OPD Health Insurance Plans: Necessary or Just a Marketing Attraction?

We live in a marketing oriented world where products and services are constantly reinventing themselves to offer something new and unique. No doubt, many new products are value additions. But many new products also turn out to be old wines in new decorative bottles. So, as a consumer, if you are skeptical about a new offering it is only prudent to do some research before opting one way or other.

Health insurance plans for example, are offering coverage for outpatient treatments without the need of any hospitalization. So are OPD health plans as effective as they seem?

Take the case of Sunil, an avid cycling enthusiast seeking health insurance. Between regular health insurance and an OPD health insurance plan, Sunil choose the former as a safe approach. One small cycling accident where Sunil needed medical attention and OPD treatment made him realize that the costs were not covered by his regular health policy.

So the ‘safety first’ approach by not trying out a newer product turned out to be a costly affair for him in the long run.

Understanding OPD health covers
OPD health covers are designed to offer coverage for all your outpatient expenses including consultation fee of the doctor, medical expenses, treatment, bills etc. Such OPD health insurance plans do not offer any coverage towards hospitalization that is covered under your regular health care plan.

Since regular health insurance plans do not cover the costs you incur towards outpatient procedures, insurance companies have introduced OPD health covers. Many people do not opt for health insurance as they feel it is like paying for something that is uncertain in its occurrence at any time in the future. With OPD covers, the premium paid can be used for OPD procedures which are far more common than hospitalization.

Why OPD health insurance plans make sense
Visit any health insurer’s website and the number of networked hospitals is displayed far more prominently. While the better the hospital network, the greater is the protective cover but how often does one get hospitalized?

The increasing health care technology and better treatment options means that many diseases today require minimal or no overnight hospitalization and are treated on an outpatient basis. With more treatments being carried out on an OPD basis, having an OPD health insurance ensures coverage for doctor consultations and treatments.

Even though health insurance is a must have in your personal finance armory, the tax benefits of OPD insurance also make it a good value proposition. You can avail tax deductions up to Rs. 25,000 under Section 80D with tax free claims when opting for OPD health insurance.

OPD plans vis-a-vis self created health fund corpus
The benefits of OPD health insurance plans notwithstanding, many financial experts believe that since such plans do not cover the hospitalization costs, having a dedicated financial corpus for OPD needs and diverting OPD plans premium into viable investment options like mutual funds can be a better proposition. But if you are someone prone to visit OPD department regularly, having an OPD health insurance may still be a better alternative.

Pre existing disease and OPD plans
If you are someone with any pre existing diseases, OPD plans may not work as well. Firstly insurers are reluctant to offer OPD plans to someone with pre existing diseases citing higher risk. Even if the insurers allow such plans, the premium charged is likely to be substantially higher than cost benefits you may receive by your OPD medical visits.

The bottom line: While OPD health covers is an innovative idea, the tax deductions and tax-free claims alone may not be sufficient to make them an attractive investment option for the majority. However, it may still make sense for those who do away with financial planning for OPD expenses.