What is Hospital Cash (HospiCash) in Health Insurance Plans?

A few days ago, one of our customers met with an accident and was hospitalised for 5-6 days. Naturally, she couldn’t go to work and was forced to take a pay cut. This made her ask us one fundamental question: Is there any health insurance policy that also provides a cash benefit if I’m hospitalised and unable to work?

This issue needs to be addressed because while your standard health insurance policy covers medical and hospitalisation expenses, you must take care of numerous non-medical expenses, such as travel, food, and even compensation for the loss of income if you cannot work during your hospitalisation.

This is where Hospital Cash (HospiCash) insurance comes into play.

Best Health Insurance Policies that Offer Hospital Cash Benefits in 2024

What is Hospital Cash (HospiCash) Insurance?

During your hospitalisation, the insurance company pays you a certain amount every 24 hours you’re hospitalised. This feature is known as HospiCash (or Hospital Cash) coverage in your health insurance policy, and it helps cover any expense not covered by the health insurance plan. You can include travel costs to and from the hospital, food & grocery expenses, or other miscellaneous expenses. Once you are discharged and make a claim, the insurer reimburses a fixed sum for each day you are hospitalised.

Let’s understand this with an example:

Rahul has a health insurance policy with a HospiCash benefit that pays ₹1,000 per day of hospitalisation (with a deductible of 2 days). One day, he fell ill and had to be hospitalised for 6 days. During this time, his family had to tend to his needs – travel to and from the hospital, purchase medicines, groceries, etc.

On the sixth day, the bill was tallied to about ₹2,500. During discharge, the insurer pays Rahul ₹3,000 (5 days of hospitalisation minus 2 deductible days). The sixth day is not considered because he hadn’t completed 24 hours of hospitalisation on the final day.

This ₹3,000 helped Rahul’s family cover various expenses that were not included in his standard health insurance, such as travel to and from the hospital and additional food costs for his family members.

Although this sounds like a benefit, not all health insurance policies cover this by default. If your health insurance plan doesn’t cover HospiCash, you can add them as an add-on in some policies or purchase them as a separate standalone plan that covers only hospital cash. Let’s explore them in detail now.

Types of Hospital Cash (HospiCash) in Health Insurance Policies

1. In-built to your Standard Health Insurance Policy: Some health insurance policies include a hospital cash benefit as a part of the standard coverage. This means the policy provides a cash allowance during hospitalisation by default, without needing a separate add-on.
2. Add-On to your Standard Health Insurance Policy: Some insurers offer hospital cash as an add-on to your health insurance policy. You can purchase this add-on by paying an additional premium, which provides hospital cash benefits.
3. Standalone HospiCash Policy: There are also standalone hospital cash policies available in the market. These policies are separate from your standard health insurance plan and solely provide the daily cash allowance if you’re hospitalised.

At this point, you probably think hospital cash is a valuable benefit, right? Well, you’re not wrong. However, there are always two sides to a coin; just looking at one will not always show you the complete picture. Understanding the pros and cons will.

What are the Pros and Cons of Hospital Cash in Health Insurance Policies?

While the exact pros and cons of hospital cash vary from policy to policy, here are some of the most common ones across the industry. This will give you an overview of what to look for and what to avoid when comparing two health insurance policies.

A. Pros of Hospital Cash in Health Insurance Policies

1. Covers Daily Expenses: During hospitalisation, you will not be able to work and contribute towards the household expenses. Hospital cash provides compensation to cover these non-medical expenses, such as transportation, food, and incidental costs that arise during hospitalisation.
2. Allowance Increased in Case of ICU Hospitalisation: In many policies, the hospital cash benefit increases if the policyholder is admitted to the ICU. This provides additional support when it’s needed the most, as ICU admissions are far more severe than standard hospital admissions.
3. Income Replacement: If you are the family's sole breadwinner, hospital cash coverage can act as a temporary income replacement, helping your family manage household expenses, as you can use it at your discretion.

