Hospitalisation costs in India have surged by 11.35% in just one year, putting immense pressure on families even with existing health insurance. A basic health policy may cover common medical expenses, but what happens when a single hospital stay exceeds your coverage limit?
That’s where a Top-Up Health Insurance Plan steps in. It provides extra protection without the high premiums of opting for another health insurance plan with a higher sum insured. It is a smart, cost-effective way to boost your financial security against rising medical inflation.
Read below to understand when buying a top-up for health insurance is necessary.
What is Top-Up for Health Insurance?
Top-up health insurance provides additional coverage that comes into play when your existing policy limit gets exhausted. Think of it like a mobile top-up: when the data or talk time of a phone runs out, it is recharged. Similarly, with a top-up plan, it's like "recharging" your medical insurance coverage, and stepping in to pay for medical expenses beyond the limit of the base policy.
These are affordable, flexible plans that offer higher coverage at lower premiums. They can be used in addition to the individual's or employer's mediclaim policy to handle any sudden medical emergency without creating a financial setback.
How Does a Top-Up Plan Work?
Most top-up plans cover inpatient hospitalisation, pre- and post-hospitalisation expenses, day care procedures, organ donor costs, emergency ambulance charges, and even domiciliary treatments. This ensures comprehensive support when medical expenses exceed your regular plan’s limit.
A top-up health insurance plan comes into effect only after your base policy’s coverage limit is used up. It has a deductible, which is the amount you must first pay (either personally or through another policy) before the top-up starts covering the remaining medical costs.
The deductible applies to each hospitalisation, meaning the bill must exceed that amount for the top-up to activate. If it does not, the top-up plan will not contribute.
For instance, imagine having a ₹4 lakh health policy and an additional ₹8 lakh top-up with a ₹2 lakh deductible. If a surgery costs ₹6 lakh, the first ₹4 lakh will be paid by the base policy, and the remaining ₹2 lakh will be covered by your top-up. However, if a policyholder faces two smaller hospitalisations of ₹1.5 lakh each, the top-up will not apply, as neither bill crosses the ₹2 lakh deductible.
When Should You Consider Buying a Top-Up Plan for Health Insurance?
● When Medical Inflation is Rising
Health inflation in India is growing significantly faster than regular inflation. What appears to be adequate cover today may turn out to be insufficient tomorrow. A top-up plan helps one get ready for any future hospital expenses without overpaying for a high sum insured.
● When You Want High Coverage at a Lower Premium
A top-up plan offers larger coverage at a fraction of the cost of enhancing your base policy. For instance, if you have a ₹5 lakh base cover and buy a ₹10 lakh top-up with a ₹5 lakh deductible, you actually get ₹15 lakh total protection at a much lower premium than a ₹15 lakh regular policy.
● When You Need a Financial Safety Net
Major surgeries, accidents, or pandemics are unexpected medical emergencies that may quickly deplete one's savings. A top-up policy provides safety by kicking in when the sum insured for regular health cover is insufficient or has been used up.
● When You Rely Only on Employer Health Insurance
The group health policies that an employer provides are usually basic and therefore are not sufficient to cover major treatments or even long-term hospital care. A top-up plan offers continued and extended protection in case of job changes or even retirement.
● When You Want to Protect Your Savings
Without adequate health insurance, major medical bills compel one to use their savings or take loans. A top-up plan preserves financial stability and ensures that the hard-earned money remains untouched in case of a medical crisis.
● When Flexibility and Affordability Matter
The top-up plan is highly flexible. You can select your own deductible and coverage amount and even buy it from a different insurer than the one for the base policy. They are cost-effective and simple to add, and easy to customise to suit different needs.
Benefits of a Top-Up for Health Insurance
● Higher Coverage at Lower Cost
A top-up plan provides additional coverage without requiring a high premium. It is an affordable way to expand health protection, especially for families with a history of high medical expenses.
● Financial Safety Net
Once the base health insurance limit is exhausted, the top-up plan can be utilised. It covers most of the huge hospital bills and surgeries, reducing out-of-pocket expenses during emergencies.
● Flexibility and Customisation
A top-up plan can be combined with any base policy, even from a different insurer. It also allows selecting the deductible and coverage amount based on diverse needs and budgets.
● Tax Benefits
Premiums paid for top-up plans qualify for tax deductions under Section 80D of the Income Tax Act. This means that individuals can save on taxes while strengthening overall health coverage.
In this world of unpredictable medical expenses, top-ups for health insurance plans act as a financial safety net that extends coverage and helps one bear the load of huge bills resulting from hospitalisation.
They serve as an ideal way to enhance coverage without paying the hefty price for a different policy with a higher sum insured. However, when choosing a top-up plan for health insurance, ensure to check out the applicable waiting periods, room rent limits, and policy exclusions to avoid surprises when filing claims.
