Health Insurance With Built-in OPD Cover: Should you opt?

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For families, which owing to some member with chronic ailment need to make frequent hospital visits as well as spent a substantial amount on medication can certainly opt for a cover for OPD expenses. The OPD cover termed as though primarily provides for expenses incurred in OPD consultation, pathological or diagnostic test and medications. Out Patient Department are costs largely associated with the smaller expenses that we incur on hospitalization.

Tax benefit or allowability of its deduction under Section 80D as per the prescribed limit is the biggest and only advantage of such plans considering the higher cost. The accruing benefit shall be explained in detail with an example.

Cover for OPD expenses less than Premium Amount while Premium peaks to over50% of Sum insured Value

For an added amount paid as premium for the extra OPD cover, insured is entitled to a cover value that is usually less than the premium paid. Nonetheless, the waiting period that these policies come with is in a general case of 3 months or 90 days.

Several Exclusions

Additionally, a set of exclusions are associated with a though dedicated OPD cover, as any dental procedure, sight glasses, external equipment such as hearing aids, vaccination , lab diagnosis and X-ray aren't the part of the cover. Also, cover for treatment of any psychiatric condition is not offered.

Cashless OPD not known

Insured needs to submit the claim form along with proofs of expenses in order to get the money paid for OPD treatment. 

Also read Best Health Insurance Plans in India

Tax Benefit with an Illustration

Family floater plan for a family of four that comes at an annual premium of Rs. 8000 can be clubbed with an additional cover for OPD expenses. Suppose, the top-up for OPD cover increases your premium by 18000. Note, claim under the OPD cover is usually lower that is for an additional payment of Rs. 18,000 you can claim any amount less than this. So, the two scenarios, i.e in a case when you opt for the OPD cover and when you do not, taxation benefits can be understood as hence.

Without the OPD cover when you happen to incur considerable amount on OPD consultation and medication, you pay a hefty say Rs. 8000 towards the heath cover and Rs. 1600 towards other OPD and bills, totaling your expenditure to RS. 24,000. As per the provisions of Income Tax, claim of upto 30% on health insurance premium is allowed as deductions. (30% of 8000= 2400). So, net expenses for the person without the OPD cover comes to be 24000-2400= Rs. 21600.

In a case, when the person has opted for a cover and incurs Rs. 16000 for OPD who also gets the reimbursement on it, happens to save on 30% on the premium amount or Rs. 25000, so Rs. 7500 allowed as deduction. So, net incur for him totals to premium amount paid less the deductions allowed, i.e. (26000-7500); Rs. 18,500.

 

Conclusion

In case you are a person making frequent hospital visits, you can still opt for a medical cover with OPD in-bulit functionality. But before shelling out such high premium, ensure that you end up taking the maximum benefit together with taxation benefit. Nonetheless, you have other better choices to go about for planning your health needs like the discount health card or a substantial corpus for healthcare contingency that can be meted by parking funds in a dedicated way in short term liquid or debt funds or an FD or RD.

Story first published: Tuesday, May 9, 2017, 10:46 [IST]
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