Rashtriya Swasthya Bima Yojana (RSBY)

RSBY has been launched by the Ministry of Labor and Employment, Government of India to provide free health insurance coverage to BPL families. The objective of RSBY is to provide protection to BPL families from financial liabilities arising from hospitalization due to any illness.

Unorganized sector employees belonging to the BPL category and their family members (a family unit of five members) will be the beneficiaries under this scheme.

It will be the responsibility of the implementing agencies to verify the eligibility of the unorganized sector workers and their family members who are proposed to be benefitted under the scheme.

(Read more: What does health insurance cover)

Beneficiaries will be eligible for health care insurance benefits designed by the respective state governments based on the need of the people and the geographical area. However, the state governments have been advised to include the following benefits in the package or scheme:

• Workers in the unorganized sector and their families (five members) will be covered.
• The total sum assured will be fixed at Rs 30,000 per family per annum on a floater basis.
• Cashless treatment will be made available for all the diseases covered.
• Treatments will be covered, along with hospitalization expenses, taking care of most of the common ailments.
• All pre-existing diseases will be covered.
• The transportation cost (with a maximum limit of Rs100 per visit) will be provided within the overall limit of Rs 1,000.

(Read more: What is not covered in health insurance)

An electronic list of eligible BPL households is provided to the insurer using a pre-specified data format. An enrollment schedule with dates for each village is prepared by the insurance company with the help of district-level officials.

As per the schedule, the BPL list is posted in each village, at the enrollment station and other prominent places, before enrollment and the date and place of enrollment are publicized in advance. Mobile enrollment stations are set up at local centers (like public schools) in each village.

These stations are equipped with the hardware required by the insurer to save biometric information (fingerprint) and photographs of the members of the household. A printer is also installed to print smart cards along with the photos.

Once the beneficiary has paid Rs 30, the concerned government official certifies the smart card. The smart card along with an information sheet, description of the scheme and list of hospitals, is provided to the beneficiary.

This entire process usually takes less than ten minutes. The card is handed over in a plastic cover.

(Read more: Difference between health insurance and life insurance)

RSBY was launched in early 2008 and was initially designed to target only BPL families but the scheme was expanded later to cover other categories of unorganized workers like the following as well:

• Building and other construction workers registered with welfare boards
• Licensed railway porters
• Street vendors
• MGNREGA workers who have worked for more than 15 days during the previous financial year
• Beedi workers
• Domestic workers
• Cleaners
• Miners
• Rickshaw puller
• Ragpickers
• Auto or taxi drivers

(Read more: Cashless health insurance)

Smart cards are used for various activities such as identification through beneficiary's photo and fingerprint, patient information, etc.

The most important function of the smart card is that it enables cashless transactions across hospitals and the portability of availing the scheme for multiple treatments across the country.

The authenticated smart card is handed over to the beneficiary at the enrollment station. In case of failure of the biometric information, the photograph of the head of the household printed on the smart card may be used for identification purposes.

(Read more: Cheapest health insurance)

A list of hospitals, both public and private, is provided to the beneficiary at the time of enrollment. A helpline number is also provided with the smart card, from which help can be taken if needed.

Based on the eligibility criteria, both public and private hospitals are empanelled by the insurance company. The beneficiary will have the option to select the hospitals where they want to go.

The beneficiary will not have to pay any hospitalization expenses for the treatment up to Rs 30,000. In the case of cashless service, the patient will not have to pay any amount for treatment and hospitalization. It is the job of the hospital to claim this amount from the insurer.

Although the expenditure limit available under this scheme is less, you do not need to be worried as a nationwide ambitious scheme named Ayushman Bharat has been launched by the Government of India recently. The beneficiaries of this scheme will be covered for up to 5 lakhs, which is not less than a private insurance policy.

(Read more: Benefits of mediclaim policy)