Health Insurance in India: What Mediclaim Covers and Key Terms

A few days in a private hospital can cost more than many families save in a year. Health insurance, often called a mediclaim policy in India, is how you stop one illness from wiping out your savings.

But these policies are full of words like sum insured, co-pay, waiting period and sub-limit, and many people only find out what they mean when a claim is cut. This guide explains what health insurance covers, what it does not, the key terms in plain English, how cashless claims work, tax benefits, and the new rules from IRDAI, India’s insurance regulator. Then test yourself with our free health insurance terms quiz.

What is health insurance?

Health insurance is a contract where you pay a yearly premium, and the insurer pays your medical bills for covered treatment, up to a limit called the sum insured. If your policy has a sum insured of ₹10 lakh and your hospital bill is ₹3 lakh, the insurer pays the covered part of the ₹3 lakh, and ₹7 lakh of cover is left for the rest of the year.

The policy usually renews every year. As long as you renew on time, your benefits keep building up, such as completed waiting periods and any no-claim bonus.

Mediclaim vs health insurance: is there a difference?

People use the words to mean the same thing, but strictly:

Today, most plans sold in India are full health insurance plans, even when people still call them mediclaim. What matters is not the name but what the policy wording covers.

What is covered under mediclaim and health insurance?

Most good policies cover:

• Hospitalisation: room, nursing, ICU, doctor fees, surgery, medicines and tests during a stay of 24 hours or more.
• Pre- and post-hospitalisation: tests and medicines before admission and after discharge, often 30 to 60 days before and 60 to 180 days after, depending on the plan.
• Day-care treatments: procedures that need less than 24 hours, such as cataract surgery or chemotherapy.
• Ambulance charges, up to a limit.
• AYUSH treatment: Ayurveda, Yoga, Unani, Siddha and Homeopathy in a recognised hospital.
• Organ donor expenses and modern treatments, often with limits.
• Annual health check-up in many plans.

What is not covered?

Common exclusions are:

• Illness in the first 30 days after you buy the policy, except accidents.
• Treatment during a waiting period (explained below).
• Cosmetic surgery, unless needed after an accident.
• Dental treatment, unless it needs hospitalisation after an accident.
• Outpatient (OPD) visits in a basic plan, unless you add OPD cover.
• Maternity in many basic plans, or only after a long waiting period.
• Injuries from self-harm, alcohol or drug abuse, and treatment that is not medically needed.

Always read the “exclusions” page of the policy wording. It is short, and it tells you more than any advert.

Key terms explained in plain English

Waiting periods: how long before you can claim

A waiting period is the time you must hold the policy before some claims are paid:

• Initial waiting period: usually 30 days for illnesses. Accidents are covered from day one.
• Pre-existing diseases: under IRDAI’s 2024 rules, the waiting period can be at most 3 years of continuous cover. Some plans offer shorter periods.
• Specific illnesses or procedures: many policies have a separate waiting period, commonly around two years, for things like hernia, cataract or joint replacement.
• Maternity: often from nine months to several years, if covered at all.

Renew on time, every time. A break in cover can restart your waiting periods.

The moratorium period

After 5 years of continuous cover, the insurer cannot reject a claim by saying you did not disclose an illness, except in cases of proven fraud. This “moratorium period” used to be 8 years and was cut to 5 by IRDAI in 2024.

New IRDAI rules you should know

The rules changed a lot in 2024 and 2025:

• Faster cashless: insurers must decide a cashless request within 1 hour, and give final discharge approval within 3 hours of the hospital’s request.
• Shorter waits: the pre-existing disease waiting period can be at most 3 years, and the moratorium is 5 years.
• Cover for more people: insurers must offer health plans to people of all ages, including older buyers.
• Senior citizens: since January 2025, insurers cannot raise the premium of individual plans for senior citizens by more than 10% a year without first consulting IRDAI.
• No GST: since 22 September 2025, individual health insurance premiums, including family floater and senior citizen plans, are exempt from GST. Earlier, 18% GST was added.
• 30-day free-look: after buying a new policy, you have 30 days to review it and return it if you are not happy.

How much cover do you need?

