You should not be surprised if you are asked to pay 5% of the bill
even if you are covered under cashless scheme. In the event of consumables are not 5% or
more than 5% there is good possibility that you may get part of this paid to you at time of
finalization of their claim.

As a customer you should see that information being given at time of admission into
the hospital, discharge certificate, claim form is consistent. Any follow up letter being
sent to the insurance company should be well drafted and consistent to the claim
lodged.

WHY MEDICLAIM INSURANCE IS A MUST (Example)

I heard a story recently from an acquaintance of mine who has no medical insurance. She
never expected to use such a thing. Sure, maybe dental on occasion, but never medical. I
mean come on, the girl's only 23 years old. What could happen? Well, this is what happened.
She manages a truck stop, and while conversing with an employee one night, a brute strolls in
with a nasty temper. Before she knew it, the employee she was conversing with is being
attacked by the brute. Now, when she decided to intervene and be the hero, she was stabbed
in the shoulder. Wow, what a reality check. You try and do the right thing, and life smacks
you in the face. Now comes the problem with having no medical insurance. After being
hospitalized for a couple weeks, her medical bills are now around 30 grand. However, this is
not the end of it. She still has to go through physical therapy; not to mention the mental
anguish of almost dying. How much will the psychiatrist charge? The point is, you simply
can't know what's in store for you. Life is so random for us all. I wanted to use this girl's
recent story as an example because it's true. Sure it's sad, but still reality.

These days, no medical insurance equals trouble down the road. Even a minor hospitalization
can set you back for a long while. The problem is that most of us don't believe that we will

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ever use it. Get rid of your fantasies and purchase a decent medical insurance plan today.
Don't end up in the emergency room with no medical insurance. If nothing else, insurance
offers you piece of mind. Although I have not used my medical insurance yet, I understand I
may need it in the future. I choose to be prepared for what lies ahead.

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PRECAUTIONARY MEASURES TO BE TAKEN


The following must first take root,

Judicial reforms that clearly link compensation along with avoidable errors.

Government support for a nationwide response to medical error costs.

Development of initiatives by Mediclaim insurance firms to reduce the number of


avoidable errors.

State and local support for further uniformity in model regulations and rules.

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IRDA MAY ENSURE AFFORDABLE MEDICLAIM COVER TO ALL, EVEN


AFTER 65 YEARS

Hyderabad: Senior citizens have good chances of getting a Mediclaim cover even after they
turn 65. Insurance regulator IRDA is vetting a proposal to make Mediclaim cover affordable
to all senior citizens. A final view will be taken on providing guaranteed access to Mediclaim
insurance for this segment by the end of this year, said a top official of the regulatory body.
The proposal is based on the recommendations of an expert panel on Mediclaim insurance
last year. The panel recommended allowing senior citizens to enter the Mediclaim insurance
system up to 65 years of age or higher at the discretion of the insurer.
If they do so, they should be given guaranteed renewal of their insurance without any upper
age limit. As a transitional measure since guaranteed access is being provided to senior
citizens for the first time there should be no upper age limit for entry or renewal for a
period of three years from the date the IRDA issues the regulations, the panel had said. It
had made out a case for insurers to fix a base price of Rs 3,000 every year for a sum
insured of Rs 1,00,000 (at 50 years). We are examining these recommendations of the panel
we reckon that Mediclaim insurance should be made affordable, given the mounting
Mediclaim care-costs, said DVS Sastry, director general, IRDA at a seminar on effective
cross selling of insurance and mutual fund products organized by Watson Wyatt and the
Indian Institute of Banking and Finance here. Several senior citizens have registered
complaints with the regulator about insurance companies denying renewals. Industry experts,
however, reckon that people should enter Mediclaim insurance schemes at an early age to
enable insurance companies distribute their risks better. Currently, Mediclaim insurance
penetration is minuscule in India. The total premium from Mediclaim insurance stood at Rs
4,970 crore in FY 08, marking a 55% growth over FY07. Currently, there are only two
standalone Mediclaim insurance companies Star Mediclaim and Allied Insurance and
Apollo DKV offering pure Mediclaim products. The government is looking at raising the
cap on foreign direct investment (FDI) in insurance from 26% to 49%. It is also considering a
minimum capital requirement of Rs 50 crore for Mediclaim insurance companies to make it
attractive for new-entrants. Consumers are expected to get a better deal in terms of pricing
when competition intensifies among these players.

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Deduction U/s 80D for mediclaim premium available to individual HUF and senior
citizen

Deduction in respect of Medical Insurance Premium (Mediclaim) paid to keep in force


insurance by individual either on his own Mediclaim or on the Mediclaim of spouse,
dependent parents and children or HUF on the Mediclaim of any members of the family. A
Mediclaim policy is a must because should you fall sick or meet with an accident, your
medical bills could wipe out your savings.

Features of Mediclaim policy

1. Premium based on Age: - As in term insurance, the premium rates will vary among the
insurers and will also depend on your age. The older you are, the heftier the premium. For
instance, Mediclaim policy from General Insurance Corporation has a fixed premium till 35
years and then it changes in 10-year slabs.

2. Who is it available to?

Individual (resident or non resident, Indian Citizen or foreign citizen):- In case an


individual is taking the deduction, the medical insurance policy can be taken in the
name of any of the following: the taxpayer or the spouse, parents or dependent
children* of the taxpayer.
HUF(Hindu undivided Family may be resident or non resident) :- In case a HUF is
taking the deduction, the medical insurance policy can be taken in the name of any
member of the family.