B. Cons of Hospital Cash in Health Insurance Policies

1. Increased Premiums: A hospital cash benefit is often an add-on. This means you need to pay an extra amount, which will ultimately increase your total premium.
2. Limited Coverage: More often than not, the hospital cash benefit may not be sufficient to cover all the non-medical expenses you may incur. Insurers will only provide a fixed amount per day, irrespective of your spending.
3. Activated Only After a ‘Deductible’: The hospital cash benefit is often activated only after a specified number of days of hospitalisation. For example, if you’re hospitalised for 5 days, the insurer may not consider the first two days for the HospiCash benefit and cover you only for the remaining three days.
4. Coverage is on a Reimbursement Basis: Many policies only offer hospital cash on a reimbursement basis. This means you have to bear the costs upfront and claim it later.
5. Cannot Claim HospiCash if You’re Not Hospitalised: The benefit is only payable during hospitalisation, so outpatient treatments or daycare treatments that do not require hospitalisation will not be covered. But you will still keep paying the premiums every year, irrespective of your hospitalisation.
6. Specific Conditions: Some policies have particular conditions or caps on the number of days for which the hospital cash benefit is payable. There may also be stringent eligibility criteria, including age limits and pre-existing diseases, that can affect your ability to purchase or claim hospital cash benefits.

What are the Best Health Insurance Policies Offering Hospital Cash Benefits in 2024?

1. Optima Secure (Add-on): Optima Secure is a comprehensive health insurance policy that provides an option to have HospiCash benefits as an add-on. This means you can choose to include this feature by paying an additional premium. The HospiCash benefit under Optima Secure offers a daily cash allowance ranging from ₹1k to ₹2k per day, which can be used to cover non-medical expenses such as travel, food, and other incidental costs during hospitalisation.

Drawbacks: HDFC ERGO is, without a doubt, one of the top insurers in the country. However, they do charge a significantly higher premium than their peers. Apart from this, since HospiCash is an add-on, it requires an extra premium, which increases the policy's overall cost.

  2. Niva Bupa ReAssure 2.0 (Add-on): Niva Bupa ReAssure 2.0 is another robust health insurance policy that offers HospiCash as an add-on. This add-on provides a daily cash allowance of ₹1,000 to ₹4,000 per day, which helps manage additional expenses incurred during hospitalisation.

Drawbacks: Niva Bupa has a relatively higher complaint volume than its competitors. This can be attributed to the recent management change. However, we are hopeful they will get back on track soon.

 3. Aditya Birla Activ Assured Diamond (In-built): Aditya Birla Activ Assured Diamond stands out by offering an in-built HospiCash benefit. The policy provides a daily cash benefit of ₹500 per day for up to 5 consecutive days of hospitalisation. This feature ensures that policyholders have some financial support for non-medical expenses during their hospital stay.

Drawbacks: As a newer entrant in the market, Aditya Birla’s operational metrics can be improved to match industry standards.

Things to Remember When Purchasing Hospital Cash Coverage in Your Health Insurance Policy

1. Also Available in Term Insurance: Hospital cash benefits are available as a rider in term insurance plans, in addition to health insurance or as a standalone policy. It might be more prudent to purchase this rider with term insurance plans because premiums are likely to stay the same in term policies, making it more affordable in the long run.
2. May Not Cover All Expenses: It's important to understand that hospital cash coverage may not cover every non-medical expense during your hospitalisation. The daily cash benefit is fixed and may not cover all additional costs, especially during extended stays. However, remember that even if your expenses are below the said limit, the insurer will reimburse you the entire amount as it is a fixed amount paid per 24 hours.
3. Deductible: Hospital cash benefits often come with a ‘deductible’ period. While this is not a conventional cash deductible, it means that the benefit is only payable after you have been hospitalised for a specified number of days.
4. Reimbursement: The insurer reimburses the hospital cash amount in a lump sum only when you file a claim or after discharge from the hospital.
5. Room Category: The amount of hospital cash benefit you receive can be influenced by the type of hospital room you choose. For example, selecting a twin-sharing room might entitle you to a different cash benefit amount than opting for a single private room.

Conclusion

When choosing a health insurance policy, consider whether a hospital cash benefit aligns with your financial and healthcare needs. It's important to evaluate if the increase in premiums justifies the potential benefits. For instance, if you are fortunate not to be hospitalised for an extended period, say 10 years, the increase in premium may not seem justified. This is why it’s essential to weigh the pros and cons carefully and compare different policies before making a decision.

If you need further assistance, feel free to consult with Ditto’s IRDAI-certified insurance advisors for unbiased, personalised, and spam-free insurance advice. Whether health or term insurance, we can help you understand the nuances of hospital cash benefits and guide you in making the best decision given your circumstances.