OPD policies help exhaust tax benefits

One grouse that several policyholders have against standard mediclaim policies is that they do not cover outpatient or day-care expenses unless they stem from treatments for ailments like cancer. Besides, as premiums for a sum insured of Rs 5 lakh are around Rs 5,000 for those in the age bracket of 18-35 years, they are not able to avail of the entire tax benefit of Rs 15,000 available under Section 80D in respect of health premiums. In order to tap this segment, some health insurance companies have designed plans that cover outpatient expenses, and charge a higher annual premium.

These include expenses related to maternity, dental treatment, medicines and diagnostic tests that do not qualify for claims under a regular mediclaim policy. Once you furnish the relevant bills and other documents, the amount spent by you will be reimbursed by the company. Other features, including coverage of pre-existing illnesses after the completion of a specified waiting period remain the same.

While some may feel that such policies belong to the just-what-the-doctor-ordered category, make sure you read the fine print to identify the expenses that are not covered (i.e. exclusions) and the sub-limits before signing up for the cover. Not all companies cover all of the expenses mentioned earlier. For instance, some may offer a maternity cover only under their family floater plans while others may extend the same after a waiting period of as much as four years. Some may exclude it altogether. You need to watch out for sub-limits as well – within the total sum insured, the cover granted to specific OPD expenses could be capped.

You can consider going for these policies only if you are keen on exhausting the tax breaks available. These policies are certainly more expensive compared with regular mediclaim covers. Hence, you need to take a call on whether you want to make use of the higher premium to maximise tax savings or for buying a larger regular cover.