Note

Dependent Children (i.e. legitimate or legally adopted children). Children above 18


years, if employed, can not be covered. Male children, if not employed, but a bonafide
student can be covered upto age of 25 years. Female children, if not employed, can be
covered until the time she is married.
Parents need bot be dependent on the Assessee.
Parents of Individual or Spouse both are covered.

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3. Entry Age: This insurance is available to a person between the age of 18 to 59 years.
However, the Policy can be renewed upto the age of 80 years.

a) Children above the age of 3 months can be covered provided parents are covered
concurrently and suitable premium is paid. If the child above 18 years is employed or if the
girl child is married, he or she shall cease to be covered under the policy. However male child
can be covered upto the age of 25 years if he is a bonafide regular student and fully
dependent on primary insured. Female child can be covered upto the time, she is unmarried.

b) If the insured has taken continuous Mediclaim insurance policy with us for at least 5 years
prior to attaining the age of 80 years the policy can be renewed beyond the age of 80 upto
the age of 90 years as a special case with the approval of Regional Incharge on case to case
basis. The premium chargeable shall be 10% of the premium for 75-80 years age slabs for
proposers above 85 and 20% of the premium for 75-80 age slabs for proposers above 90.

c) No inclusion of family member during currency of policy is permissible except for a new
born child between the ages of 3 months to 6 months and newly married spouse within 60
days of marriage. Otherwise inclusion of family member shall be allowed only at the time of
renewal. Prorata premium shall be charged for such inclusion during the currency of the
policy for the unexpired period.

4. Sum Insured: Minimum sum insured shall be Rs 50,000/- and can be increased in
multiples of Rs 25,000/-upto Rs 5 lacs. The sum insured must be identical for primary
insured and the dependents. However, the children may be covered for 50% Sum Insured as
per 4 above.

5. Payment of Mediclaim Premium out of taxable Income:- The amount must have been
paid using the taxpayers income chargeable to tax.

6. In addition to deduction u/s, 80C, 80CC and 80CCD,:- This is an


additional deduction available which do not include deduction u/s 80C, 80CCC and
80CCD for which overall limit is is Rs. 1,00,000.

7. Partly contribution: If part payment is done by you and part payment by the parent, both
can claim deduction to the extent of their contribution subject to maximum allowed but

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amount should be paid directly to insurance company and paid through mode other than by
cash.

8. Mode of payment: The premium may be paid by any mode of payment other than cash.
Note prior to 1st April 2009, premium payment was required to be done only by
cheque. Credit card or other online payment mechanism where not allowed. Now all payment
modes except cash payment are accepted.

9. Which Mediclaim Premium is allowed? : - Mediclaim premium paid under Medical


insurance scheme of General Insurance Corporation approved by the Central Government, or
any other insurer approved by the Insurance Regulatory & Development Authority (IRDA).

10. What is the amount of the deduction?

For Individual

Basic deduction: Mediclaim premium paid for Self, Spouse or dependant children.
Maximum deduction Rs 15,000. In case any of the persons specified above is a senior
citizen (i.e. 65 years or more as of end of the year) and Mediclaim Insurance premium
is paid for such senior citizen, deduction amount is enhanced to Rs. 20,000.
Additional deduction: Mediclaim premium paid for parents. Maximum deduction Rs
15,000. In case any of the parents covered by the Mediclaim policy is a senior citizen,
deduction amount is enhanced to Rs. 20,000.

For HUF

Mediclaim premium paid for any member of the HUF. Maximum deduction Rs
15,000. In case any member of the HUF covered by the Mediclaim policy is a senior
citizen, deduction amount is enhanced to Rs. 20,000.

Senior citizen: means who is at least of 65 year of age or more at any time during the
previous year.

EXAMPLE- 1

1. An individual assessee pays (through any mode other than cash) during the previous
year medical insurance premium out of his taxable income, as under:

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(i) Rs 12,000/- to keep in force an insurance policy on his Mediclaim and on the Mediclaim
of his wife and dependent children;

(ii) Rs 17,000/- to keep in force an insurance policy on the Mediclaim of his parents.

Under the new provisions he will be allowed a deduction of Rs 27,000/- (Rs. 12,000/- + Rs.
15,000/-) if neither of his parents is a senior citizen. However, if any of his parents is a senior
citizen, he will be allowed a deduction of Rs 29,000/- (Rs.12,000/- + Rs.17,000/). Whether
the parents are dependent or not, is not a consideration for deciding the deduction under the
new provisions.

Further, in the above example, if cost of insurance on the Mediclaim of the parents is Rs
30,000/-, out of which Rs 17,000/- is paid (by any non-cash mode) by the son and Rs
13,000/- by the father ( who is a senior citizen), out of their respective taxable income, the
son will get a deduction of Rs 17,000/- ( in addition to the deduction of Rs 12,000/- for
the medical insurance on self and family) and the father will get adeduction of Rs 13,000/-.

EXAMPLE 2

An individual assessee pays through credit card during the previous year Mediclaim
insurance premium as under:

1. Rs. 12,000 to keep in force an insurance policy on his Mediclaim and on the
Mediclaim of his wife and children
2. Rs. 17,000 to keep in force an insurance policy on the Mediclaim of his parents.

Under the proposed new provisions, he will be allowed a deduction of Rs. 27,000 (Rs. 12,000
+ Rs. 15,000) if neither of his parents is a senior citizen. However, if any of his parents is a
senior citizen, he will be allowed a deduction of Rs. 29,000 (Rs. 12,000 + Rs. 17,000).
Whether the parents are dependent or not, is not a consideration for deciding the deduction
under Section 80D.

