What Is the Difference Between Mediclaim & Health Insurance?

We live in very ironic times today, where medical advancements are prominent, yet illnesses and diseases are claiming more lives than ever. Today, people’s life expectancy has grown tremendously, and the medical field has made progress contributing to this enhanced life expectancy. Yet, many people are either diagnosed with serious ailments or die at a younger age. This shortened life expectancy is thanks to people’s lifestyle choices, including going on crash diets, under or over-exercising, work stress, erratic sleep patterns, etc. All this has made one thing very apparent – there is an urgent need to manage the expenses from sudden health or medical emergencies. Most people often resort to insurance policies to bear such costs, and rightly so. Many others tend to confuse the terms mediclaim policy and health insurance to mean the same. So, let’s learn about the differences between mediclaim and health insurance in this article.

Health Insurance Vs Mediclaim – A Comparison

To truly understand the difference between health insurance and mediclaim policy, it is first essential to understand the meaning of the two terms. Let’s break down their definitions and meaning before proceeding to compare their differences.

• Mediclaim Policy

An insurance policy designed to protect you against the general expenses arising from a medical emergency is known as a mediclaim policy. It is meant to help you bear expenses in case of an unexpected health crisis while being an entirely budget-friendly option. This policy typically comes with a lower sum insured and the coverage insurance companies offer under it is limited. Thus, while the insurer covers the basic hospitalisation and treatment expenses, you may also have to bear high out-of-pocket expenses if you choose a mediclaim policy. Additionally, you have to bear the expenses not covered under the policy, as mentioned by the insurer in the policy documents.

• Health Insurance

Unlike a mediclaim policy, a health insurance policy is one that covers a wide range of diverse medical expenses. Under such a policy, your insurer typically offers coverage for various types of physical and mental ailments. The insurer also allows you to seek alternative treatment courses beyond allopathy under health insurance policies. The insurer mentions the full schedule of coverage offered under the inclusions and exclusions section of the policy. To allow you to get comprehensive coverage, the insurer further offers several types of additional riders that enable coverage beyond the standard hospitalisation and treatment-related expenses. A health insurance policy thus offers more wholesome coverage with a higher sum insured. That said, it is typically more expensive, in that you have to pay higher premiums. 

What is the difference between mediclaim and health insurance?

Having explained the meanings, let us now understand what is the difference between health insurance and mediclaim policy. Listed below are the main factors of comparison.  

• Coverage and Out-of-pocket Expenses

In the case of mediclaim policies, insurers offer coverage limited to hospitalisation and treatment. If you own such a policy, you should be prepared for higher out-of-pocket expenses since the sum insured limits for such plans are usually low. As for health insurance plans, you can enjoy extensive, wholesome coverage that goes beyond general hospitalisation and treatment. The insurer covers the costs associated with pre and post-hospitalisation expenses, annual or bi-annual routine check-ups, day-care procedures, etc., under health insurance plans. Depending on the type of health insurance plan you choose, the insurer may compensate you for loss of income, physical disabilities, and domiciliary expenses and even provide a daily hospital cash limit, among other things. Thus, the out-of-pocket expenses of health insurance vs mediclaim policies are significantly lower. 

• Additional Riders

Another point of difference between mediclaim and health insurance concerns the availability of additional riders. Generally, there is no scope or provision for you to purchase additional riders under mediclaim policies, which means you cannot enhance your protection despite being able to afford the same. In contrast, insurers offer an assorted range of add-on riders with health insurance plans. Thus, you can enhance your coverage by purchasing riders like personal accident cover, disability cover, critical illness cover, sum insured restoration (usually for family floater health insurance plans), land and air ambulance cover, etc. You need to pay a little extra over your premium amount for every extra rider you purchase. 

• Sum Insured Limits

While discussing the difference between mediclaim insurance and health insurance, we need to address the sum insured limits. As mentioned earlier, the sum insured limits for mediclaim policies are generally on the lower side. You can generally get insurance only up to a few lakhs of rupees, which may be insufficient when diagnosed with a long-term illness, or one wherein the treatment costs are higher – cancers, for instance. However, you can rest assured that you can seek the best medical treatment money can buy by investing in a health insurance policy. With the higher sums insured, the insurer covers most of the medical treatment costs, so you can focus on seeking the best treatment money can buy, instead of worrying about expenses.

