Taking Cover. Nuts and bolts of out-patient policy

A health cover that pays for hospitalisation is a must-have for people of all ages and economic categories.

But what about out-patient department (OPD) expenses related to regular visits to the doctor, periodic diagnostic tests and bills pertaining to medicines bought at the pharmacy?

Many insurance companies offer OPD cover along with their regular health policies to cover these expenses.

But before opting for a health cover that has OPD benefits, it is important to understand what is covered, the maximum amount allowed under these policies and the cost implications.

Here we take a closer look at these aspects to decide if the additional benefits justify the added costs.

Expenses covered

The OPD cover is not sold as a standalone product and would always be a part of a regular health insurance policy.

Companies such as Star Health, Apollo Munich, ICICI Lombard and Max Bupa offer policies that have OPD benefits.

A typical OPD cover would include doctor consultation fees, costs of medicines prescribed and medical tests conducted.

Settlement is done by both cashless as well as reimbursement modes.

But the most important part to note is that the amount settled under OPD cover is a small fraction of the overall sum assured.

In a typical health policy with sum assured of ₹10 lakh, the amount allowed under OPD cover would be only ₹10,000 in a year. And it is not as if you can exhaust the entire OPD amount at one go.

There are limits on costs for every consultation, medicines or diagnostic tests.

Max Bupa, for example, allows a maximum of ₹600 per doctor consultation.

The company allows up to 10 consultations in a year for a ₹10 lakh regular health cover that also has OPD benefits.

For a ₹4 lakh cover, the number of consultations is restricted to four. Diagnostic tests have a limit of ₹1,500.

Higher premiums

With out-patient visits to the doctor for minor ailments being a common affair, insurance companies tend to charge hefty premiums to provide cover. More often than not, the OPD amount is equal to or only marginally higher than the additional premium paid.

Star Health’s insurance policy with OPD benefits charges a premium of ₹15,000 (excluding taxes) for a ₹5 lakh family floater cover for a 35-year old, his/her spouse and their child (two adults and one child). The maximum OPD expenses allowed by the policy for a family with two adults and a child are ₹3,280.

A ₹5 lakh health policy without OPD cover with Star Health, for the same age, profile and number of people, is available for ₹11,915 (excluding taxes).

In other words, for an OPD cover of ₹3,280, you pay an additional premium of ₹3,085 (₹15,000 minus ₹11,915)! The case is similar with Max Bupa and ICICI Lombard, where a ₹10 lakh policy with OPD benefits cost ₹4,000-7,000 more than one without out-patient cover.

Should you take it?

The additional premium that is paid does have tax benefits under Section 80D of the Income Tax Act.

Reimbursements received from insurance companies for OPD benefits are not taxable either.

But tax benefit should not be the only reason to take up OPD cover. As seen earlier, the premiums are fairly high for the additional cover.

One of the arguments in favour of OPD cover is that, for ailments such as diabetes or high blood pressure, there would be a frequent need to take medicines or visit doctors. But such patients may not get a cover in the first place from insurance companies or, even if they do, the premiums are likely to be hefty. It would be better for people to save separately for out-patient doctor visits.

Ideally, you must set aside a sum from your salary and invest in a liquid fund, short-term fixed deposit or even a recurring deposit to build a out-patient medical contingency.

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