Pros and Cons of Having Two or More Health Insurance Plans

These days, more and more people are getting health insurance coverage. Due to the rising cost of healthcare, having this kind of financial protection can be an essential safeguard in unexpected medical emergencies.

However, if one policy is good, are there any benefits to buying multiple medical policies for extra protection? Read to know the pros and cons of having multiple health insurance policies.

Multiple Health Insurance means having more than one health insurance policy, either with two different insurers or private and public health insurance. It is also called "multi-policy" or "dual health insurance." An insurer can create a regular finance structure, such as a payroll tax or monthly premium, to provide necessary funds.

This fund pays for the health care benefits outlined in all the insurance agreements by evaluating the overall risk of health risk and health system expenses over the risk pool. A central organisation, such as a government agency, commercial company, or non-profit organisation, administers the benefit.

It is definitely possible to get a second or even a third health insurance plan. Indeed, it can be a great way of getting additional or more comprehensive coverage. It can also serve as a backup to an employee's health insurance and can reduce the risk for those with pre-existing conditions.

However, it is important to remember that having more than one plan does not mean that you get reimbursed twice for medical treatment. Even when you have more than one plan, the total amount that they will cover at the time of a claim will not exceed 100% of the treatment cost.

For example, if you get surgery, you will choose one plan to pay for this up to its coverage limits. Once this insurer has paid the amount, the remaining bill goes to your second or third insurance, which will then cover part of or all of the remaining costs, again up to its coverage limit.

If you have two or more insurance policies, one will serve as your primary source of coverage and the other as your backup. As the titles suggest, your secondary coverage takes up any unpaid bills if needed after your primary coverage kicks in. This depends on your Coordination of Benefits (COB), which specifies which health plan kicks in first.

Each health insurance plan has a COB policy that sets forth how it works with other health insurance. By doing this, the insurance companies may communicate with one another and prevent paying for a patient's services twice. You will receive up to 100% of the cost of a procedure or doctor visit if you have the COB.

Having a second or even multiple health insurance policies can have several benefits, such as:

1. Wider Coverage

Having more health plans will give you the scope to have more widespread coverage. If you look closely at your first policy, you can choose the second and any subsequent policies based on what is not covered in that policy, such as a critical illness cover, or a maternity cover.

Additionally, if your primary plan is an Employee Health Insurance, having an additional plan will ensure that you have consistent coverage even after you leave the company.

2. More Effective Premiums

When you invest in multiple health policies with smaller covers instead of one plan with big coverage, you are likely to have lower premium amounts. And, the smaller covers can ultimately lead to having more widespread coverage as mentioned above, without placing too much stress on your pocket.

3. Coverage for More Specific Conditions

When you have multiple policies, you have the option to cover more illnesses. For example, by having one generic policy and one specific policy you can cover both basic hospitalization and treatments as well as critical conditions through a Critical Illness Policy.

Based on your and your family’s situation, you can also opt for Individual Plans, a Family Floater Plan, or COVID-19 Insurance, to maximize your coverage as compared to one generic plan.

4. More Efficient Policy Management

When you have multiple policies, you will be able to decide which one to make a claim against, should such a situation arise. This way, you can ensure that one policy remains undisturbed and earn a No Claim Bonus or Cumulative Bonus for a claim-free year.

5. Protection Against Claim Rejection

In case you make a health insurance claim, and it is rejected, it can be a financial disaster. But when you have more than one insurer, the claim that was rejected by one insurer might be accepted by another.

6. Further Tax Benefits

Having multiple health insurance plans will also result in additional tax benefits under Section 80D of the Income Tax Act. When you have a health plan, you can further claim tax returns and actually save money on income tax.

Having several insurance policies guarantees additional insurance coverage, but it does have some negative probabilities as well:

1. Extra Expenses

Maintaining multiple health insurance policies can become expensive, often outweighing the benefits of the additional coverage. Your overall spending increases, and you might never end up using all the policies. A smarter approach is to combine a comprehensive health insurance plan with a term insurance policy. This combination is more cost-effective and ensures you're protected against both medical emergencies and life uncertainties.

2. Difficulty in Management

Maintaining several policies at a time is bewildering and may lead to partial loss of benefits or duplication of certain benefits. Knowing when to pay for which policy can be difficult and what to use in the time of need.

3. Duplication

You might pay for a policy that covers what you already have. This does not add value. This duplication does not provide additional value but represents wasted expenditure on unnecessary coverage.

4. Claim Problems

The involvement of several insurers makes claims processing more cumbersome and often delayed or disputed. This can frustrate policyholders and result in longer waiting times for claim resolutions.

5. Administrative Inconvenience

Keeping track of multiple policies with their renewal dates and coverage details is relatively precise. This administrative burden increases the risk of missing important deadlines or failing to update necessary information, which affects your coverage.

There are a number of reasons why you might wish to have two or more health insurance plans:

• You are covered only under a group plan like your parent’s Family Floater Plan and or an Employee Health Insurance and you want additional coverage from an Individual Health Plan.
• You only have an Individual Health Plan and need more specific coverage like a Critical Illness Plan or a COVID-19 cover.
• You have just gotten married and wish to get a Family Floater in addition to either an Individual Plan or an Employee Health Insurance.
• You require a Top-up or a Super Top-up Plan over and above your current policy.

All of these scenarios will help you to ensure a strong health insurance portfolio that will provide financial stability in a health crisis.

Utilising multiple health plans has its advantages, though it requires proper management and seeking ways to keep your out-of-pocket costs as low as possible. The steps listed below are ways to use multiple health insurance plans effectively:

1. Understand Coordination of Benefits (COB)

Health Insurers have rules on who pays as the primary payer or secondary payer. Read your plans' COB policies to understand their process when paying claims.

2. Compare Your Plans to Check Overlaps

Compare your plans to see what services are covered and to what extent. Be aware of any overlap in coverage.

3. Use Primary Insurance First

As you receive medical care, use your primary insurance plan first. That plan pays its share of the costs under its benefits.

4. Submit Claims to Secondary Insurance

After your primary insurance has processed the claim, submit it to your secondary insurance to pick up other costs.

5. Understand Your Coverage Limits

Know each plan's limits and exclusions to avoid unexpected costs. Many plans limit certain types of treatments.

6. Review and Update Your Plans Regularly

Review your insurance plans to ensure they meet your needs and remain on top of all available benefits.

Following these steps, you can coordinate different health insurance plans and maximise your health benefits.