The long wait at a hospital corridor. Silent prayers for a loved one to recover. It’s an experience that many of us would have gone through. There is only one thing that trumps career, money and success in the pyramid of life, and that is health. Which is why health insurance is the personal finance subject closest to my heart. And there’s some good news to share.
Thanks to the Insurance Regulatory and Development Authority (Irdai), the health insurance in India is about to undergo a radical transformation. The highlights, at least on the face of it, are all positive—enhanced coverage, clear definitions and less ambiguity in policy fine print, which should hopefully result in lesser rejection of claims. The guidelines came into force from October.
Now any new insurance policy launched in the market has to comply with the new norms. As for the existing running policies, insurers must recast and attune them with the new rules by October 1, 2020.
Let’s go over the key aspects of the new health insurance regulations.
EXCLUSIONS NOT ALLOWED
To begin with, Irdai has issued a ‘negative-list’ of 12 exclusions. These are conditions under which earlier insurers could have rejected claims, or denied the policy altogether.
Now such exclusions have now been disallowed. For example, a person suffering from mental illness or psychological disorders or types of neurodegenerative ailments or puberty or menopause-related illness can’t be denied health insurance.
An insurer now has to also pay for injury or illness associated with hazardous activities, other than adventure sport. In other words, people working in say, a coal mine or a nuclear power plant can’t be denied insurance simply on grounds that they happen to be in a hazardous environment. Other exclusions that have been disallowed include age-related macular degeneration, a disorder which affects the vision as one grows old, congenital diseases or birth disorders and genetic ailments.
STANDARD POLICY DOCUMENT
The new regulations have standardised the policy fine print. The insurance regulator has issued specific codes for legit policy exclusions.
There are 18 codes for 18 specific exclusions and if any insurance company must reject a claim citing an exclusion, it can do so only from the specified list of 18 codes.
What does this mean for you? This should make the claim settlement process more transparent and reduce the chances of litigation over repudiated claims. Some of the standard exclusions are pre-existing diseases, cosmetic surgery when it’s not mandated by a doctor, adventure sports, treatment for alcoholism and drug abuse, refractive error, infertility, and maternity.
An insurance company can apply these exclusions and state them clearly in the policy contract. The good part about standardisation is that the insurer can’t reject claims citing vague reasons. Take for example obesity.
The new rules are so specific that while they list out obesity as an exclusion, they specify that claims relating to surgical treatment of obesity can’t be rejected if the surgery is to be conducted on a doctor’s advice and if the Body Mass Index of the patient is greater than or equal to 40, or if the BMI is greater than 35 along with heart disease, or severe type II diabetes.
SPECIFIED PERMANENT EXCLUSIONS
IRDAI has also created a list of 16 permanent exclusions, which include ailments like chronic kidney disease, chronic liver disease, epilepsy, and Hepatitis B. An insurer can choose to offer a policy, permanently excluding these illnesses from coverage.
Now, this is actually good news. Why? Until now, patients suffering from these ailments were denied health insurance entirely. They would face blanket rejection from most companies, even for other illnesses.
But now insurers can offer products that don’t cover the stated pre-existing disease (one of the 16 permanent exclusions), while covering at least other conditions not connected to the stated ailment. If insurance companies take this part of the regulation in the right spirit, it would go a long way in providing at-least partial health cover to those already suffering from chronic ailments.
OTHER GENERAL HEALTH INSURANCE GUIDELINES
The new rules make it clear that the waiting period for any policy cannot be longer than four years. IRDAI has also banned the use of ambiguous, open-ended words like “related to”, “such as” or “etc” in the wording of exclusions and waiting periods in the policy contract.
This should ensure that claims aren’t rejected on unfair or frivolous grounds. The waiting period for lifestyle diseases like hypertension, diabetes and cardiac conditions can now not be more than 90 days. If you don’t have any of these pre-conditions and you buy a policy and then develop the condition, an insurer will have to honour claims as long as the condition develops after 90 days of policy inception.
Another very important aspect is the definition of pre-existing disease. IRDAI has specified that a pre-existing disease is one that is diagnosed or has been treated four years prior to the issuance of policy. If there is no diagnosis, then any disease whose symptoms occur within 3 months of the policy being issued will be considered a pre-existing disease.
THE BOTTOM LINE
The Irdai’s move to standardise health insurance is commendable as it aims to increase the penetration of health insurance and enhance coverage– something that will also benefit insurers in the long run. While the new regulations may result in a slight increase in premiums from next year, the increase is not expected to be more than 10-15 percent.
Perhaps the biggest benefit of these new norms will go to those patients who have been denied health coverage altogether due to specific conditions such as HIV/AIDS, and kidney or liver failure. The regulator has done its part.
One hopes over the next 12 months the insurance sector will do its bit and rise to the occasion to really create a new, more evolved and inclusive world of health insurance.