India's Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) provides health cover of ₹5 lakh per family per year. Which MECHANISM of coverage makes this a 'defined benefit' scheme rather than an indemnity scheme?

• A It reimburses actual hospitalisation expenses up to ₹5 lakh with prior authorisation
• B It requires co-payment of 10% from beneficiaries for secondary care
• C It is a social health insurance funded by employer-employee contributions
• D It provides a fixed cashless benefit for listed packages regardless of actual cost, with beneficiaries not bearing any residual ✓

Explanation

AB-PMJAY operates as a defined-benefit cashless scheme: the government (as strategic purchaser) contracts empanelled hospitals and pays fixed 'package rates' for ~1,949 listed medical/surgical procedures regardless of actual cost variation. Beneficiaries pay nothing at the point of care (fully cashless). This contrasts with indemnity insurance which reimburses actual documented expenses. PMJAY is tax-funded (not contributory like ESI) and designed for BPL families — approximately 107 million families in the bottom 40% of the socioeconomic distribution.

Reference: Park's Textbook of Preventive and Social Medicine, 27th ed.

High-yield for: NEET PGINI-CETNExTFMGEUSMLEPLABMRCP

Written and medically reviewed by the StethoPrep medical team.