Difficult times often expose vulnerabilities of life. Coronavirus has made people realise how easily life can be taken away. It has also made them understand the importance of health insurance. We are in a situation where there may be possibility of the entire family requiring medical care.
To increase health insurance penetration, the Insurance Regulatory And Development Authority (IRDA) has introduced a number of changes to improve coverage, service quality and claim experience of policyholders. Some have already been implemented.
These changes are a good point for you to take stock of your health insurance cover. And if you do not have health insurance, it can be a good time to buy one considering customer-friendly changes IRDA has brought about and the health crisis we are facing.
Many policyholders are not sure if their policy covers coronavirus infection or not. "Viral infections are covered. This is one of the common infections a policyholder can contract. All Covid-related diseases and complications are covered by the basic health policy," says Dr. S Prakash, Managing Director, Star Health and Allied Insurance.
IRDA has issued guidelines to remove doubts among policyholders. "A basic health policy covers medical expenses, that is, hospitalisation expenses, for any viral infection, including coronavirus. Also, as instructed by IRDA, insurers are liable to pay for treatment of coronavirus," says Ravi Vishwanath, President, Accident & Health, HDFC ERGO General Insurance.
However, this does not mean everything is hunky-dory. As the pandemic spreads, finding a bed in a hospital is not easy. Even if you do, you may have to bear high out-of-pocket expenses due to corona-specific disposable items. "There are a lot of consumables such as PPE kits that are not paid for in a standard policy. Patients can end up spending as much as one-fourth of their bill on PPE kits during extended hospitalisation," says Krishnan Ramachandran, MD & CEO, Max Bupa Health Insurance.
The costs being charged are not uniform. "Hospitals are charging Rs 400 to Rs 12,000 per PPE kit. Different hospitals are claiming different prices for same product and brand. We can accept some difference due to quality of material and type of product but such a huge difference is difficult to understand," says Dr. Prakash of Star Health and Allied Insurance.
Some insurers are paying for these consumables but only to an extent. "We are paying for reasonable PPE costs. PPE kits have become a necessity. We understand their importance in safeguarding people," says Ramachandran of Max Bupa.
Unless there is a mechanism to prevent levy of arbitrary charges, patients will keep bearing significant out-of-pocket expenses despite having a good policy. "Representation has been submitted to the regulator. I hope it will look into it," says Dr. Prakash.
State governments have also swung into action to ease the process. "With state governments' efforts to standardise costs for Covid-19 treatment, the insurance industry is also working towards standardisation of costs paid for consumables such as PPE kits. This is expected to ease Covid-19 treatment payouts," says Vishwanath of HDFC Ergo.
Many insurers have launched or plan to launch corona-specific plans. "We are in the process of filing a coronavirus policy which may offer wider coverage, including quarantine and hospitalisation expenses," says Subrata Mondal, EVP (Underwriting), IFFCO Tokio General Insurance.
Understand coverage details while buying a new policy. "A regular health policy does not cover infectious diseases for the first 30 days. Apart from this, standard exclusions, mentioned in the policy, will be applicable in case of hospitalisation. OPD consultations/treatments are covered if they are part of pre- and post-hospitalisation expenses of the main claim," says Vishwanath of HDFC ERGO.
Universal Plan/Eight-year Rule
The extent of coverage, list of diseases covered, diseases excluded, waiting period for pre-existing diseases, all these vary widely from one health plan to another and one insurer to another. There is no way for a layman to differentiate between plans offered by different insures. This makes porting tedious.
To address this, IRDA has come up with a standard plan called Arogya Sanjeevani that all health insurers will have to offer from June 15. "Arogya Sanjeevani is a base plan with limited features. It should work in the current environment in Tier-II and Tier-III markets as people are worried about expenses for coronavirus treatment. This can be a starting point for customers looking to secure health of their families," says Ramachandran of Max Bupa Health Insurance.
