Hospital cash benefit: Here’s all that you need to know

A health insurance policy reduces the financial burden on the individual and his/her family during medical emergencies. While health policies cover hospitalisation expenses, most of the time, there are expenses that need to be paid from your pocket as well.

In such a scenario, hospital cash allowance, one of the many benefits offered in a comprehensive health policy, turns out to be of great use to policyholders. It means, if you, as a policyholder, gets hospitalised, your health insurer will provide you a lump sum amount for every day of hospitalisation, up to a certain limit. This comes in handy, especially during the current pandemic situation. However, note that the hospital cash benefit comes with a catch. Here is what you should know.

Features

While your health insurance policy takes care of your hospitalisation and medical expenses, the daily cash benefit helps meet any non-medical expenses that you may incur. These expenses are usually inadmissible at the time of claims, and include hospital gown, gauze, adhesive bandages, maintenance and housekeeping charges, admission charges, conveyance charges, and some diagnostic expenses. Most of the insurers including Tata AIG, ICICI Lombard, Max Bupa, Bajaj Allianz, Star Health and Digit, offer hospital cash benefit as an optional cover within the policy for additional premium, while some insurers offer this cover in-built. Aditya Birla Health and Liberty General fall in the latter category.

While buying a health policy, one needs to keep certain key aspects in mind regarding this clause. First, is the minimum duration of hospitalisation. The daily cash benefit kicks in only if the insured is hospitalised for a minimum period of, usually, 24 hours, and up to a certain number of days. Second, the maximum amount payable differs from insurer to insurer, and is usually dependent on the sum insured (SI). For instance, Tata AIG’s Medicare pays its policyholders in case of hospitalisation for a period of 24 hours. The coverage limit is 0.25 per cent of the SI up to a maximum of ₹2,000 per day. Some insurers have a minimum hospitalisation requirement of beyond 24 hours too. For Max Bupa’s ReAssure policy, the insured should be hospitalised for a minimum of 48 minimum and the hospital cash benefit is payable up to 30 days. The amount depends on the SI and ranges between ₹1,000 per day and up to ₹4,000 per day. In the case of ICICI Lombard’s iHealth Plus, hospitalisation should be for a minimum of three consecutive days or more. The insurer will pay ₹500-2,000 per day (depending on the SI) up to a maximum of 10 consecutive days.

Cornoa Kavach also comes with hospital daily cash rider. The insurer will pay 0.5 per cent of the SI per day up to 15 days, provided the policyholder is hospitalised for 24 continuous hours.

Certain insurers such as Digit Insurance (Comfort option) allow policyholders to choose the maximum number of days for payment of this benefit (to be chosen at the time of purchase of policy) — 30, 60, 90 and 120 days.

Note that with certain insurers, the hospital cash benefit is applicable depending on the room type taken by the insured (shared accommodation or single private room), at the time of hospitalisation. For instance, Tata AIG’s Medicare offers hospital cash for shared accommodation. Similarly, the Optima Restore plan of HDFC Ergo Health offers daily cash benefit of ₹800-1,000 per day up to ₹4,800, for choosing shared accommodation.

But, largely, irrespective of the type of room, insurers provide for daily cash allowance as an optional cover.

Standalone policy

In case of in-built and also rider hospital cash benefit, all exclusions/waiting period mentioned in the base plan applies to them as well.

That said, in the case of standalone hospital cash policies, the product works like a benefit policy (where the policy terminates once the claim is paid). Some insurance companies including Bajaj Allianz General, SBI General, Star Health and Future Generali offer hospital cash as a standalone policy. It comes with its exclusions such as pre-existing diseases, out-patient expenses, self-afflicted injuries and any routine or prescribed health check-up or examination.

Standalone policies have a waiting period of 30 days.

The catch

While your hospitalisation expenses are cashless, the hospital cash benefit is usually paid via reimbursement, that is, you will have to submit your hospital discharge form along with the claim form to your insurer, who will then credit the amount of the hospital cash benefit to your account. So, when you are hospitalised, the inadmissible expenses have to be borne by you despite you having the hospital cash cover.

Further, note that, if you are buying the hospital cash benefit cover as a rider, you will have to cough up extra premium. Buy the cover only if you think the extra premium makes sense.

If you want hospital cash benefit, it’s best to consider policies that have it in-built.