The rising cost of healthcare, especially during the Covid-19 pandemic, has affected millions of families across the country. While health insurance plans provide some respite, individuals and families end up spending a large portion of their health care budget on pre- and post-hospital expenses. FEDO, a startup based in Bengaluru, plans 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 of FEDO, explained the details of HSA and why such an initiative is needed. Excerpts:
What is the FOEN health savings account? How will it work?
Fedo HSA is a unique savings account that can be used to pay for eligible medical expenses, including those not covered by health insurance. This savings account can be used to offer better interest rates than regular savings accounts, thereby providing an incentive for clients to save for their health. The HSA also offers smart investment options for better returns and pre-approval lines of credit 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 is 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 the Deep Technology Analysis Platform, will lay the foundation for a holistic healthcare ecosystem from the perspective of the individual. The main purpose of the platform is to enable customers to manage their healthcare expenses using a combination of services such as HSA, insurance, wellness and disease management programs.
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Why do you think there is a need for something like HSA?
The increase in health and hospitalization costs with the drug load and the management of chronic diseases of the lifestyle are the drivers of HAS. In India, with the low penetration of health and life insurance which mainly focuses on inpatient health expenses, a person spends 3 times the hospital expenses for pre and post hospital expenses which are usually not covered. through insurance. A WHO health financing profile in 2017 also pointed out that 67.78% of total health expenditure in India was paid out of pocket, compared to just 18.2% on the global average.
There is a big gap between an individual’s financial health related needs and the current health care financing needs are met by unorganized money lenders and gold loans in the market. Studies have found that more than 55 million families went bankrupt last year due to medical expenses. While the insurance industry is working to bridge the gap, the change is not drastic.
We believe that HSA is the solution to the above problem by offering individuals an exclusive savings account for health-related expenses, tailored to the individual’s health needs. It will provide the right mix of healthcare financing options to cover medical costs and ensure minimum out-of-pocket expenses. With HSA, the gap will narrow considerably and the rate of bankruptcy due to medical bills will also drop.
What are the benefits that can be obtained with HSA?
FEDO will provide individuals with a Health Savings Account (HSA) financial platform, which will recommend the right combination of tools / assets that they can use to pay for eligible medical expenses. A good assortment of health / life insurance as well as an individual’s savings will be offered depending on the state of health of the individual and his family members.
At the same time, savings will offer better interest rates than the regular savings account. This will give an individual the freedom to choose the amount of money that can be set aside for health care costs. It also gives control over how that money is spent based on quality and cost.
Medical emergencies break the financial and emotional backbone of a household. With HAS, households can manage unforeseen medical emergencies and associated health costs more efficiently and independently.
Who can open HSA, where and how in India?
In India, HSA is a new concept introduced by Fedo with SBM and Zwitch by Bank Open. Anyone eligible to open an account in financial institutions can open HSA. The entire process is digital and accessible through the mobile app and online banking. It is convenient and easy to understand Health and investment dashboard. In-app health and disease management exciting information and offers are available to meet individual health needs. There are pre-approved loan offers. In addition, a range of easy credit card management services are offered for a seamless experience.
What type of insurance and line of credit will be offered by HSA?
FEDO will provide recommendations on the mix of health care financing options, including a store of insurance products that will ensure minimum expenses for the course of an individual’s life. There will be no minimum amount. The amount will be based on certain parameters present in the case such as the individual’s state of health, the FEDO score, the CIBIL score, etc.
How will FEDO Score help users?
The FEDO score is a holistic indicator of future health risks. It is created on the principle that the first step in the management or prevention of lifestyle-related diseases in an individual is the detection of the propensity for such disease. It’s more like a CIBIL health score which indicates the likelihood of incurring medical expenses over the next several years taking into account a person’s demographics, lifestyle, and habits.
The FEDO score ranges from 0 to 1000, with 1000 indicating the score of a superman and 0 being a deceased person. Any score above 600 can be considered a healthy individual in this age group.