Should I claim through corporate cover or personal health insurance policy?

Published: October 8, 2023 at 6:00 am

Many clients often inquire whether to use their personal or corporate health insurance policy first. Let’s figure out whether you should use your corporate or personal health insurance in case of hospitalization, assuming there are no room rent sub-limits in both policies.  I thank Melvin Joseph Sir (Finvin Financial Planners), who provided valuable input for this article.

About the author: Ajay Pruthi is a fee-only SEBI registered investment advisor. He can be contacted via his website Ajay is part of the freefincal list of fee-only advisors and fee-only India.

But first, I would like to share what happened with one of my clients hospitalized due to Dengue fever. He has two insurance policies from the same company: a base policy worth 10 Lakhs and a super top-up policy worth 40 Lakhs.

He tried to get cashless approval for a bill of 1,00,000, but the request was rejected. The rejection was because he applied for a cashless claim using the details of his super top-up policy, which has a deductible of 10 Lakhs. He should have applied for a cashless claim using the base policy of 10 Lakhs. Unfortunately, the insurance company didn’t check if he had a base policy before rejecting the claim. 

Understanding the difference between base and super top-up policies is essential. In times of emergency, knowing how to make insurance claims is crucial. I recommend reading the article below to educate yourself and your spouse on this matter, as it can be helpful in case of hospital emergencies. FAQ: Super Top up Health Insurance policy

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Now, to the problem at hand. In the case of an emergency, you can use either corporate cover or private health insurance. There is no need to think twice. Always use base cover first and super top-up cover after the base cover is exhausted if you use a personal health insurance policy.

However, if your hospitalization is planned, you have more options and flexibility in choosing insurance. Let’s explore different scenarios to determine the best choice for each type of insurance.

It’s generally a good idea to use your corporate health insurance policy as corporate insurance claims are often processed smoothly and usually cover pre-existing diseases. Also, insurance companies value their relationships with corporate clients since it’s an important part of their business.

However, there are a few things to be aware of and consider –

Too lazy to claim the co-payment amount – If you find yourself too lazy to claim the co-payment amount through your personal health insurance policy, if there’s a co-payment clause in your corporate policy, it’s better to use your personal health insurance policy. 

*Co-payment – If your hospital bill is Rs. 1 Lakh and co-payment is 20%, then the health insurance policy will pay 80,000, and you will have to pay 20,000.

Let me give you an example – Suppose one of your family members gets hospitalized, and you opt for the corporate health insurance policy for a cashless claim. The corporate health insurance policy has a co-payment clause of 20%. The total hospital bill was Rs. 3 Lakhs, which means 2.40 Lakhs would be paid by the corporate health insurance policy and Rs. 60,000 from your own pocket. 

This 60,000 can be reimbursed through your personal health insurance coverage, but there may be a few hassles in doing the extra work to claim this 60,000. If you don’t want the hassle of claiming the co-payment amount through reimbursement in your personal health policy, opting for your personal health insurance is better. If there is no co-payment in your corporate health insurance coverage, opting for your corporate health insurance is better.

Parents in corporate health insurance cover –  If parents are covered under your corporate health insurance policy, and the coverage amount is not substantial, it’s advisable to claim from a personal health insurance policy (if you are using a health insurance policy for anyone other than your parents)

I’ve noticed that many clients don’t get separate health insurance coverage for their parents because their parents are already included in their corporate policy.

Let me give you an example – Suppose your spouse gets hospitalized, and the total hospitalization cost is Rs. 4 Lakhs. You opt to claim from a corporate health insurance policy, and the total corporate health insurance cover for the family (including parents) is 5 Lakhs. 

Then you could claim only 1 Lakh if your parents are hospitalized during the same year; the remaining amount must be paid from your own pocket.

However, if the coverage provided by the corporate policy is significant enough (if you have increased your base cover or added a top-up to enhance the coverage by paying an extra premium), you can claim through it. 

Expenses required for hospitalization – If the expenses for a specific treatment exceed the coverage amount provided by your corporate health insurance, but your personal health insurance (which includes both base and super top-up cover) offers more coverage than needed, it’s always best to claim from your personal health insurance policy. This way, you can ensure that all your medical expenses are adequately covered without any financial burden.

Personal base and super top-up policy and corporate policy from the same insurer If you have a personal base policy, super top-up policy, and corporate policy all from the same insurance company, you can follow this approach: Use the corporate policy first, and if the expenses exceed the coverage of the corporate policy, you can switch to the personal super top-up policy to cover the additional costs. In this situation, there’s no need to use the personal base policy, but make sure there’s no co-payment clause in your corporate health insurance policy. This way, you can maximize your insurance coverage effectively.

Personal base and corporate policy from the different insurers –   If you have both personal and corporate health insurance policies from different insurers, and the coverage amounts are relatively small (assuming you do not have a super top-up policy), here’s how it works:

Let’s say you have a personal health insurance cover of 5 Lakhs and a corporate health insurance cover of 5 Lakhs for your family. If you require hospitalization that costs 7 Lakhs, you have two options. You can use your personal or corporate policy (assuming no co-payment clause). In this case, 5 Lakhs can be claimed cashless, and the remaining 2 Lakhs should be reimbursed.

If one of the policies has a co-payment clause, the scenarios will vary depending on the total cost of treatment.

All the above points are for your convenience, as they allow you to get a cashless claim in many situations.

During emergencies, you can always get the amount reimbursed through either your corporate or personal policy.

However, it’s essential to have emergency funds set aside in addition to your health insurance coverage. These funds can be used if needed for any unexpected medical emergencies. Insurance and emergency funds will provide you better financial security and peace of mind during challenging times.

*Disclaimer- Nothing in the article is my solicitation, recommendation, endorsement, or offer. If you have any doubts as to the merits of the article, you should seek advice from an independent financial advisor. Registration granted by SEBI, BASL membership, and NISM certification does not guarantee the intermediary’s performance or provide any assurance of returns to investors. Investment in the securities market is subject to market risks. Read all the related documents carefully before investing.

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Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
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