Those looking for a basic and affordable plan can go for it. "One reason people don't buy health insurance is confusion created by plethora of products. Arogya Sanjeevani offers common features and exclusions. This makes it an ideal product for base coverage," says Mondal of IFFCO Tokio.
While buying, you just have to compare the price and find the best service quality. "We will later offer easy upgrade to more comprehensive plans," says Ramachandran of Max Bupa.
IRDA has also said that once a policy completes eight years with continuous renewal, insurers cannot apply a look-back. "After the expiry of the period, no claim shall be contestable except for proven fraud and permanent exclusions specified in the contract. The policies would, however, be subject to limits, sub-limits, co-payments, deductibles, as per the contract."
A lot of people take treatment from alternative medicine systems. There are few plans for these treatments. IRDA has asked health insurers to encourage other medicine systems. "Coverage for alternative treatments such as Ayurveda, Unani, Sidhha and Homeopathy is included in indemnity-based health plans and Arogya Sanjeevani," says Ashutosh Shrotriya, Head, Products & Business Process, Religare Health Insurance. Insurers have also started designing products keeping requirements of senior citizens in mind. "Such products have a shorter waiting period for pre-existing ailments, easier co-payment options, coverage for multiple co-morbidities and comprehensive health check packages," he says .
Late Renewal/Health Incentives
You will now get a longer grace period for policy renewal. "The insurer shall provide a mechanism to condone a delay of up to 30 days from the due date without deeming such condonation as break in policy. However, coverage need not be available for such period," says IRDA. This means you can carry forward no-claim bonuses if you renew your policy during the grace period. However, you cannot claim anything in the gap period.
The industry is also encouraging healthy habits. "In our flagship product, every claim-free year is rewarded with 10 per cent cumulative bonus, up to 50 per cent. We also reward customers for fitness activities. The wellness points accumulated can be redeemed against reimbursement of out-patient expenses that the customer incurs in a policy year," says Sanjay Datta, Chief of Claims, Underwriting and Reinsurance, ICICI Lombard General Insurance. "Some other benefits are annual health check-ups, discount on pharmacy bills, complementary doctor consultations, online consultations, etc," says Shrotriya.
Many issuers were charging prohibitive premiums from senior citizens. The regulator has taken note of this. "The premium for health insurance products offered by life insurers, general insurers and health insurers to senior citizens shall be fair, justified, transparent and duly disclosed upfront," it has said.
Claim from Multiple Policies
It is not uncommon for many people to have two or more active policies such as corporate, family floater, top-up and individual. The regulator wants insurers to make it easy for policyholders to make simultaneous claims from multiple policies for single hospitalisation. "Efforts are being made by insurers in this direction. Customers who hold multiple health policies may avoid the hassle of reporting multiple claims for different policies," says Ravi Vishwanath, President, Accident & Health, HDFC ERGO General Insurance.
If you have two polices and one does not cover a particular cost, you can claim it from the other insurer. "In case of two policies, one needs to declare both. One can take benefit of consolidated coverage depending on the wordings of the programme," says Anik Jain, Co-Founder & CEO, Symbo India Insurance Broking.
Those with personal and corporate plans should first use the latter. "Corporate plans are generally better negotiated and, hence, possibly address more areas, at least in the first few years," says Jain. Insurers will have to either change policies or come up with new ones reflecting the changes ordered by IRDA by October 1. These changes and enhanced coverage mean additional expenses for companies. Though plans which are already offering a wider coverage may not need a big rise in premiums, many base plans may become more expensive. "There may be a 25-30 per cent increase in premiums," says Rakesh Goyal, Director, Probus Insurance, an insurtech broking company.
The regulator has asked insurers to offer policyholders the option of migrating to a suitable alternative policy while modifying or withdrawing the policy. "Indemnity-based health covers offered to specific age groups, students, children under family floater policies, shall also offer an option to such lives to migrate to a suitable alternative health insurance policy available at the specific exit age. Every policy migrated shall be allowed suitable credits for all previous policy years, provided the policy has been maintained without a break," it has said.