EXAMPLE- 3

Question:- In the last budget, the finance minister announced exemptions for Mediclaim
charges paid for senior citizens. However, I am not sure if it has yet been notified and

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effective. I need to take medical insurance for both my parents, who are senior citizens. I
would appreciate if you can let me know.

Answer:- Earlier Sec 80D deduction in respect of medical insurance premium was Rs 15,000
for an individual and Rs 20,000 for a senior citizen. However, from this year, if someone
were to buy medical insurance for his parent/s, an additional deduction of Rs 15,000 (over
and above Rs 15,000) will be available. If such parent/s were senior citizen, the additional
deduction would be Rs 20,000. So a person insuring himself, his spouse, children and parents
could potentially get a deduction of Rs 35,000. This provision is effective from 1.4.08.

Appendix: Section 80D of the Income Tax Act

Deduction in respect of medical insurance premium.

80D. (1) In computing the total income of an assessee, being an individual or a Hindu
undivided family, there shall be deducted such sum, as specified in sub-section (2) or sub-
section (3), payment of which is made by any mode, other than cash, in the previous year out
of his income chargeable to tax.

(2) Where the assessee is an individual, the sum referred to in sub-section (1) shall be the
aggregate of the following, namely:

(a) the whole of the amount paid to effect or to keep in force an insurance on the Mediclaim
of the assessee or his family as does not exceed in the aggregate fifteen thousand rupees; and

(b) the whole of the amount paid to effect or to keep in force an insurance on the Mediclaim
of the parent or parents of the assessee as does not exceed in the aggregate fifteen thousand
rupees.

Explanation.For the purposes of clause (a), family means the spouse and dependant children
of the assessee.

(3) Where the assessee is a Hindu undivided family, the sum referred to in sub-section (1)
shall be the whole of the amount paid to effect or to keep in force an insurance on the
Mediclaim of any member of that Hindu undivided family as does not exceed in the
aggregate fifteen thousand rupees.

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(4) Where the sum specified in clause (a) or clause (b) of sub-section (2) or in sub-section (3)
is paid to effect or keep in force an insurance on the Mediclaim of any person specified
therein, and who is a senior citizen, the provisions of this section shall have effect as if for the
words fifteen thousand rupees, the words twenty thousand rupees had been substituted.

Explanation. For the purposes of this sub-section, senior citizen means an individual resident
in India who is of the age of sixty-five years or more at any time during the relevant previous
year.

(5) The insurance referred to in this section shall be in accordance with a scheme made in this
behalf by

(a) the General Insurance Corporation of India formed under section 9 of the General
Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and approved by the Central
Government in this behalf; or

(b) any other insurer and approved by the Insurance Regulatory and Development Authority
established under sub-section (1) of section 3 of the Insurance Regulatory and Development
Authority Act, 1999 (41 of 1999).]

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Mediclaim Insurance in India Opportunities, Challenges and Concerns


Mediclaim Insurance
Mediclaim insurance in a narrow sense would be an individual or group purchasing
Mediclaim care coverage in advance by paying a fee called premium. In its broader sense, it
would be any arrangement that helps to defer, delay, reduce or altogether avoid payment for
Mediclaim care incurred by individuals and households. Given the appropriateness of this
definition in the Indian context, this is the definition, we would adopt. The Mediclaim
insurance market in India is very limited covering about 10% of the total population. The
existing schemes can be categorized as:
Voluntary Mediclaim insurance schemes or private-for-profit schemes;
Employer-based schemes;
Insurance offered by NGOs / community based Mediclaim insurance, and
Mandatory Mediclaim insurance schemes or government run schemes (namely ESIS,
CGHS).

Voluntary Mediclaim insurance schemes or private-for-profit schemes

In private insurance, buyers are willing to pay premium to an insurance company that pools
people with similar risks and insures them for Mediclaim expenses. The key distinction is
that the premiums are set at a level, which provides a profit to third party and provider
institutions. Premiums are based on an assessment of the risk status of the consumer (or of
the group of employees) and the level of benefits provided, rather than as a proportion of the
consumers income.

In the public sector, the General Insurance Corporation (GIC) and its four subsidiary
companies (National Insurance Corporation, New India Assurance Company, Oriental
Insurance Company and United Insurance Company) and the Life Insurance Corporation
(LIC) of India provide voluntary insurance schemes. The Life Insurance Corporation offers
Ashadeep Plan II and Jeevan Asha Plan II. The General Insurance Corporation offers
Personal Accident policy, Jan Arogya policy, Raj Rajeshwari policy, Mediclaim policy,
Overseas Mediclaim policy, Cancer Insurance policy, Bhavishya Arogya policy
and Dreaded Disease policy (Srivastava 1999 as quoted in Bhat R & Malvankar D, 2000)

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Of the various schemes offered, Mediclaim is the main product of the GIC. The Medical
Insurance Scheme or Mediclaim was introduced in November 1986 and it covers individuals
and groups with persons aged 5 80 yrs. Children (3 months 5 yrs) are covered with their
parents. This scheme provides for reimbursement of medical expenses (now offers cashless
scheme) by an individual towards hospitalization and domiciliary hospitalization as per the
sum insured. There are exclusions and pre-existing disease clauses. Premiums are calculated
based on age and the sum insured, which in turn varies from Rs 15 000 to Rs 5 00 000. In
1995/96 about half a million Mediclaim policies were issued with about 1.8 million
beneficiaries (Krause Patrick 2000). The coverage for the year 2000-01 was around 7.2
million.

