All You Wanted To Know About A Top-Up Health Insurance Plan

With medical expenses on the rise, you may feel the need to increase your existing health insurance cover, If yes, can a top-up plan serve your purpose Or, should you consider hiking the sum assured under your existing health plan.

It allows people to get their medical expenses covered even if they have exhausted the sum insured of their regular health insurance policy. However, a top-up plan comes with a mandatory deductible or threshold limit and provides coverage only after the insured has paid the deductible amount. The Top-up insurance plan provides insurance coverage by replenishing the sum insured up to a certain amount. Once the medical expenses cross the deductible limit, the Top-up plan gets activated.

What is top-up health insurance?

A top-up health insurance plan enhances your existing health insurance policy’s sum insured amount. It provides financial coverage after you have utilized the maximum claim amount. When the set sum insured amount is exhausted, it acts as an additional layer of financial protection and backup to your primary health insurance plan.

For example, it was not until 1904 that a spare tyre was added to the car so that if the tyre got punctured, you have the backup in the form of a spare tyre. Top-up plans work in the same fashion as a spare tyre does to the car.

With advancements in healthcare infrastructure and technology, medical costs are always on the rise. Therefore it is essential to have a health insurance plan that comprehensively covers you against all types of medical emergencies.

When your medical expenses exceed the limit of your base health plan, top-up plans act as a safety net.

There are two types of top-up health insurance policies in India. Here are the details.

• Top-up plan: The top-up insurance plan provides insurance coverage by replenishing the sum insured up to a certain amount. Once the medical expenses cross the deductible limit, the top-up plan gets activated.

• Super top-up plan: This top-up plan provides additional insurance coverage after the medical costs exceed the threshold limit. While the top-up plan considers the threshold limit/deductible for every claim, the super top-up plan considers all the claims put together in a policy period.

In both plans, if the illness relapses within 45 days of discharge from the hospital, it is usually considered a single illness. However, if the illness relapses after 45 days from discharge, it is generally considered a fresh illness.

How does top-up health insurance work?

The primary health insurance plan covers medical bills up to the sum insured, while a top-up plan provides coverage after the sum insured has exhausted as per policy. Please note, the mandatory deductible is payable as per the terms and conditions of the policy.

Suppose you have opted for a health insurance plan with a sum insured of Rs. 5 lakhs and enhanced the existing plan with a top-up insurance plan of Rs. 10 lakhs. Thus, the total sum insured amount is Rs. 15 lakhs with a set threshold limit of Rs. 5 lakhs.

If your medical bill is Rs. 8 lakhs, your insurer will pay Rs. 5 lakhs from your base plan and Rs. 3 from your top-up plan. Here is the example in a table for your reference.

Note: The top-up plans work on a per claim basis. Hence, the deductible rule will apply for each claim and not the total medical expenses incurred during the policy year. Meaning, only if the claim amount exceeds the deductible limit, the top-up plan will be active.

Super top-up plans in health insurance

Super top-up plans are similar to top-up plans that enhance your health insurance sum insured. However, the difference is that super top-up plans work on the total medical expenses incurred during the policy year and not on a per claim basis.

Unlike the regular top-up health insurance plan that only covers claims when a single claim surpasses the threshold limit, the super top-up plan covers claims when the overall claims during the policy period are above the threshold limit.

In the recent past, there has been a massive improvement in healthcare infrastructure and pharmaceuticals. This improvement has resulted in an increase in healthcare expenses. Therefore, you must be well-protected with a health insurance plan that has the benefit of a super top-up plan and avoids higher out-of-pocket expenses.

How does super top-up health insurance work?

The base health insurance policy covers medical expenses up to the sum insured amount. In contrast, the super top-up health insurance plan provides financial cover after you exhaust the sum insured amount. Similar to the top-up plan, the super top-up plan covers expenses of the cumulative claim amount that exceeds the threshold limit.

For example: Suppose you have opted for a health insurance coverage of up to Rs. 5 lakhs and enhanced the existing plan with a super top-up insurance plan of Rs. 10 lakhs. Thus, the total sum insured amount is Rs. 15 lakhs with a threshold/deductible limit of Rs. 5 lakhs.

If your medical bill is Rs. 8 lakhs, your insurer will pay Rs. 5 lakhs from the base policy and Rs. 3 lakhs from the super top-up plan.

You need to note that the threshold limit is not considered for every claim in the super top-up plans but rather on the total hospitalisation bill during the policy period (cumulative claims). However, in the case of a top-up plan, the plan will only turn active if the medical bill crosses the threshold limit for each claim.

Here is the example in a table for your reference.

Inclusions in super and top-up health insurance plans

Following are the coverage details of top-up and super top-up health insurance plans depending upon specific coverage offered by an insurer.

• Hospitalisation cover
• Pre- and post-hospitalisation cover
• Inpatient expenses
• Annual health check-up
• Day-care procedures

Exclusions in super and top-up health insurance plans

Here are the non-coverage details of top-up and super top-up insurance plans depending upon specific coverage offered by an insurer.