Medical costs rise every year, so buy more than today’s bills suggest. As a rough guide:

• Small city, single person: at least ₹5 lakh.
• Metro city or family floater: ₹10 lakh to ₹20 lakh or more.
• Parents above 60: as much as you can afford, ideally in a separate policy.

A cheap way to raise cover is a super top-up: it starts paying once your bills in a year cross a set amount, such as ₹5 lakh, and costs much less than a big base policy.

Family floater or individual policy?

• A family floater shares one sum insured across the family. It is cheaper and works well for a young couple with children.
• Individual policies give each person their own cover. They suit older family members, who are more likely to claim.

Many families keep a floater for themselves and the children, and a separate policy for parents, so one big claim for a parent does not use up everyone’s cover.

How cashless and reimbursement claims work

Cashless claim

1. Go to a network hospital and show your health card at the insurance (TPA) desk.
2. The hospital sends a pre-authorisation request to the insurer.
3. The insurer must reply within 1 hour. At discharge, it must give final approval within 3 hours.
4. You pay only items the policy does not cover, plus any co-pay.

For planned treatment, inform the insurer a few days in advance. For emergencies, inform them as soon as possible after admission.

Reimbursement claim

1. Pay the hospital yourself and collect all original bills, reports and the discharge summary.
2. Submit the claim form and documents to the insurer within the time limit in your policy.
3. The insurer checks the claim and pays the approved amount to your bank account.

Why does the premium increase?

• Age: premiums go up as you move into a higher age band.
• Medical inflation: hospital costs rise every year, so insurers adjust prices.
• Claims across the plan: if a plan sees many claims, its price may rise for everyone in it.
• Added benefits: a bigger sum insured or new add-ons cost more.

Your premium should not go up just because you made a claim in a normal individual policy.

Tax benefit on health insurance

Under the old tax regime, health insurance premiums can be deducted from your taxable income (long known as Section 80D):

• Up to ₹25,000 a year for yourself, your spouse and children, or ₹50,000 if you are a senior citizen.
• Up to another ₹25,000 for your parents, or ₹50,000 if they are senior citizens.
• Preventive health check-ups count within these limits, up to ₹5,000.

The new tax regime does not offer this deduction. Tax rules and section numbers change, so check the current rules for your tax year.

Is employer health insurance enough?

A group policy from your employer is a great extra, but usually not enough on its own:

• It often ends when you leave the job.
• The cover may be small for a whole family.
• You may face new waiting periods if you buy a personal policy later, when you are older.

Buy a personal policy while you are young and healthy, and treat the employer cover as a bonus.

Checklist before you buy

• Waiting periods for pre-existing and specific illnesses
• Co-payment, deductible and room rent limits
• Network hospitals near your home
• Pre- and post-hospitalisation days
• Restoration and no-claim bonus
• Exclusions page in the policy wording
• Honest answers to every health question

Frequently asked questions

Is delivery covered under mediclaim?

Only if the policy includes maternity cover, and usually after a waiting period. Many basic plans do not cover delivery at all, so check before you plan a family.

Is mediclaim necessary if my employer covers me?

It is strongly advised. Employer cover usually ends when you change jobs and may be too small for your family.

Can I cancel my health insurance policy?

Yes. Within the 30-day free-look period you get your premium back minus small charges. After that, most policies can still be cancelled, with a refund for the unused period if no claim was made. Check your policy wording.

Is dental treatment covered?

Usually only when hospitalisation is needed because of an accident. Routine dental care needs a separate OPD or dental add-on.

Is health insurance tax deductible?

Yes, under the old tax regime, within the limits explained above. The new regime does not allow this deduction.

Can I switch my health insurance to another company?

Yes, through portability. Apply before your renewal date, and the new insurer gives you credit for the waiting periods you have already completed.

The bottom line

A good policy is not about the cheapest premium. It is about whether the policy will actually pay when someone in your family is in hospital. Buy enough cover, read the waiting periods, co-pay and room rent rules, renew on time, and keep a separate policy for your parents if you can.

Check your understanding with our health insurance terms quiz, explore more insurance quizzes, or read our guide to term insurance.