Another scheme, namely the Jan Arogya Bima policy specifically targets the poor population
groups. It also covers reimbursement of hospitalization costs up to Rs 5 000 annually for an
individual premium of Rs 100 a year. The same exclusion mechanisms apply for this scheme
as those under the Mediclaim policy. A family discount of 30% is granted, but there is no
group discount or agent commission. However, like the Mediclaim, this policy too has had
only limited success. The Jan Arogya Bima Scheme had only covered 400 000 individuals by
1997.

The year 1999 marked the beginning of a new era for Mediclaim insurance in the Indian
context. With the passing of the Insurance Regulatory Development Authority Bill (IRDA)
the insurance sector was opened to private and foreign participation, thereby paving the way
for the entry of private Mediclaim insurance companies. The Bill also facilitated the
establishment of an authority to protect the interests of the insurance holders by regulating,
promoting and ensuring orderly growth of the insurance industry. The bill allows foreign
promoters to hold paid up capital of up to 26 percent in an Indian company and requires them
to have a capital of Rs 100 crore along with a business plan to begin its operations.Currently,
a few companies such as Bajaj Alliance, ICICI, Royal Sundaram, and Cholamandalam
among others are offering Mediclaim insurance schemes. The nature of schemes offered by
these companies is described briefly.

Bajaj Allianz: Bajaj Alliance offers three Mediclaim insurance schemes namely,
Mediclaim Guard, Critical Illness Policy and Hospital Cash Daily Allowance Policy.

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Project on Mediclaim Insurance

- The Mediclaim Guard scheme is available to those aged 5 to 75 years (not allowing entry
for those over 55 years of age), with the sum assured ranging from Rs 100 0000 to 500 000. It
offers cashless benefit and medical reimbursement for hospitalization expenses (pre-and post-
hospitalization) at various hospitals across India (subject to exclusions and conditions). In
case the member opts for hospitals besides the empanelled ones, the expenses incurred by
him are reimbursed within 14 working days from submission of all the documents. While
pre-existing diseases are excluded at the time of taking the policy, they are covered from the
5th year onwards if the policy is continuously renewed for four years and the same has been
declared while taking the policy for the first time. Other discounts and benefits like tax
exemption, Mediclaim check-up at end of four claims free year, etc. can be availed of by the
insured.

- The Critical Illness policy pays benefits in case the insured is diagnosed as suffering from
any of the listed critical events and survives for minimum of 30 days from the date of
diagnosis. The illnesses covered include: first heart attack; Coronary artery disease
requiring surgery: stroke; cancer; kidney failure; major organ transplantation; multiple
sclerosis; surgery on aorta; primary pulmonary arterial hypertension, and paralysis. While
exclusion clauses apply, premium rates are competitive and high-sum insurance
can be opted for by the insured.

- The Hospital Cash Daily Allowance Policy provides cash benefit for each and every
completed day of hospitalization, due to sickness or accident. The amount payable per day is
dependant on the selected scheme. Dependant spouse and children (aged 3 months 21years)
can also be covered under the Policy. The benefits payable to the
dependants are linked to that of insured. The Policy pays for a maximum single
hospitalization period of 30 days and an overall hospitalization period of 30/60 completed
days per policy period per person regardless of the number of confinements to
hospital/nursing home per policy period.

ICICI Lombard: ICICI Lombard offers Group Mediclaim Insurance Policy. This
policy is available to those aged 5 80 years, (with children being covered with their
parents) and is given to corporate bodies, institutions, and associations. The sum

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insured is minimum Rs 15 000/- and a maximum of Rs 500 000/-. The premium


chargeable depends upon the age of the person and the sum insured selected. A slab
wise group discount is admissible if the group size exceeds 100. The policy covers
reimbursement of hospitalization expenses incurred for diseases contracted or injuries
sustained in India. Medical expenses up to 30 days for Pre-hospitalization and up to
60 days for post-hospitalization are also admissible. Exclusion clauses apply.
Moreover, favourable claims experience is recognized by discount and conversely,
unfavourable claims experience attracts loading on renewal premium. On payment of
additional premium, the policy can be extended to cover maternity benefits, pre-
existing diseases, and reimbursement of cost of Mediclaim check-up after four
consecutive claims-free years.

Max New York Life Insurance: The leading private life insurance company - Max
New York Life Insurance Company Ltd. has launched 'lifeline' - a Mediclaim
insurance product on Wednesday, 5th March 2008, across India. Now, the company
can boast of offering complete Mediclaim and life insurance products across ll regions
in India. This newly launched Mediclaim insurance product of Max New York Life
Insurance Company offers three groups of heath insurance solutions. The Director
Marketing Product Management and Corporate Affairs of Max New York Life
Insurance said that these three distinct heath insurance products are meant to cover
eventualities like hospitalization, surgery and critical illness of the insured. He points
out that these plans have been structured with features like coverage for a wide range
of ailments, no claim discount on revised premium for a Mediclaimy life, a fixed
premium for a five-year term, free second opinion from the best Mediclaim care
institutions of India on detection of illness. Further, it also has provision for a free
telephonic medical helpline across India. The hospitalization - is covered by
"Medicash plan", which is meant to provide a fixed amount of cash benefit on a day-
to-day basis during the entire period of hospitalization of the insured. The Medicash
plan would also cover expenses for admission in ICU, lump sum benefits against an
unlimited number of surgeries and recuperation benefits. The second plan of the
newly launched Mediclaim insurance of Max New York Life Insurance, is the
"Wellness Plan", which is a more attractive one and covers 'critical illness' like

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cancer, alzheimers, heart ailments, liver disease, deafness, permanent disability, etc.
The Wellness plan covers thirty eight critical illnesses, which is the highest number of
illness covered under one insurance plan in India by any insurance company. The
third Mediclaim insurance policy of Max New York Life Insurance is a term plus
Mediclaim protection plan known as "Safety Net". This provides coverage to the
insured person for any losses incurred by him/her in eventualities like critical illness,
accident, disability and death.

