Irda balm for elders soon

Regulator moots insurance pool for high-risk senior citizens.

Senior citizens, who are aged 80 and above, may enjoy hassle-free treatment in hospitals if the government accepts the recommendations of the Senior Citizens Health Insurance Committee constituted by the Insurance Regulatory and Development Authority (Irda).

The seven-member committee, which was formed in May to look into issues pertaining to health insurance for senior citizens and suggest commercially viable insurance schemes, submitted its recommendations to the insurance regulator last week. The suggestions have to be approved by the Irda board this week.

Since insurance companies view individuals who are 80 years old and above as high-risk entities and do not see profitability in insuring them, the committee has recommended the formation of a health insurance pool to take care of their claims. The committee has suggested that the pool should be funded by the government and 50 per cent of the service tax on health insurance policies should be invested in it.

"We have recommended a health insurance pool, created with active funding by the government and other stakeholders to take over high-risk cases such as those above 80 years of age or a person with a risk-based loading of 40 per cent and above (for example, individuals suffering from ailments)," said a member of the committee.

"After every five years, the insurance company can re-examine the insured from the medical point of view and charge a premium accordingly in case the senior citizen is found suffering from any disease. The Irda mandate is that they should not load more than 75 per cent. In case the premium has to increase by more than 40 per cent, he is then classified as a high-risk individual and goes to the pool," explained B D Banerjee, a member of the committee.

"The cost of the medical tests will be borne by the senior citizen and the insurance company in the ratio of 50:50 unlike the present practice, where the senior citizen bears all the charges," added Banerjee.

Based on the senior citizen's health insurance policy (Varisht Bima Yojana) launched by National Insurance Company some months ago, the committee has given an indicative premium of Rs 3,000 for a cover of Rs 1 lakh for a healthy person aged 50 years.

In order to control medical costs, the committee has accepted the introduction of co-payment (the policyholder pays a part of the claim), limits and sub-limits. It has suggested that insurers load the premium each year, not exceeding by 2 per cent.

Likewise, they should offer a loyalty discount of 1 per cent every year so that the effective increase in premium for a senior citizen comes to 1 per cent.

At present, insurance companies charge a premium of over Rs 6,000 to people in the age band of 56 to 60 years. The premium increases according to the age bands. The committee has also suggested discontinuation of the present practice of insurance companies fixing a premium in age bands.

The committee has also said that insurance companies should not deny insurance to senior citizens unless they are found suffering from an incurable or terminal disease.

The committee has recommended various types of covers such as a hospital cash cover for critical illnesses, cashless hospitalisation cover provided the hospitalisation is less than 7 days, medical reimbursement covers, cover for all types of diseases having a higher sum insured with limits and sub-limits.