Applications for portability are not processed in several cases due to lack of policy documents and history. This will change now. "IRDA has created a web-based facility which enables the new insurer to get history of health insurance of the policyholder. The data-sharing portal has expedited the process," says Mondal of IFFCO Tokio.
Restriction on movement during lockdown has made both consumers and insurers realise the importance of digital transactions and enabling infrastructure. "IT has played a great role during the lockdown due to which we have been able to offer services. All this was possible because of technological readiness at the right time," says Dr. Prakash of Star Health and Allied Insurance.
The companies with high level of IT-readiness were able to quickly turn this crisis into an opportunity. "Since most functions were digitised even before the lockdown, there were no teething issues, and transition was smooth. The learnings from this lockdown have led to digitisation of all operations in the insurance life cycle right from issuance of policy to claims," says Datta of ICICI Lombard.
The experience gained during the lockdown will help the healthcare and insurance industry. "As pressure on health services rises, we are likely to see a rise in tele-health services. This can help healthcare reach more remote and less affluent populations, including the under- or un-insured," says Ramachandran of Max Bupa.
Many people have health covers offered by employers. It is it wise to depend only on them? "It is considered prudent to run a parallel individual insurance policy to address situations like job loss and retirement. Also, job change may reduce the cover depending on policy offered by the new employer," says Anik Jain of Symbo India.
Usually, the corporate cover is on the lower side. "Treatment costs can go beyond the group policy cover. So, it is better to have a regular health plan or a super top-up plan even if you are covered by a group plan," says Rakesh Goyal of Probus Insurance.
Individual Vs Family Floater
If affordability is a big concern, family floater is a better option than individual cover for all family members. "If one is married and has children, one should go for a floater policy. Buying individual policies will be expensive. Probability of entire family becoming unwell is low," says Indraneel Chatterjee, Co-founder, RenewBuy.com.
However, if there are big age differences and if a family member has health complications, it may not be the cheapest option. "Floater will work as long as there is not much age difference between husband and wife. Else, the premium may be high. Also, if one person has an ailment, loading will make the policy costlier," says Suresh Sadagopan, Founder of Ladder7 Financial Advisories.
"If you are a couple living with kids, go for family floater. If living with dependent parents, buy individual plans for parents and family floater for others," says Nitin Shahi, Executive Director, Findoc.
Also, if you are old and have family history of a medical complication, an individual plan is better. "Go for individual health plans when you start nearing 40s. If someone is having health issues like diabetes or high blood pressure, he should take an individual plan, while the rest of the family can avail floater benefits," says Shahi of Findoc.
If affordability is not an issue, go for individual policies as they offer reliable cover for each member. "For a family that has one policy per individual, the no-claim bonus will accrue to all except those making a claim. In family floater, no bonus will accrue even if any one family member has filed a claim. A family policy is taken assuming everyone in the family may not need insurance in the same year. This assumption may not hold in some cases," says Sadagopan.
Critical Illness Plan
There are many diseases where chances of survival are less and which require costly treatment. It may prove disastrous if such a disease is contracted by the main earning member of the family. Critical illness plans address this. They provide immediate full payment on diagnosis of a covered disease. Should you have one? "Yes, it is becoming a must with increasing incidence of diseases. One can have a special insurance policy or even riders that are available at a low cost and cover a lot of critical illnesses," says Shahi of Findoc.
However, some have a different view. "Critical illness is a good-to-have policy, not a must-have policy. A critical illness policy covers a set of common illnesses. It will exclude a large number of critical illnesses one may be susceptible to. It is a limited cover for common critical illnesses afflicting the population" says Sadagopan of Ladder7 Financial Advisories. "If one has history of a certain critical illness in the family (like heart ailments), one may buy this cover. Also, if one feels financially vulnerable to certain illnesses which can curtail one's earnings and become a massive drain on financial resources, one can go for it," he adds.
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