• Treatment Type

A vital aspect of health insurance and mediclaim difference is the type of treatment you can avail of under both plans. While both the policies cover you against the expenses associated with accidental hospitalisation, sudden illnesses and planned surgeries, you can generally only seek allopathic treatments under mediclaim policies. However, under health insurance, you can seek treatment beyond allopathic medication. Per the Insurance Regulatory Development Authority of India (IRDAI), you can seek alternative treatment forms like Ayurveda, Yoga and Naturopathy, Unani, Siddha, and Homeopathy (AYUSH) under health insurance plans. What’s more, you can also seek treatment for mental health conditions under health insurance plans. 

• Hospitalisation Requirements

When it comes to a mediclaim policy, insurers approve your claims only in case you are hospitalised for a period exceeding 24 hours. As such, you need to be hospitalised overnight to be eligible to file a claim. However, there are certain provisions under health insurance policies, wherein overnight hospitalisation is not mandatory. Your insurer may cover the expenses of several treatments that do not warrant overnight hospitalisation. For instance, if you need to undergo chemotherapy, which usually requires total hospitalisation of 8-10 hours, or if you need to undergo tonsilitis, dental, or cataract surgery, wherein the hospital discharges you within 4-8 hours, etc; in such cases, insurers approve claims for such treatments even though you may not need overnight hospitalisation.  

Health Insurance and Mediclaim Policies – How They are Similar

Having compared health insurance vs mediclaim for their differences, let’s assess their similarities

• Illnesses and Treatments Covered

Irrespective of your medical diagnosis, you can encash your mediclaim policy or health insurance plan to seek treatments for all kinds of illnesses and diseases. Both policies help you cover the costs of general and critical illnesses, up to the sum insured limit, per your policy terms. For instance, if a patient diagnosed with breast cancer needs a mastectomy, they can use either their mediclaim or health insurance policy for the surgery. The same applies to the treatment of dengue, viral infections, liver illnesses, heart problems, etc. Insurers generally mention the schedule of illnesses covered in the policy documents

• Tax Deduction Benefits

A mediclaim policy, at the end of the day, is a type of health insurance investment. As such, you can obtain tax deduction benefits irrespective of which type of policy you purchase. Under Section 80D of the Income Tax Act of India, 1961, you can claim tax deductions of ₹25,000 to ₹100,000 per annum for purchasing mediclaim or health insurance for yourself, your spouse, your children and your dependent parents. The deduction amount that you may claim depends on the ages of the insured parties. Also, check out sub-sections of 80D wherein you can obtain tax deductions if you are bearing the costs of dependents with disabilities or severe illnesses. 

• Claim Filing Provisions

Whether you purchase health insurance vs mediclaim policies, you can file your claims in similar ways. You can choose between cashless claims and reimbursement claims. If you choose the former, you need to seek admission in a hospital under the insurer’s network and inform your insurer about the hospital where you intend to seek treatment. The insurer’s representative (a third-party administrator) contacts the hospital and pays for the expenses incurred up to the sum insured amount. You can also seek treatment in a non-network hospital of your choice and file a reimbursement claim after being discharged from the hospital. Most insurers generally reimburse you for the costs incurred within 3 to 5 weeks of claim submission. 

Health Insurance Vs Mediclaim – What Should You Choose?

When it comes to determining what you should choose between health insurance vs mediclaim, the answer is quite simple. It would help if you considered the following factors.

• Your Budget

If your budget is low, you can consider choosing budget-friendly mediclaim policies as they are relatively inexpensive. In contrast, health insurance plans tend to cost significantly higher sums in premium payments, making them more expensive.

• Your Required Coverage

If your priority is to obtain comprehensive, all-encompassing coverage with various types of necessary riders as a precaution, you should select a health insurance plan. As mentioned earlier, there is no scope for riders under mediclaim policies.

• Your Age 

When you are young, your income is usually low; you are typically healthy and less likely to file insurance claims. Thus, if you are young, you can consider investing in mediclaim policies due to their budget-friendly nature. Once you enter your mid-30s, you can consider switching from mediclaim to health insurance. 

Final Note: Now that you know the difference between mediclaim and health insurance, you can choose an appropriate policy that fulfils your requirements. You can speak to your insurance agent or provider about your specific coverage needs, budget, and other factors before choosing between health insurance vs mediclaim policies. Alternatively, you can conduct online research and compare different insurance plans to make an informed investment decision. Today, you can purchase your medical insurance policies online directly from the insurer’s website. You can complete the entire policy-buying process online, including the document submission process. Remember, medical insurance proves a boon when you need sudden hospitalisation or treatment. So ensure you invest prudently.