How new health policy rules will impact you? | Economic Times

Health insurance policies have received a much-needed makeover. Thanks to the new guidelines that will come into effect from October 1, 2020, all existing and new health insurance policies will become more standardised, simpler to understand, and cover more treatments and procedures. However, since the coverage will become more enhanced, do keep in mind that health insurance policies may become dearer.These new guidelines were issued by the Insurance Regulatory and Development Authority of India (IRDAI) in a staggered manner over the past one year.New products (filed after October 1, 2019) launched by health insurers are already adhering to the new rules. Whereas for products that are already in the market, IRDAI has given the insurance companies a year (i.e., from October 1, 2019, till September 30, 2020) to comply.Here is a closer look at six of the major changes that will come into effect from October 1, 2020, and how it will impact the policyholder.1. Health insurance claims may not be rejected after 8 years of premium paymentWhat the new guidelines state: The IRDAI guidelines issued on June 11, 2020, states, "After completion of eight continuous years under the policy no look back to be applied. This period of eight years is called a moratorium period. The moratorium would be applicable for the sums insured of the first policy and subsequent completion of 8 continuous years would be applicable from the date of enhancement of sums insured only on the enhanced limits. After the expiry of the Moratorium Period, no health insurance claim shall be contestable except for proven fraud and permanent exclusions specified in the policy contract. The policies would, however, be subject to all limits, sub-limits, co-payments, deductibles as per the policy contract."How it will impact you: Health insurers will not be able to reject your claims if you have continuously been covered for at least eight years. This period of eight years is known as the moratorium period.Chandan D. S. Dang, Executive Director, SecureNow.in, a Delhi-based online insurance broking firm said, “This moratorium of eight years means that you should buy your health insurance as early as possible. After you have held this for eight years all your claims (except fraud) will be paid and this significantly enhances the quality of your insurance. This moratorium also puts the onus of proving fraud on the insurer and makes it more difficult to reject a claim.”Besides, the policy will be subject to all limits, sub-limits, co-payments, deductibles as per the policy contract.You must also know that the moratorium will be applicable for the sums insured of the first health policy and subsequently completion of eight continuous years. At the time of claim settlement, the insurer can settle or reject a claim, as the case may be, within 30 days from the date of receipt of last necessary document. The policy will become void and all premium paid will be forfeited to the insurer in the event of misrepresentation or non-disclosure of any material fact by the policyholder.2. Insurer can't able to deny coverage outright to those suffering from critical illnessesWhat the new guidelines state: According to the IRDAI guidelines issued on September 27, 2019: "Insurers are allowed to incorporate the as many as 16 existing diseases disclosed by the person to be insured at the time of underwriting as permanent exclusions with due consent of the proposer or person to be insured, where underwriting policy of the insurer does not enable the Insurer to offer the Health Insurance Coverage for the given existing disease disclosed even after levying the loading. The permanent exclusion would be specific for the following listed conditions. However, it is emphasized that these permanent exclusions shall be allowed only in cases where the policyholder may be denied coverage as per the underwriting the policy of the Insurer for the existing diseases disclosed at the time of underwriting."How it will impact you: Insurers will not be able to deny coverage outright to those suffering from critical illnesses or conditions like Sarcoidosis, Malignant Neoplasms, Epilepsy, Heart Ailment Congenital heart disease and valvular heart disease, Cerebrovascular disease, Inflammatory Bowel Diseases, Chronic Liver diseases, Pancreatic diseases, Chronic Kidney disease, Hepatitis B, Parkinson's Disease, Demyelinating disease, HIV & AIDS, Loss of Hearing, Papulosquamous disorder of the skin, Avascular necrosis (osteonecrosis) and Alzheimer's Disease.The list covers 16 such ailment categories. Until now, those with these conditions were not considered eligible for buying health policies."Previously if one suffered from a certain set of diseases such as epilepsy or chronic liver disease, the insurer would most likely not have issued health insurance to you. This would leave you financially vulnerable if you fell ill. Now the insurer could issue a health policy to you and just exclude a specific ailment. So, if you fall ill from any other disease that will be insured. This is in the customer's best interest and policy issuances to people with adverse health conditions should increase," Dang explained.3. Clarity on the definition of pre-existing diseaseWhat the new guidelines state: The IRDAI guidelines issued on September 27, 2019, said: "Every Health insurance product shall cover all pre-existing diseases disclosed by the persons to be insured immediately after the expiry of the forty-eight months waiting period or such lower period as stipulated in the product."How it will impact you: The diseases or ailments that the insured already suffers from while