With 21 lakh life insurance policies and with an assured sum of Rs 62,000 crores in
its kitty Max Life Insurance wishes to achieve business at least five percent higher
than it did in the last financial year. The company also announced that it would go for
an expansion drive and would also increase the number of branch offices in Tamil
Nadu within the fiscal year 2008-2009. Max New York Life Insurance Company is
one of the fastest growing life insurance companies in India and is the first life
insurance company of India to be awarded with ISO 9001:2000 certification. This Rs
907.4 crores insurance company is one of the most respected companies in India.
After making strong inroads into the Indian life insurance market with a strong
product portfolio the company is expected to do well with its new product line in the
Indian Mediclaim insurance sector as well.

Royal Sundaram Group: The Shakthi Mediclaim Shield policy offered by the Royal
Sundaram group can be availed by members of the womens group, their spouses and
dependent children. No age limits apply. The premium for adults aged up to 45 years
is Rs 125 per year, for those aged more than 45 years is Rs 175 per year. Children are
covered at Rs 65 per year. Under this policy, hospital benefits up to Rs 7 000 per
annum can be availed, with a limit per claim of Rs 5 000. Other benefits include
maternity benefit of Rs 3 000 subject to waiting period of nine months after first
enrolment and for first two children only. Exclusion clauses apply (Ranson K &
Jowett M, 2003)

Cholamandalam General Insurance: The benefits offered (in association with the
Paramount Mediclaim Care, a re-insurer) in case of an illness or accident resulting in

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hospitalization, are cash-free hospitalization in more than 1 400 hospitals across India,
reimbursement of the expenses during pre- hospitalization (60 days prior to
hospitalization) and post- hospitalization (90 days after discharge) stages of treatment.
Over 130 minor surgeries that require less than 24 hours hospitalization under day
care procedure are also covered. Extra Mediclaim covers like general Mediclaim and
eye examination, local ambulance service, hospital daily allowance, and 24 hours
assistance can be availed of.Exclusion clauses apply.

Employer-based schemes:Employers in both the public and private sector offers


employer-based insurance schemes through their own employer-managed facilities by
way of lump sum payments, reimbursement of employees Mediclaim expenditure for
outpatient care and hospitalization, fixed medical allowance, monthly or annual
irrespective of actual expenses, or covering them under the group Mediclaim
insurance policy. The railways, defence and security forces, plantations sector and
mining sector provide medical services and / or benefits to its own employees. The
population coverage under these schemes is minimal, about 30-50 million people.

Insurance offered by NGOs / community-based Mediclaim insurance


Community-based funds refer to schemes where members prepay a set amount each year for
specified services. The premia are usually flat rate (not income-related) and therefore not
progressive. Making profit is not the purpose of these funds, but rather improving access to
services. Often there is a problem with adverse selection because of a large number of high-
risk members, since premiums are not based on assessment of individual risk status.
Exemptions may be adopted as a means of assisting the poor, but this will also have adverse
effect on the ability of the insurance fund to meet the cost of benefits.

Community-based schemes are typically targeted at poorer populations living in


communities, in which they are involved in defining contribution level and collecting
mechanisms, defining the content of the benefit package, and / or allocating the schemes,
financial resources (International Labour Office Universities Programme 2002 as quoted in
Ranson K & Acharya A, 2003). Such schemes are generally run by trust hospitals or
nongovernmental organizations (NGOs). The benefits offered are mainly in terms of
preventive care, though ambulatory and in-patient care is also covered. Such schemes tend to

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be financed through patient collection, government grants and donations. Increasingly in


India, CBHI schemes are negotiating with the for- profit insurers for the purchase of custom
designed group insurance policies. However, the coverage of such schemes is low, covering
about 30-50 million (Bhat, 1999). A review by Bennett, Cresse et al. (as quoted in Ranson K
& Acharya A, 2003) indicates that many community-based insurance schemes suffer from
poor design and management, fail to include the poorest-of-the- poor, have low membership
and require extensive financial support. Other issues relate to sustainability and replication of
such schemes.

Some examples of community-based Mediclaim insurance schemes are discussed herein.

Self-Employed Womens Association (SEWA), Gujarat: This scheme established


in 1992, provides Mediclaim, life and assets insurance to women working in the
informal sector and their families. The enrolment in the year 2002 was 93 000. This
scheme operates in collaboration with the National Insurance Company (NIC). Under
SEWAs most popular policy, a premium of Rs 85 per individual is paid by the
woman for life, Mediclaim and assets insurance. At an additional payment of Rs 55,
her husband too can be covered. Rs 20 per member is then paid to the National
Insurance Company (NIC) which provides coverage to a maximum of Rs 2 000 per
person per year for hospitalization. After being hospitalized at a hospital of ones
choice (public or private), the insurance claim is submitted to SEWA. The
responsibility for enrolment of members, for processing and approving of claims rests
with SEWA. NIC in turn receives premiums from SEWA annually and pays them a
lumpsum on a monthly basis for all claims reimbursed. (Ranson K & Acharya A,
2003).

