Choosing a suitable health plan to become easier with standardised norms

Uniform policy wordings will reduce ambiguity and allow buyers to understand key policy features better

In recent months, the Insurance Regulatory and Development Authority of India (IRDAI) has come up with several regulatory changes aimed at simplifying health insurance and making it more customer-friendly. Many of these changes came into force from the beginning of this month. Let us try to understand how these changes will impact you, the policyholder. 

Standardisation of policy wordings: Starting from October 1, several important clauses in health insurance policies will be standardised. Insurers have been asked to incorporate the same policy wordings, prescribed by the regulator, across all products. According to S. Prakash, managing director (MD), Star Health and Allied Insurance, “Standardisation will address and improve factors like claim rejections, turn-around-time (TAT) for approval, issues related to waiting time for pre-existing diseases (PED), and so on.” 

Hospitals also stand to benefit. Says Prakash: “Insurers will adopt a uniform approach, which will enable hospitals to offer better services. This synergy will ultimately benefit customers.” 

Since policies will be similar on several parameters, customers will find it easier to understand them. Product comparison will also become easier. “These guidelines may lead to a slight increase in the premiums of health plans. But this is a good move as it will provide greater confidence to customers at the time of purchasing a plan,” says Naval Goel, chief executive officer (CEO), PolicyX.com.  

The guidelines also require customers to make full disclosure. Says Amit Chhabra, head-health business, Policybazaar: “If policyholders misrepresent facts or fail to disclose material facts while buying a health insurance policy, they will forfeit the premium paid. Insurers will also have the right to render the policy void.” 

If an individual owns multiple policies, he will have the right to settle his claim from any of them. In such cases, the insurer will be obliged to settle the claim as long as it is within the limits of the policy and meets its terms and conditions. The regulator has also demanded greater clarity from insurers. Says Chhabra: “Terms and conditions related to claim settlement, cancellation of policy, porting to another insurer, renewal, and redressal of grievances must be clearly mentioned in the policy document.” 

Telemedicine to be covered: Many people need to consult their doctor regularly. Keeping in mind the need to safeguard them, the regulator has now asked all general and specialised health insurers to start covering the cost of telemedicine consultation in their policies. Says Goel: “Plans with OPD (out-patient department) covers will benefit from these guidelines.” If your policy does not cover you for OPD expenses, then it will not cover the charges for telemedicine consultation.  
 

At the time of purchasing a policy, customers must check whether it provides an OPD cover. Says Chhabra: “A few companies don't provide it in their basic cover. In that case, one may cover OPD expenses by buying an add-on policy.” 

Proportionate claim deductions: The new rules say that insurers can no longer include within ‘associated medical expenses’ the following items: costs associated with pharmacy and consumables, implants, medical devices, and diagnostics (see box: What is proportionate deduction). Says Chhabra: “In future, insurers will not be allowed to recover expenses towards proportionate deductions other than the defined associated medical expenses.” 

The regulator has asked insurers to ensure that proportionate deduction is not applied in case of hospitals that do not follow differential billing based on room category. Insurers will also not be allowed to apply proportionate deduction to ICU charges.  

The total deduction made at the time of claim will reduce significantly. Says Chhabra: “This will reduce the out-of-pocket expenses of customers to a great extent.” 

Other key changes: Another positive step is the introduction of a moratorium period in health insurance. Under the new rules, once a customer has paid a premium for eight years, his claim cannot be rejected unless it is fraudulent. Says Krishnan Ramachandran, MD & CEO, Max Bupa Health Insurance: “With the inclusion of the moratorium clause, customers will want to stay covered for long so that they are able to derive the optimum benefit from their health policy.” 

The guidelines have also brought greater clarity to the definition of PEDs. Any disease that was diagnosed 48 months prior to entering the plan will be considered a PED. 

The guidelines also bring greater uniformity to the list of diseases excluded from coverage. “Health conditions such as age-related macular degeneration, mental illnesses, enteral feedings, internal congenital and genetic diseases will get covered by health insurance policies,” says Ramachandran. Also, customers will have to be informed about exclusions and their consent will have to be obtained. “This will ensure there are no unpleasant surprises at the time of a claim,”  says Goel.