buying the insurance policy are termed 'pre-existing diseases'. The guidelines will now bring in a lot of clarity on such pre-existing diseases.Rakesh Goyal, Director, Probus Insurance, an online Insurtech Broking firm, said that the regulator specified that any condition, disease, injury, or illness diagnosed by the physician or for which medical treatment was recommended or received within 48 months before the effective date of the issued policy by the insurer or reinstatement falls under pre-existing diseases."IRDAI has said that all the existing health insurance products must comply with these terms and cover all the pre-existing diseases disclosed by the person to be insured after the waiting period of 48 months or as mentioned in the product," Goyal said.4. Modern treatment procedures to be coveredWhat the new guidelines state: “To ensure that the policyholders are not denied the availability of health insurance coverage to Modern Treatment Methods Insurers shall ensure that the following treatment (examples mentioned below) procedures shall not be excluded in the health insurance policy contracts. These Procedures shall be covered (wherever medically indicated) either as an in-patient or as part of domiciliary hospitalization or daycare treatment in a hospital,” IRDAI guidelines issued on September 27, 2019.Examples of modern treatment methods include, Uterine Artery Embolization and HIFU, Balloon Sinuplasty, Deep Brain stimulation, Oral chemotherapy, Immunotherapy- Monoclonal Antibody to be given as an injection, Intravitreal injections, and Robotic surgeries, etc.How it will impact you: Goyal said, “Insurers will not be able to deny the coverage outright for modern treatment procedures and will have to cover the treatment procedures as in-patient or as part of domiciliary hospitalisation or daycare treatment.”5. No proportionate deduction for ICU chargesWhat the new guidelines state: The guidelines issued on June 11, 2020 said: Insurers are not permitted to apply proportionate deduction for ‘ICU charges’ as different categories of ICU are not there.How it will impact you: Amit Chhabra, Head-Health Insurance, Policybazaar.com said that amid the pandemic where people were complaining about the rising costs of medical procedures across hospitals, this is a customer-friendly move. Chhabra added, “Proportionate deductions are a complex topic for the customers and it often leads to dissatisfaction amongst customers at the time of claim. Since typically ICU has only 1 category, there shouldn’t be any proportionate deduction and that has been clarified with this circular.”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. “This step will reduce the out-of-pocket expenses for customers having health insurance policies. It will also allow the customer to avail better services in the hospital of their choice at a lesser price,” informed Chhabra. 6. Accrued continuity benefits in waiting periodsWhat the new guidelines state: The guideline issued on June 11, 2020, said, "The insured person will get the accrued continuity benefit in respect of the “Waiting Periods”, “Specific Waiting Periods” in the event of payment of the premium within the stipulated grace period."How it will impact you: Since health insurance policy premiums can now be paid in monthly, quarterly and half-yearly instalments, there will be specific grace periods for each period mentioned by the insurers. Usually, health policies with annual premium payment mode have a grace period of 30 days, however, policies with monthly premium payment mode might have a different grace period.Dhirendra Mahyavanshi, Co-Founder, Turtlemint, an Insurtech firm said, "In order to continue the waiting period of the health policy, the premium needs to be paid before the grace period ends. Else the policy lapses and the continuity benefit of the waiting period cannot be utilised. Even if the health insurance policy is revived at a later date, with health declaration or medical tests, the previous continuity benefits of the waiting period would lapse, and a fresh waiting period would start. Thus, the premium needs to be paid on time in order to continue the waiting period and health insurance coverage."A “waiting period” is a tenure during which the claim for a specific ailment would not be admitted. Some health policies have generic waiting periods of two to four years for certain listed illnesses. There could be a “specific waiting period” for pre-existing illnesses.Adarsh Agarwal, Appointed Actuary at Digit Insurance said, "So if a customer has completed their pre-existing disease waiting periods in the previous policy, then they can transfer these benefits to a new policy. They do not have to go through the waiting periods in the new policy again. This will benefit the customer as and when they port their policy to a new insurer, the coverages even for pre-existing diseases can activate immediately."The premiums could increaseInsurance experts say that an increase in premium rates could be expected due to the changes and additions to health insurance policies."I do expect an increase in premiums because several new factors are going to be added in the health policies and also the 10 per cent medical inflation and increasing pandemic costs will impact the premium amount. The premium increases may be more in the older age groups or those with pre-existing conditions. Also, the premiums will increase gradually as products get refiled with the regulator.”Will premiums of health insurance policies sky-rocket though? This is not a possibility said Dang. “Fortunately, there is considerable competition in the market which ensures that prices do not increase irrationally," he said.