Another CBHI scheme located in Gujarat, is that run by the Tribhuvandas


Foundation (TF), Anand. This was established in 2001,with the membership being
restricted to members of the AMUL Dairy Cooperatives. Since then, over 1 00 000
households have been enrolled under this scheme, with the TF functioning as a third
party insurer.

The Mallur Milk Cooperative in Karnataka established a CBHI scheme in 1973. It

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covers 7 000 people in three villages and outpatient and inpatient Mediclaim care are
directly provided.

A similar scheme was established in 1972 at Sewagram, Wardha in Maharashtra.


This scheme covers about 14 390 people in 12 villages and members are provided
with outpatient and inpatient care directly by Sewagram.

The Action for Community Organization, Rehabilitation and Development


(ACCORD), Nilgiris, Tamil Nadu was established in 1991. Around 13 000 Adivasis
(tribals) are covered under a group policy purchased from New India Assurance.

Another scheme located in Tamil Nadu is Kadamalai Kalanjia Vattara Sangam


(KKVS), Madurai. This was established in 2000 and covers members of womens
self-help groups and their families. Its enrolment in 2002 was around 5 710, with the
KKVS functioning as a third party insurer.

The Voluntary Mediclaim Services (VHS), Chennai, Tamil Nadu was established in
1963. It offers sliding premium with free care to the poorest. The benefits include
discounted rates on both outpatient and inpatient care, with the VHS functioning as
both insurer and Mediclaim care provider. In 1995, its membership was 124 715.
However, this scheme suffers from low levels of cost recovery due to problems of
adverse selection.

Raigarh Ambikapur Mediclaim Association (RAHA), Chhatisgarh was established


in 1972, and functions as a third party administrator. Its membership in the year 1993
was 72 000.

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Social Insurance or mandatory Mediclaim insurance schemes or government


run schemes (namely the ESIS, CGHS)
Social insurance is an earmarked fund set up by government with explicit benefits in return
for payment. It is usually compulsory for certain groups in the population and the premiums
are determined by income (and hence ability to pay) rather than related to Mediclaim risk.
The benefit packages are standardized and contributions are earmarked for spending on
Mediclaim services The government-run schemes include the Central Government
Mediclaim Scheme (CGHS) and the Employees State Insurance Scheme (ESIS).

Central Government Mediclaim Scheme (CGHS)


Since 1954, all employees of the Central Government (present and retired); some
autonomous and semi-government organizations, MPs, judges, freedom fighters and
journalists are covered under the Central Government Mediclaim Scheme (CGHS). This
scheme was designed to replace the cumbersome and expensive system of reimbursements
(GOI, 1994). It aims at providing comprehensive medical care to the Central Government
employees and the benefits offered include all outpatient facilities, and preventive and
promotive care in dispensaries. Inpatient facilities in government hospitals and approved
private hospitals are also covered. This scheme is mainly funded through Central
Government funds, with premiums ranging from Rs 15 to Rs 150 per
month based on salary scales. The coverage of this scheme has grown substantially with
provision for the non-allopathic systems of medicine as well as for allopathy. Beneficiaries at
this moment are around 432 000, spread across 22 cities.

The CGHS has been criticized from the point of view of quality and accessibility. Subscribers
have complained of high out-of-pocket expenses due to slow reimbursement and incomplete
coverage for private Mediclaim care (as only 80% of cost is reimbursed if referral is made to
private facility when such facilities are not available with the CGHS).

Employee and State Insurance Scheme (ESIS)


The enactment of the Employees State Insurance Act in 1948 led to formulation of the
Employees State Insurance Scheme. This scheme provides protection to employees against
loss of wages due to inability to work due to sickness, maternity, disability and death due to
employment injury. It offers medical and cash benefits, preventive and promotive care and

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Mediclaim education. Medical care is also provided to employees and their family members
without fee for service. Originally, the ESIS scheme covered all
power-using non-seasonal factories employing 10 or more people. Later, it was extended to
cover employees working in all non-power using factories with 20 or more persons. While
persons working in mines and plantations, or an organization offering Mediclaim benefits as
good as or better than ESIS, are specifically excluded. Service establishments like shops,
hotels, restaurants, cinema houses, road transport and news papers printing are now covered.
The monthly wage limit for enrolment in the ESIS is Rs. 6 500, with a prepayment
contribution in the form of a payroll tax of 1.75% by employees, 4.75% of employees' wages
to be paid by the employers, and 12.5% of the
total expenses are borne by the state governments. The number of beneficiaries is over 33
million spread over 620 ESI centres across states. Under the ESIS, there were 125 hospitals,
42 annexes and 1 450 dispensaries with over 23 000 beds facilities. The scheme is managed
and financed by the Employees State Insurance Corporation (a public undertaking) through
the state governments, with total expenditure of Rs 3 300 million or Rs 400/- per capita
insured person.

The ESIS programme has attracted considerable criticism. A report based on patient surveys
conducted in Gujarat (Shariff, 1994 as quoted in Ellis R et a, 2000) found that over half of
those covered did not seek care from ESIS facilities. Unsatisfactory nature of ESIS services,
low quality drugs, long waiting periods, impudent behaviour of personnel, lack of interest or
low interest on part of employees and low awareness of ESI procedures, were some of the
reasons cited.

Other Government Initiatives


Apart from the government-run schemes, social security benefits for the disadvantaged
groups can be availed of, under the provisions of the Maternity Benefit (Amendment) Act
1995, Workmens Compensation (Amendment) Act 1984, Plantation Labour Act 1951, Mine
Mines Labour Welfare Fund Act 1946, Beedi Workers Welfare Fund Act 1976 and Building
and other Construction Workers (Regulation of Employment and Conditions of Service) Act,
1996.

