What is Hospital Cash (HospiCash) Insurance?

Arav is a 29-year-old corporate employee. One day, while on his way back, he meets with a small accident. While the injuries are not fatal or fatal-adjacent, he still requires minor surgery. His hospital stay would extend to somewhere between 4 to 6 days.

Thankfully, a few years ago, he had considered his parent’s advice and availed of a health insurance policy. So, he gets to reap its benefit by being financially covered for his medical treatments. However, being the sole bread-earner of the family, upon his hospitalization, his family is left in a relative financial crisis to meet the daily expenses. So, they sweep out a part of their savings while Arav stays hospitalized for a week.

Now, the question is - is there any way they can refill their savings immediately? Is there a way to get back the amount they spent last week on travel, medications, daily operations, etc.?

Well, we say there is! (Provided they have availed one of the best health insurance policies for Arav). The answer is a specific health insurance add-on called Hospital Cash Insurance, under which a policyholder’s family is offered financial support while the insured individual is hospitalized and unable to provide for the family.

But wait. That sounds too simple, right? Is the Hospital Cash Insurance add-on really this simple? What are its restrictions, limitations, disadvantages, and advantages? Should you avail? What are the best insurers that provide this health insurance rider?

Let’s find out, shall we?

What is Hospital Cash (HospiCash) Insurance?

Hospital Cash Insurance or HospiCash insurance is a health insurance add-on under which, in case a policyholder is hospitalized for a minimum of 3 days and a maximum of 7 days, his/her family receives a daily allowance as a lumpsum amount. The daily allowance amount can range from INR 500 to INR 3000 based on the policy chosen by the insured.

This allowance provided to the family has a few features that can become crucial when deciding whether you want to purchase it.

What are the Features of Hospital Cash Insurance?

The Hospital Cash Insurance amount disbursal is done on a reimbursement basis. Here’s an example of how this add-on works -

Arav purchases the Hospital cash Insurance add-on on his base health insurance policy. He chooses a plan that offers INR 1000/day because the premium for the rider seems affordable as per his financial status.

During his hospitalization, his parents spent an estimated INR 7000 for 7 days for daily expenses, including transportation, medicines, groceries, etc.

Arav gets discharged and raises a claim for the billed amount. His insurer and their underwriting team acknowledge the claim raised and notice the rider on his plan. They disbursed the claimed bill amount, and an additional amount of INR 7000 since Arav had opted for an INR 1000/day plan and was admitted to the hospital for 7 days.

• This rider kicks in when the insured individual has been hospitalized for a minimum of 2 days and extends to a maximum of 7 days (may vary, depending on the insurer and the plan availed). During a policy year, it can be claimed upto 60 days depending on the policy and insurance company.
• In the case of ICU admissions, the allowance is often increased (the per-day allowance may get boosted to double its original sum).
• The entry and exit age for the daily hospital cash benefit rider usually coincides with that of the base health insurance policy.

While some of the benefits of the HospiCash policy add-ons are already coming to the surface, some are yet to be uncovered. Additionally, there is a reason why when you approach any expert health insurance advisor, they do not advocate this add-on - the limitations and restrictions are undeniable and often a major hurdle for policyholders and their families.

What are the advantages and disadvantages of HospiCash Insurance?

Pros of Hospital Cash Insurance

• Standard amount disbursed, irrespective of the spent amount

Under the hospital cash policy, the amount disbursed is constant and indifferent to the actual expenditure amount. For example, say -

The total amount spent by the insured individual’s family = INR 3500

• Number of days spent in the hospital = 7 days
• Expenses/day = INR 500
• Hospital cash policy = INR 1000/day
• Disbursed amount = INR 7000 for 7 days

So, while the family spends only INR 3500, they still receive INR 7000 because that is a standard amount.

• Tax benefits under Section 80D

Much like a base health insurance policy, with the hospital cash plan add-on, a policyholder can enjoy the perks of tax benefits under Section 80D.

• Comprehensive coverage

- Under the hospital daily cash policy, insurers offer coverage for many ailment treatments.

- The range of options available for the per/day sum insured is also extensive. It can be seen as substitute funding against the loss of income of the insured individual during his/her hospitalization.

• No Claim Bonus

Considering that you raise no claims across a complete insurance year, your insurer provides a No-Claim Bonus that helps boost your sum insured during the rider renewal process.

However, to untap the considerable perks of the hospital daily cash benefit add-on, you must approach one of India's most reputed health insurance providers. Availing of health insurance plans and their add-ons from these insurers comes with the assurance of -

- A convenient claim settlement process,

- Pre- and post-hospitalization coverage

- No mandatory copayment

- Assured tax benefits

- No room rent limits

- No disease-wise sub-limits

- Daycare treatment coverage

- High No-Claim Bonus

- Restoration perks

- Domiciliary coverage

Cons of Hospital Cash Insurance

• Mandatory hospitalization

To avail of the perks of a daily hospital cash policy, policyholders have to be hospitalized for a minimum of 3 days and a maximum of 7 days (the number of days may vary based on the insurance provider approached and the policy availed).

• Reimbursement mode of payment

The aim of the HospiCash insurance policy is to help the family of a policyholder avoids any additional financial crunch over miscellaneous expenses while the sole bread-earner of the family is hospitalized. However, considering that this health insurance add-on has a mandatory reimbursement policy and no cashless facility, the families need to first spend from their savings. Therefore, this is not exactly a preferable arrangement for policyholders.

• Waiting period

Each hospital daily cash plan has a certain waiting period on the policy. This waiting period varies from one insurer to the other. During this span, the insured does not have access to the perks of this add-on.

• Restrictions on pre-existing ailments

Health insurance providers are often reluctant to cover pre-existing conditions in potential policyholders. In the case of Hospital Cash Insurance, there is always an additional extensive waiting period for the treatment coverage of pre-existing ailments. Needless to say, this is a major hurdle for those purchasing the policy.

When it comes to health insurance add-ons like Protector Rider (for consumable coverage, inflation shield, and No-Claim Bonus Shield), copayment waiver, and restoration/recharge, most unbiased health insurance advisors are vocal in their support. Such add-ons truly add to the value of the base health insurance plan.

However, with the HospiCash Health insurance, the verdict is dicey. Whether you want to purchase the policy will depend on your medical and financial stability. The best way to do this would be to weigh out the pros and cons of this rider before the purchase.

And if you decide to purchase a hospital daily cash insurance policy, here is a quick look at the top 3 plans across the industry -

What are the Top 3 Hospital Cash (HospiCash) Insurance Plans?

Frequently Asked Questions