Health Insurance: Mediclaim policies set to be less opaque now

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September 22, 2020 5:20 AM

With all indemnity-based health plans to have standardised wordings for exlusions & waiting periods, customers will now be able to compare & comprehend policies better

The insurance regulator’s circular underlines that the objective is to simplify the wordings of general terms and clauses of the policy contracts and ensure uniformity across the industry.

From October 1, all new indemnity-based health insurance policies will have standardised clauses. For existing policies, the same will come into effect from April 1, 2021 at the time of renewal of the respective policy. The insurance regulator’s circular underlines that the objective is to simplify the wordings of general terms and clauses of the policy contracts and ensure uniformity across the industry.

The premium can be paid in instalments —half yearly, quarterly or monthly. Insurers cannot deny renewal of a policy on the ground that the insured person had made a claim or claims in the preceding policy years. The insurer will inform the policyholder about renewal and collect the premium before the end of the policy period.

New guidelines
If the policyholder misrepresents or does not disclose any material fact, then the policy will be void and all premium paid will be forfeited to the company. After completion of eight continuous years, health insurance claims will not be contestable except for proven fraud and permanent exclusions specified in the policy contract. However, the policies would be subject to all limits, sub limits, co-payments, deductibles as per the policy contract.

Prasun Sikdar, MD & CEO, ManipalCigna Health Insurance Company, says the measures taken by the regulator are in the interest of the policyholders. “The standardisation of exclusions will help customers to understand and compare policies, leading to an informed decision. Also, instalment of premiums will ease the mode of payments for customers, the crystal clear exclusions will ensure there is less ambiguity with respect to policy wording,” he says.

Similarly, Krishnan Ramachandran, MD and CEO, Max Bupa Health Insurance, says the implementation of the new guidelines from October will have a positive impact as the standardisation of wordings in the terms and conditions, waiting periods and exclusions will make it easy to understand and compare health insurance policies. “As each policy will have the same wordings for exclusions, and general terms and conditions, it will remove the ambiguity across products and bring more transparency. The inclusion of the moratorium clause in which health policy of more than eight years will not be contestable except in case of any fraudulent claim, would make consumers stay invested for long and take the optimum benefits of the health policy,” he says.

Claim settlement
The insurer will have to settle or reject a claim within 30 days from the date of receipt of last necessary document. In case of delay in payment of a claim, the insurer will be liable to pay interest to the policyholder from the date of receipt of the last necessary document to the date of payment of claim at a rate 2% above the bank rate. If the claim warrants an investigation, then the company will initiate and complete it within 30 days from the date of receipt of the last necessary document. If one has multiple policies, then the insurer chosen by him will have to settle the claim as within the terms of the chosen policy. If the amount to be claimed exceeds the sum insured under a single policy, then the policyholder can claim the balance amount from the other insurer.

Uniformity in exclusion
The guidelines bring more uniformity in the list of excluded diseases as health conditions such as age-related macular degeneration, mental illnesses, enteral feedings, internal congenital, genetic diseases will now be covered. “The modern way of treatment will be covered across all health insurance plans which will eventually help consumers to access quality and effective methods of treatment. The health policies that cover consultations through physical visits will need to include consultations over telemedicine as well. Telemedicine has become more prominent in the current times and policies with OPD will be more beneficial,” says Ramachandran.

Proportionate deductions
The regulator has mandated that insurers cannot recover any expenses such as pharmacy and consumables, implants and medical devices and diagnostics towards proportionate deductions other than the defined ‘associate medical expenses’ while processing claims. Proportionate deduction takes place when a policyholder opts for a room where the tariff is more than the tariff capped by the insurer.

The regulator has directed insurers to ensure that proportionate deductions are not applied in hospitals which do not follow differential billing or for those expenses in which differential billing is not adopted based on the room category. Insurers are not permitted to apply proportionate deduction for ICU charges as the regulator has underlined that different categories of ICU are not there.

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