The Government of India has also undertaken initiatives to address issues relating to access to

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Project on Mediclaim Insurance

public Mediclaim systems especially for the vulnerable sections of the society. The National
Mediclaim Policy 2002 acknowledges this and aims to evolve a policy structure, which
reduces such inequities and allows the disadvantaged sections of the population a fairer
access to public Mediclaim services. Ensuring more equitable access to Mediclaim services
across the social and geographical expanse of the country is the main objective of the
policy. It also seeks to increase the aggregate public Mediclaim investment through increased
contribution from the Central as well as state governments and encourages the setting up of
private insurance instruments for increasing the scope of coverage of the secondary and
tertiary sector under private Mediclaim insurance packages. The government envisages an
increase in Mediclaim expenditure as a % of GDP from existing 0.9% to 2.0 % by 2010 and
an increase in the share of central grants from the existing 15% to constitute at least 25% of
total public Mediclaim spending by 2010. The State government spending for Mediclaim in
turn would increase from 5.5% to 7% of the budget by 2005, to be further increased to 8% by
2010.

The National Population Policy (NPP) 2000, envisages the establishment of a family welfare-
linked Mediclaim insurance plan. As per this plan, couples living below the poverty line who
undergo sterilization with not more than two living children would be eligible for insurance.
Under this scheme, the couple along with their children would be covered for hospitalization
not exceeding Rs 5 000 and a personal accident insurance cover for the spouse undergoing
sterilization. The Institute of Mediclaim Systems (IHS), Hyderabad has been entrusted the
responsibility of operationalizing the mandate of the NPP 2000. The initial scheme proposed
by the HIS was discussed at a workshop in June 2003. The consensus at the meeting was that
the scheme, needed further improvement prior to its implementation even as a pilot project.

In keeping with the recommendations of the Tenth Five Year Plan and the National
Mediclaim Policy (NHP) 2002, the Department of Family Welfare is also proposing to
commission studies in eight states covering eight districts, to generate district-specific data,
which is essential for conceptualization of a reasonable and financially viable insurance
scheme.

The current plan the Tenth Five Year Plan (2002-07) - also focuses on exploring alternative
systems of Mediclaim care financing including Mediclaim insurance so that essential, need-

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Project on Mediclaim Insurance

based and affordable Mediclaim care is available to all. The urgent need to evolve, implement
and evaluate an appropriate scheme for Mediclaim financing for different income groups is
acknowledged. In the past, the government has tried to ensure that the poor get access to
private Mediclaim facilities through subsidy in the form of duty exemptions and other such
benefits. Social Mediclaim insurance for families living below the poverty line has been
suggested as a mechanism for reducing the adverse economic consequences of hospitalization
and treatment for chronic ailments requiring expensive and continuous care.

In the budget for the year 2002-2003, an insurance scheme called Janraskha was introduced,
with the aim of providing protection to the needy population. With a premium of Re 1/- per
day, it ensured indoor treatment up to Rs 3 000 per year at selected and designated hospitals
and outpatient treatment up to Rs 2 000 per year at designated clinics, including civil
hospitals, medical colleges, private trust hospitals and other NGO-run institutions. A few
states have started implementing this scheme under pilot phase.
In the budget for the period 2003-2004, another initiative of community-based Mediclaim
insurance has been announced. This scheme aims to enable easy access of less advantaged
citizens to good Mediclaim services, and to offer Mediclaim protection to them. This policy
covers people between the age of three months to 65 years. Under this scheme, a premium
equivalent to Re 1 per day (or Rs 365 per year) for an individual, Rs 1.50 per day for a family
of five (or Rs 548 per year), and Rs 2 per day for a family of seven (or Rs 730 per year),
would entitle them to get reimbursement of medical expenses up to
Rs 30 000 towards hospitalization, a cover for death due to accident for Rs 25000 and
compensation due to loss of earning at the rate of Rs 50 per day up to a maximum of 15 days.
The government would contribute Rs 100 per year towards the annual premium, so as to
ensure the affordability of the scheme to families living below the poverty line. The
implementation of this scheme rests with the four public sector insurance companies.
The government also offers assistance by way of Illness Assistance Funds, which have been
set up by the Ministry of Mediclaim and Family Welfare at the national level and in a few
states. State Illness Assistance Funds exist in Andhra Pradesh, Bihar, Goa, Gujarat, Himachal
Pradesh, Jammu and Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Mizoram,
Rajasthan, Sikkim, Tamil Nadu, Tripura, West Bengal, NCT of Delhi and UT of Pondicherry.
A National Illness Assistance Fund (NIAF) was set up in 1997, with the scheme being
reviewed in January 1998. Through this, three Central

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Government hospitals and three national-level institutes have been sanctioned


Rs 10 00 000 each at a time from the NIAF to provide immediate financial assistance to the
extent of Rs 25 000 per case to poor patients living below the poverty line and who are
undergoing treatment in these hospitals / institutions. Thereafter the scheme has been
extended to few other institutes across the country and provides Rs 25 000 Rs 50 000 per
case.

Mediclaim insurance initiatives by State Governments


In the recent past, various state governments have begun Mediclaim insurance initiatives. For
instance, the Andhra Pradesh government is implementing the Aarogya Raksha Scheme since
2000, with a view to increase the utilization of permanent methods of family planning by
covering the Mediclaim risks of the acceptors. All people living below the poverty line and
those who accept permanent methods of family planning are eligible to be covered under this
scheme. The Government of Andhra Pradesh pays a premium of Rs 75 per acceptor. The
benefits to be availed of, include hospitalization costs up to Rs.
4000 per year for the acceptor and for his / her two children for a total period of five years
from date of the family planning operation. The coverage is for common illnesses and
accident insurance benefits are also offered. The hospital bill is directly reimbursed by the
Insurance Company, namely the New India Assurance Company.

