What is a cashless facility?

Mar 05, 2018 | 11 months ago | Read Time: 3 minutes | By iKnowledge Team

With cashless facility, your insurer will settle your medical bills directly with your healthcare provider.

During a medical emergency, the last thing you should be compelled to do is run around for cash. Paying medical bills shouldn’t be a hassle, especially when you are already worried about your health. Therefore, insurance companies started providing cashless facility.

What is a cashless facility?

This feature makes sure you don’t pay for treatment costs from your pocket. The insurance company settles the bill with the hospital.

How does it work?

Insurance companies have tie-ups with hospitals, which are known as ‘network hospitals’.

You don’t have to stump up the cash if you are admitted to one such network hospital. The insurer will directly settle the bill with the hospital.

What does it cover?

A cashless facility pays for:

  • Emergency hospitalisation
  • In-patient care (treatments that requires you to be admitted to a hospital)
  • Complementary health check-ups
  • Daily cash benefits (the insurer gives a fixed amount every day while you are hospitalised)

Cashless policies also provide:

  • Free-look periods: This gives you a chance to review the insurance policy. If you don’t like it, you have the choice to terminate it.
  • No claim bonus: The insurer may reduce your premium amount or increase the sum assured if you don’t make a claim for a year.
  • Tax benefits: You get a tax deduction of Rs 15,000 under Section 80D of the Income Tax Act. And if you are above the age of 60, you get a deduction of Rs 20,000.

However, this facility doesn’t pay for any non-medical expenses.

What are the different ways of availing this feature?

There are two ways:

  • Planned hospitalisation: You can apply for the sanction amount in advance.
  • Emergency hospitalisation: You can initiate the claim within 24 hours of hospitalisation.

It can help you receive better treatment

Since you already have an insurance cover providing cashless benefits, you don’t have to risk your health by opting for a low-cost treatment for want of funds. A cashless facility comes in handy at such times.

How is it different from reimbursement?

You simply don’t have to bother about any of the bills! Having a cashless facility ensures that the insurance company settles the medical bills with the hospital.

But in case of reimbursement, you have to pay from your pocket first and then claim the insurance money.

The cashless facility is also different from co-paying the bills, wherein you make a part of the payment while the insurer makes the rest.

What is the tenure of the policy?

A cashless policy usually lapses every 12 months. In some cases, the cashless facility continues for two years. This means that you need to renew the policy every time the feature expires. So, read the terms and conditions properly to know about the duration of the facility.

Does this facility also cover pre-existing conditions?

It depends from insurer to insurer. It may also be conditional, based on the insurer. So, read the fine print of the policy.

What are the points to remember?

  • Go to a network hospital. Only then can you avail the cashless facility.
  • This facility only pays for medical bills.
  • You need to keep renewing the cashless option.
  • You may not be covered for illnesses like HIV/AIDS, regular check-ups, dental treatments, genetic ailments, injuries sustained after wars etc. Read the insurance policy carefully before signing on the dotted line.

To sum up

A cashless facility can be a godsend during medical crises. It ensures you don’t have to scurry around for cash. So, make sure you get one as part of your health insurance plan.

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