How IRDAI’s new rules benefit health insurance policyholders

In a bid to make the settlement of health insurance claims a hassle-free process, the Insurance Regulatory and Development Authority of India (IRDAI) has introduced a slew of major structural changes. The changes came into effect on October 1, 2020, and will be applicable on existing as well as new health insurance policies.

The guidelines have been introduced to make health insurance policies more standardized and customer-centric. As a policyholder, here is how you can benefit:

Standardized policy clauses

Decoding the offerings and the terms and conditions of health insurance policies may be tricky for regular customers. The language used in policies is generally loaded with jargon, which poses a challenge for customers when they want to compare different plans. To demystify the insurance terminology for customers, the IRDAI has directed insurers to standardize the general terms and clauses in their indemnity-based health insurance policy contracts. All insurers will have to use standardized wordings provided by the IRDAI henceforth. Exclusions have also been standardized, which means that if an insurer does not want to cover certain ailments, it has use to the same wordings as prescribed by the regulatory body.

Inclusion of telemedicine

As the pandemic rages on and social distancing continues to play a dominant role in our lives, the concept of telemedicine has assumed greater importance. Virtual consultations with doctors have become the norm and the trend is likely to continue in the near future. In the light of this shift, IRDAI has asked insurers to include the cost of telemedicine in their plan’s coverage. The Medical Council of India also issued guidelines in March 2020 that enable registered medical practitioners to provide healthcare using telemedicine. Under the IRDAI’s new instructions, insurers have been advised to allow claim settlement for telemedicine consultation wherever normal consultation with a medical practitioner is allowed in the terms and conditions of the policy contract.

More reasonable proportionate deductions

The changes in proportionate deductions will come in handy for policy buyers who choose a room with a higher rent than what is covered in their insurance policy. Most health insurance plans carry sub-limits on room rent and should you choose a room with rent higher than the cap mentioned in your policy, there would be a proportionate deduction on the claim for inpatient hospitalization.

For instance, if you choose a room which has a tariff of Rs 7,000 per day and the sublimit on your policy is Rs 5,000 per day, your insurer would typically deduct 40 per cent (in proportion to the difference in the room tariffs) from your total claim, including room charges and other charges, which are often called associate medical expenses.

The concept of the proportionate deduction is used because for higher room rents, hospitals generally charge a higher fee for medical treatments and consultations. The new IRDAI guideline aims to restrict this proportionate deduction to bring down out-of-pocket expenses of the policyholders.

The IRDAI has called for ‘associate medical expenses’ to be clearly defined in the policy contract and specify the medical expenses that would fall under its ambit on which proportionate deduction would be allowed. Insurers can no longer include the costs incurred on diagnostics, pharmacy, consumables and implants and medical devices used in treatments in this category and they cannot recover expenses towards proportionate deductions other than the defined ‘associate medical expenses’ while processing claims. Policyholders can now avail full coverage for these costs irrespective of the room rent. Also, proportionate deduction would not be applicable should you avail medical facilities at hospitals that do not have differential pricing based on room rent category.

Enhanced coverage for various ailments

As part of the changes implemented by the IRDAI, insurers cannot exclude illnesses contracted due to hazardous activities. What’s more, treatment for mental illness, age-related degeneration, internal congenital diseases and artificial life maintenance will be covered. A few other common illnesses including behaviour and neurodevelopment disorders, genetic diseases and disorders and cover for puberty and menopause-related disorder have also been included. Age-related illnesses that include cataract surgery and knee-cap replacements will also be covered in your health plan.

Now that the IRDAI has untangled the biggest knots for customers, you can choose the best health insurance policy that secures your future and that of your family.

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