The Government of Goa along with the New India Assurance Company in 1988 developed a
medical reimbursement mechanism. This scheme can be availed by all permanent residents of
Goa with an income below Rs 50 000 per annum for hospitalization care, which is not
available within the government system. The non-availability of services requires
certification from the hospital Dean or Director Mediclaim Services. The overall limit is Rs
30 000 for the insured person for a period of one year.
A pilot project on Mediclaim insurance was launched by the Government of Karnataka and
the UNDP in two blocks since October 2002. The aim of the project was to develop and test a
model of community Mediclaim financing suited for rural community, thereby increasing the
access to medical care of the poor. The beneficiaries include the entire population of these
blocks. The premium is Rs 30 per person per year, with the Government of Karnataka
subsidizing the premium of those below poverty line and those belonging to Scheduled
Castes/ Scheduled Tribes. This premium entitles them to hospitalization coverage in the

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government hospitals up to a maximum of Rs 2 500 per year, including hospitalization for


common illnesses, ambulance charges, loss of wages at Rs. 50 per day as well as drug
expenses at Rs 50 per day. Reimbursements are made to an insurance fund which has been
set up by the NGO / PRI with the support of UNDP.
The Government of Kerala is planning to launch a pilot project of Mediclaim insurance for
the 30% families living below the poverty line. The scheme would be associated with a
government insurance company. Currently, negotiations are under way with the IRA to seek
service tax exemption. The proposed premium is Rs 250 plus 5% tax. The maximum benefit
per family would be Rs 20 000. The amount for the premium would be recovered from the
drug budget (Rs 100), the PRI (Rs 100) and from the beneficiary (Rs 62.50) while the
benefits available would include cover for hospitalization, deliveries
involving surgical procedures (either to the mother or the newborn). Instead of
payment by the beneficiary, Smart Card facility would be offered. This scheme would be
applicable in 216 government hospitals.

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CHAPTER II
Literature Review

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CHAPTERI V
1. Your age ? ( one box)
[1] < 30 years
[2] 3039years
[3] 4049years
[4] 50 and over years

2. Do you know about Medi claim insurance?

Options Number Percentage


Yes 114 95%
No 6 5%

120

100

80

60 Series1

40

20

0
yes no

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3. The question was asked to the respondents to know how many of the respondents
had a Shop insurance policy.?

Options Number Percentage


Yes 78 65%
No 42 35%

90

80
70

60

50
Series1
40

30

20
10

0
yes no

From the survey it was found out that 65% of the respondents had a Medi claim insurance
policy whereas 35% of the respondents didnt had a Medi Claiminsurance policy

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4. With which company?

Company Number Percentage


HDFC ERGO 5 4.16%
Oriental Ins. 26 21.67%
National Ins 67 55.83%
Others 22 18.33%

80

70

60

50

40 Series1

30

20

10

0
bajaj oriental national others

The finding which came out from the survey was that 55.83% of the respondents who have a
insurance cover bought Medi claim insurance from National Insurance Company Ltd.
National Insurance Company is the most preferred brand in the insurance industry because it
is the only government company which offers insurance. People prefer to buy insurance from
National Insurance Company
because of the security being one of the prime factors. In the figure we can also see that
nowadays people mindset have changed towards insurance and are opting for private
company for insurance cover or policy.

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5. From whose suggestion have the respondents taken a policy?


It was asked to gain an insight from the respondents that on whose suggestion did they
opt for a Medi claim insurance cover or policy.

Family Friends Agents Others


50% 25% 23% 12%

After the survey it was found that most of the respondents took policy or shop insurance
cover from the suggestions of their friends or family.And only 23 respondents took policy on
the recommendation of the agents.Other sources like banks, corporate tie-ups and etc. plays a
minute role in reaching out people for insurance policies.

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6. What is the insurance coverage?

Coverage Number Percentage


Fire 120 100%
Motor 120 100%
Burglary 87 72.5%
Others 33 27.5%

Number

140

120

100

80
Number
60

40

20

0
Fire Motor Burglary Others

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7. Given an option will you change your insurance company?

Option Number Percentage


Yes 35 29.16%
No 85 70.83%

Number

90
80
70
60
50
Number
40
30
20
10
0
Yes No

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8. Why would you change your insurer?

Option Number Percentage


Better Services 33 27.5%
More Options 51 42.5%
Better claim handling 24 20%
Others 12 10%

Number

60

50

40

30 Number

20

10

0
Better Services More Options Better claim handling Others

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9. Are you aware about following insurances?

Types of Cover Number Percentage


Fire 120 120%
Burglary 112 112%
Theft 116 96.67%
Workmens Compensation 65 54.16%
Public Liability 98 81.76%
Glass Plate 23 19.16%
Office 78 65%
Neon sign 12 10%

Number

140
120
100
80
Number
60
40
20
0
Burglary

Public Liability
Theft
Fire

Office

Neon sign
Glass Plate
Compensation
Workmens

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10. Why do you think insurance must be done?

Option Number Percentage


Safety 111 111%
Tax Rebate 51 42.5%
Compulsary by law 89 74.16%
Market Trend 33 27.5%

Number

120

100

80

60 Number

40

20

0
Safety Tax Rebate Compulsary by law Market Trend

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