Top-up Health Insurance Plans are medical reimbursement health plans with high deductible. In simple terms, Top-up policies reimburse expenses arising from certain illnesses over and above a specified amount. For example, suppose a top-up cover offers a sum assured of Rs. 5 lakh and have a deductible of Rs. 2 lakhs. In case of single claim of Rs. 3 lakh, the policy-holder will have to bear medical costs up to the first Rs. 2 lakh and remaining cost – Rs. 1 lakh will be reimbursed to him.
What is a Deductible?
Deductible is that portion of the claim amount that is not covered by the insurer and which policyholder have to pay first so as to trigger the top-up cover. Policyholder can pay this deductible amount from his existing individual/group health insurance policy, or out of his pocket.
Difference between Top-up, Riders and Other Health Insurance Plans
Top-up policies cover treatment costs due to hospitalisation. Moreover, while riders or add-on covers belong to particular policies and can only be taken with them, top-up plans are independent health covers that can be bought separately from the existing health policy. This means you can buy regular hospitalisation reimbursement plan and top-up cover from different insurers.
A regular health insurance policy reimburses hospital bills up to the sum insured, while a top-up plan covers costs only after a certain threshold is reached (which is called as deductible).
Both regular health insurance and the top-up plan can be claimed together for single hospitalisation.
Types of Top-up Plans
Top-up policies come as Individual and Floater Plans.
A floater plan covers more than one individual in a family and considers the number of people covered as one unit.
Things to Keep in Mind Before Buying Top-up Plans
1- A top-up policy can be bought even when the policy-holder does not have an individual comprehensive health plan.
2- On an average, these policies would be 30-35% cheaper compared to individual comprehensive health plans. But it’s not the replacement of the comprehensive health insurance policy.
3- Always check how the ‘deductible’ criteria applies to the top-up policy, whether it’s to each claim or all claims put together in one year.
4- In top-up policies, most insurers do not ask for medical check-ups up to the age of 55 years but always disclose any pre-existing medical conditions.
5- Check waiting period for pre-existing diseases.
6- Check Pre and post-hospitalisation expenses. Some top-up plans may not cover pre- and post-hospitalization expenses. E.g. ICICI Lombard’s Healthcare Plus and Star Health’s Super Surplus.
7- When there are many claims in a year and all are below the base policy limit (deductible), the Top-up policy may not be useful.
8- No contribution clause will be applicable if policyholder has Top-up health policy. So, if a policyholder has two health policies (one indemnity and the other a top-up plan) from two different insurers, each insurer is liable to pay it’s part of the claim.
What is the Contribution Clause?
The contribution clause in the health policies states that claims can be made under both the polices, in the same ratio as the sum insured. E.g. If Manish is covered under a corporate policy (Sum Insured of Rs. 2 lakh) and a personal cover (Sum Insured of Rs. 1 lakh) and makes a claim for Rs. 1 lakh, then each insurer will contribute as the ratio of the sum insured. So in this case it will be (2:1), the insurer (corporate policy) will contribute around Rs. 66,000 while the balance will come from the other insurer (personal policy).
The Bottom Line
Top Up Health Plan does not a replacement to the existing comprehensive health insurance and does not function as a comprehensive heath insurance policy. So there must be a comprehensive health insurance policy in place before buying a Top-Up Health insurance. This applies even if you have a group heath cover from your employer.