Recently, the IRDAI has modified the guidelines in health insurance plans with regards to the proportionate deductions that insurance companies resort to during the claim process.
Health Insurance Claim: The health insurance claim settlement is going to be less troublesome for the policyholders. This is because the insurance regulator has taken an important step that will help policyholders to incur less out-of-pocket hospital expense. However, the benefit, to some extent, may get set-off by an increase in the premium outgo.
Recently, the IRDAI has modified the guidelines in health insurance plans with regards to the proportionate deductions that insurance companies resort to during the claim process. But, first, we see what is the new rule and how it changes the claims settlement of health insurance plans.
At times, during hospitalization some portion of the hospital bill is to be borne by the policyholder even if the policyholder holds a cashless policy. This could be because of the ‘Sub-limit’ in the policy which is generally 1 per cent of the sum insured for the room rent. The Sub-limit defines the various hospital cost heads as per the policy terms and conditions. And, if the policyholder chooses to take a room higher than what is allowed as per sub-limit, the insurer proportionality reduces the claim amount on other cost heads.
According to the new guidelines, IRDAI has specified hospital expenses which the insurer cannot include and exclude during proportionate deductions. Going forward, IRDAI has stipulated new rules on proportionate deductions in health insurance plans which will apply on policies which are issued on or after October 1, 2020 and on those policies which are due for renewal from April 1, 2021.
“This move bodes well for customers and is in their best interest. Earlier, if the customer opted for a room that was higher than entitled, there was proportionate deduction on associated medical charges. Now, IRDAI has advised insurers to be specific about what these medical costs would entail and that pharmacy, diagnostic, consumables and other implants, would not be included under any circumstances. Furthermore, the Regulator has also said that there will be no deduction for ICU admission, since it is a single category,” says Shanai Ghosh – CEO and Executive Director Edelweiss General Insurance.
Impact on premium
A change in the way the hospital expense is going to be accounted for may make insurers revise the premium on policies. So, will there be any impact on the premium on renewal or on new plans? “For all policies which are experience rated, it can lead to an increase in premium at the renewal as insurers go for loss adjustment in their pricing. This impacts the group policyholders to a large extent as group policyholders negotiate a discount in premiums with an application of room rent restriction.”, informs Parag Ved, Executive Vice President – Consumer Lines, Tata AIG General Insurance.
What can policyholder do
Some health insurance policies do not have the provision of separate sub-limits and with no room-rent restrictions. One may have to prefer them after comparing premium across 2-3 preferred insurers. “Policyholders need to be aware if room eligibility is restricted in the policy or not. It is always good to have policies which do not have room rent restriction. At the time of claims, policyholders should check whether the disallowed amount is in line with policy terms and conditions. Also, if the cost of pharmacy and consumables, implants and medical devices, as well as diagnostics are covered as a part of the policy or not,” says Ved. Choosing the right policy at a competitive premium becomes all the more important now.