What Is Health Insurance And How Does It Work?

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As health issues continue to rise, so do the costs of the associated treatments. From routine doctor visits to specialised treatments, healthcare expenses can quickly escalate, posing a financial burden on individuals and families alike. Health insurance has become an essential requirement, cushioning against the unpredictability of medical bills. Yet, despite the importance of health insurance, many remain unsure about what it entails and how it works. Let us know more about it in this blog.  

What is Health Insurance?

Health insurance is a plan that helps you cover medical expenses in times of need. You pay a monthly premium, and in exchange, the insurer covers a portion of your healthcare expenses. This coverage typically includes expenses related to doctor visits, prescriptions, hospital stays and preventive care. Health insurance aims to provide financial protection against unforeseen medical expenditures, ensuring access to essential healthcare services without imposing significant financial strain.

Here are some key health insurance terms to understand:

1. Premium: The amount you pay periodically to get health insurance coverage.

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2. Deductible: The amount you must pay out of your pocket for services before your insurance plan begins to contribute. For instance, if your deductible is 35,000 INR and you have a medical bill of 10,00,000 INR, you'll need to pay the first 35,000 INR yourself (that's your deductible). After that, your insurance will cover the remaining 9,75,000 INR of the bill. So, the deductible is what you pay upfront, and then your insurance takes care of the rest.

3. Co-Payment: A fixed amount you pay for certain medical services at the time you receive them. They are payable every time you make a claim.

4. Co-Insurance: A percentage of the medical costs shared between you and your insurance company after meeting your deductible.

5. Waiting Period: Some insurance plans have waiting periods before certain benefits become accessible. During this time, you may not be able to claim benefits related to those conditions or treatments.

How does Health Insurance Work?

Using health insurance can differ depending on your situation, whether it's for a sudden medical emergency or a scheduled procedure. Let’s understand this in detail:

1. In Case of An Emergency 

When faced with an unexpected medical emergency, your health insurance can provide crucial support by: 

  • Providing immediate access to services
    You can access emergency medical services, including doctors and critical procedures, promptly without having to worry about the cost.
  • Coverage for emergency services
    Your insurance plan can cover expenses such as emergency room visits, ambulance rides, and hospitalisation.

2. In Case of A Planned Admission 

Before getting a hospital admission, one must know what their plan covers, including surgeries, specialised treatments, and hospital admissions. In case of a planned hospitalization:

  • You will have to notify your health insurance provider in advance about the upcoming procedure or treatment. 
  • The insurance provider will then confirm coverage for the specific services and procedures involved. 
  • Once confirmed, you will have to obtain pre-authorization for certain treatments or hospital stays.

Which Health Insurance is the Best?

Determining which health insurance is the best for you depends on your individual needs and circumstances. Certain factors need to be considered when evaluating different health insurance options.

1. Coverage Options

Look for a plan that offers comprehensive coverage including doctor visits, hospitalisation, prescription and preventive care.

2. Low Waiting Period

Choose a plan with a minimal waiting period for immediate medical attention.

3. Network Providers

Check if the insurance plan includes a wide network of healthcare providers so that you may have access to quality care from preferred doctors and hospitals.

4. Rider Facility

Look for add-ons to customise coverage based on your specific healthcare needs, like maternity coverage, dental care or critical illness coverage.

5. Affordability

Consider premium costs and out-of-pocket expenses associated with health insurance. Look for a balance between affordability and comprehensive coverage.

6. Customer Service

Examine the insurance company’s reputation for customer service, including responsiveness to queries, ease of claims processing, and emergency assistance.

7. Coverage Limits and Exclusions

Review the health insurance plan’s coverage limits and exclusions to make sure they align with your needs.

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Health insurance offers financial protection against the uncertainties of medical expenditures while also helping you access essential healthcare services. Understanding its fundamentals empowers you to make informed decisions about your healthcare. 


Frequently Asked Questions

How is health insurance premium calculated?

Premium is calculated based on several factors, such as age, health status, location, and coverage level. Insurers may also consider medical history, lifestyle habits and number of people covered under the policy. Premiums may vary among insurers and plan types.

The minimum age for eligibility varies among insurers and policies. Some may offer health insurance for newborns while some may have minimum age requirements. 

Yes, in certain circumstances, benefits from multiple insurance policies may be claimed simultaneously. This process is known as coordination and should comply with the terms and regulations of those policies.

It is advisable to buy a health insurance policy as early as possible to claim lower premium benefits and ensure coverage for sudden medical expenses.

The most common type is employer-sponsored health insurance. Employers provide coverage to employees as part of their benefits package.

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