• Pre-existing diseases
• Medical expenses during the waiting period
• Self-inflicted injury
• Pre- and post-natal medical expenses, unless hospitalisation is required
• No claim until you have exhausted the deductible
• Infertility treatment
• Plastic or cosmetic surgeries
• Hospitalisation without doctor’s recommendation

Difference between top-up plan and super top-up plan in health insurance

Both the plans provide financial support when the medical costs surpass the sum insured limit. While their primary aim is to offer additional financial protection, they differ in terms of coverage.

In other words, a top-up health insurance plan will provide financial support for medical costs when your claim crosses the threshold limit.

In contrast, a super top-up health insurance plan will provide for medical expenses when one or more claims (during the policy period), put together, crosses the threshold limit.

NOTE: In the above table, both Top-up and Super Top-up plans had a sum insured of Rs 10 lakh. The deductible chosen is Rs 2 lakh. The amount claimed was Rs 5 lakh. And in both the plans the insurance companies paid Rs 5 lakh to the policyholder.

When the second claim was filed it was Rs 6 lakh. In that case, anyone with a top-up health plan had to pay the deductible amount of Rs 2 lakh and the remaining Rs 4 lakh was paid by the insurer. Super top-up health insurance holders had to pay nothing and the complete claim amount i.e. Rs 6 lakh was paid by the medical insurance company.

This is where a Super-Top up plan has a slight edge over a Top-up health plan.

Which one to choose?

The top-up and super top-up health insurance act as a shield that helps if you exceed the limit of the existing base plan. But both have different benefits.

If you do not suffer from a chronic illness or run the risk of a terminal ailment, you should choose the top-up plan.

However, if you have the risk of a chronic disease that may require you to be hospitalised more once, you should choose the super top-up plan.

PLEASE NOTE THAT : According to the experts, to cover the risk of chronic ailments requiring more than one hospitalization in a year, then a Super top-up plan should be your choice. Also, the cost of the premium is low in comparison to buying a separate health plan with higher coverage amount. Moreover, it is suitable for senior citizens, who tend to undergo medical procedures frequently. Super top-up plans with cumulative coverage can be quite beneficial here.

PLEASE NOTE THAT:

1.A Top Up plan is cheaper than a Super Top Up plan because in case of a Top Up Plan, the deductible is applicable on every claim, while in case of a Super Top Up plan, the deductible is applicable only once in a policy year.

2. If both base and super top-up plans are from the same insurer, the entire bill can be paid in a cashless manner.

3. These plans offer you the desired medical coverage in case the sum insured amount of your current health insurance policy gets exhausted. So, if you think that your existing sum insured/coverage amount is not sufficient, then a top-up health plan is a good option for you.

4. Deductible in a top-up plan is common. It is the limit up to which the insurer will bear the healthcare costs and the remaining will be borne by the policyholder. A top-up plan medical insurance plan provides coverage above the existing coverage limit under the current health plan.

5. Waiting period of only one year in all Pre-Existing Diseases. Waiting periods for specific diseases are limited to 90 days, one and two years instead of the usual one, two and four years. Medical expenses are reimbursed without any sub limits. (For e.g., Room rent per day, Doctor’s fees & etc.).

6. Additionally, most health insurance companies in India set the age limit for health insurance purchase at 65. By this age, policyholders are considered high-risk candidates and are therefore required to pay higher premiums.

7. Section 80D of the Income Tax Act, 1961 allows eligible taxpayers to avail tax deductions on the total premium paid towards health insurance in a financial year. It is available on regular health insurance premiums along with the premiums paid for top-up plans and critical illness plans.

8. If you’re in good health, rarely need prescription drugs, and don’t expect to incur significant medical expenses in the coming year, you might consider an HDHP(High Deductible Health Plan). In trade for lower premiums, HDHPs require you meet your deductible before you get any coverage for treatment other than preventive care.

CONSLUSION:

1.A top-up plan can help you enhance your insurance coverage without tweaking your existing regular health policy (base plan).

2. For someone with no health insurance, taking a base plan and a top-up plan can turn out to be more cost effective than relying solely on a base plan.

3. Unlike a regular health plan, top-up plans come with deductibles. That is, there is a certain amount that the policyholder has to bear before the insurance company starts footing the medical bill.

4.Deductibles can be of two types – one where the deductible limit is applied to each and every claim, and another, where it is applied to the aggregate of all claims in a year. The latter is more favourable to the policyholder.

5. Apart from deductibles, there are no other differences between a regular health policy and a top-up plan.

6. If your employer provides a health insurance cover, try to enhance the sum insured by buying a top-up before going for a personal base, or full-fledged, health cover.

7. A retail top-up health plan is subject to waiting periods but under a corporate health cover, your claims get covered right from the start.

8. You do not need to buy a top-up plan from the same insurer from who you purchased your regular health policy

9. In fact, you can buy a top-up plan even if you do not have a regular health cover.

10. If you have more than one health plan, you can split a claim across all these different policies at your discretion.

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DISCLAIMER: the article presented here is only for sharing information with readers. Do consult with insurance professionals in case of need.