The rising cost of healthcare, especially during the Covid-19 pandemic, has impacted millions of families in the country. While health insurance plans provide respite to some extent, individuals and families end up spending a large chunk of their health budget on pre and post-hospitalization expenses. FEDO, a Bengaluru-based startup, is planning to provide a solution to this problem with the launch of a Health Savings Account( HSA).
In an email interaction with FE Online, Prasanth Madavana, Co-Founder and CEO, FEDO, explained the details of HSA and why there is a need for such an initiative. Excerpts:
What is FEDO’s health savings account? How will it work?
FEDO HSA is a unique savings account that can be used to pay for qualified medical expenses including the ones which are not covered by health insurance. This savings account can be used for providing better interest rates than regular savings accounts thereby providing an incentive for customers to save for health. The HSA also offers Smart investing options for better returns and preapproval credit lines for your medical emergencies.
The HSA is powered by robust AI algorithms that can predict an individual’s health risks and possible medical expenses. At the heart of FEDO’s algorithms lies the FEDO Score which is a credit score for health, like a CIBIL or a FICO Score in the financial world.
The HSA in combination with FEDO Score and deep tech analytics platform will lay the foundation for a holistic healthcare ecosystem from an individual’s perspective. The core objective of the platform is to enable customers to manage healthcare expenses using a combination of services such as HSA, Insurance, wellness and disease management programs.
Why do you think there is a need for something like HSA?
The rising healthcare and hospitalization costs with the burden of medicines and the management of chronic lifestyle diseases are the drivers for HAS. In India, with the low penetration of health and life insurance which mostly focuses on in-patient healthcare expenses, a person spends 3x the hospitalisation expenses for pre and post hospitalisation expenses which is usually not covered by insurance. A WHO health financing profile in 2017 also highlighted that 67.78% of the total health expenditure in India was paid out of pocket as compared to the world average of just 18.2%.
There is a large gap between the financial needs of an individual related to health and the current healthcare finance needs are catered by unorganised money lenders and gold loans in the market. Studies have highlighted that more than 55M families went bankrupt last year due to medical expenses. Although the insurance sector is working towards bridging the gap, the change is not drastic.
We believe HSA is the solution to the above problem in giving the individuals exclusive savings account for health-related expenditure curated to the individual’s healthcare needs. It will provide the right combination of healthcare financing options to cater to the medical costs and ensure minimum out of pocket expenses. With HSA the gap will reduce drastically and the bankruptcy rate due to medical expenses will also turn down.
What are the benefits one can get with HSA?
FEDO will provide the individuals with a financial platform -Health Savings Account (HSA), which will recommend the right combination of tools/assets that they can use to pay for qualified medical expenses. A right assortment of Health/Life insurance along with an individual’s savings will be offered depending on the health status of the individual and his/her family members.
Along with this, the savings will provide better interest rates than the normal savings account. It will give an individual the freedom to choose the amount of money that can be kept aside for healthcare costs. It also gives the control over how that money is spent depending upon quality and costs.
Medical emergencies break the financial and emotional backbone of a household. With HAS, the households can manage the unexpected medical emergencies and the healthcare costs associated with it more effectively and independently
Who can open HSA, where and how in India?
In India, HSA is a new concept introduced by FEDO along with SBM and Zwitch by Bank Open. All individuals who are eligible to open an account in financial institutions can open HSA. The entire process is digital and accessible via mobile app and internet banking. It is convenient and simple to understand Health and investment dashboard. Exciting in-app health and disease management insights and offers are available to cater to the individual’s healthcare needs. There are pre-approved loan offers. Also, an array of easy credit card management services is offered for a seamless experience.
What kind of insurance and line of credit will be offered through HSA?
FEDO will provide recommendations on a combination of healthcare financing options including a boutique of insurance products that will ensure minimal out of pocket expenses for an individual’s course of life. There will be no minimum amount. The amount will be based on the certain parameters present on the case like health status of the individual, FEDO Score, CIBIL Score etc.
How will FEDO Score help users?
FEDO Score is a holistic indicator of future health risks. It is created on the principle that the first step in managing or preventing lifestyle diseases in an individual is the detection of the propensity of such a disease. It is more like a CIBIL Score for health which indicates the likelihood of incurring a medical expense in the next few years by considering a person’s demographics, lifestyle, and habit related information.
The FEDO score ranges from 0 -1000 with 1000 denoting the score of a superman and 0 being a dead person. Any score above 600 can be considered as a healthy individual in that age group.