6 changes by IRDAI that will surely uncomplicate health Insurance

• Introduction
• 1. Standardized Definitions for 18 Exclusions
• 2. Disallowed Exclusions - Improved Coverage
• 3. Standardized Definition of Pre-existing Disease
• 4. 8 years Moratorium - Fewer Surprises in the Long-term
• 5. Permanent Exclusions & How They Improve Access to Health Insurance
• 6. Modern Treatment Methods
• What does not change?

Hello October 2020, bye bye ambiguities.

Some good news in this pandemic, finally.

The Health Insurance industry has seen tremendous changes since its privatisation 20 years ago, and continues to witness positive, periodic upgrades.

While we saw highly beneficial health insurance plans come our way, insurers often included fine-print, based on their assessment of the risks involved in covering individuals. This resulted in every policy having different types of exclusions and definitions. Customers either got confused reading multiple wordings, brochures - or blindly bought plans (higher possibility, unfortunately) only to be shocked, at the time of claims.

Since 2013, IRDAI has been taking massive efforts to standardize health insurance products, making them easier to understand and compare, with the objective of reducing customer confusion and grievances.

More recently, in Sept 2019, IRDAI introduced Guidelines to standardize exclusions, with stricter regulations that are applicable on all health insurance products starting 1st October 2020.

Note: This change is applicable to all policies - existing and new. In case you already own a policy which is due for renewal, these changes will take effect at the time of renewal.

Here's a quick summary that will help you understand how these changes help you:

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IRDAI has standardized the definitions of the 18 most common exclusions like pre-existing diseases, maternity etc.. These terms will now have standardized definitions across all health insurance plans across the country - so now you don't need to worry about the fine print in each plan when you compare and choose.

For instance, the definition of '30 day waiting period for illness claims' used to be different under different insurance companies. Some insurance companies had a waiting period for expenses incurred for illnesses in this 30 day period, while certain insurance plans used to exclude diseases diagnosed in the first 30 days.

Such stark differences had a massive impact on claims, and left customers feeling cheated. Now IRDAI has standardized this definition. So all plans after 1st Oct 2020 will have the same definition for the 30 day waiting period, and 17 other exclusions.

Disallow ambiguous definitions:

Even for exclusions that do not form part of the standard definitions - IRDAI now disallows ambigious words that make exclusions open ended - for instance you can say you cannot use "indirectly related to" - say an insurer in the past had an exclusion that said any treatment directly or indirectly related to Diabetes & Hypertension will not be covered for 2 years. Such open ended exclusions are not allowed in plans from Oct 1st 2020 onwards.

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As per the new guidelines, insurance plans now, cannot have certain exclusions.

These include exclusion for mental illnesses, treatment for puberty and menopause related complications, artificial life maintenance, Internal congenital diseases, genetic diseases or disorders.

This list ensures that certain illnesses like mental illness will now be covered under health insurance and cannot be excluded from the scope of health insurance policies.

Note:

Note though some insurers have already implemented the coverage of Mental Illness they have applied financial limits (as a % of the base sum insured) to the cover.

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Pre-existing disease and its interpretation has been the cause of maximum complaints and disputes in the past. The change in definition will result in more clarity in what can be considered pre-existing disease.

Earlier, any sign or symptom (48 months prior to buying the policy) that the person insured or applicant was aware of was considered pre-existing disease. This is a very broad definition, that tests the memory of an individual to remember all small signs, symptoms that can later result in a major hospitalization.

Now, the new definition has linked pre-existing disease to a doctor consultation. Only if the doctor has diagnosed or given medical advice or treatment for a disease in the past 48 months before buying the policy - will the disease be considered pre-existing disease.

Now, you simply need to ensure you refer to the record of all doctor visits and prescriptions for 48 months prior to buying/upgrading any kind of health insurance to answer questions regarding pre-existing diseases.

Note:

Insurers may continue asking open ended questions in the proposal form on your past medical history. Based on your medical history, the insurer can continue to choose whether to cover you or not.

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In the past, insurers could cancel policies and refund premiums on the grounds of any kind of misrepresentation even after customers had paid premium for decades. With this new change, insurers cannot contest a proposal form after continuous renewal of 8 years. The only exception is if there is a proven fraud against the customer.

So for instance, if a senior citizen has bought a health insurance 10 years ago, and missed informing about let's say hypertension out of oversight - the insurance company cannot consider this a fraudulent misrepresentation, and reject a claim today.

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People who had a medical history of cancer or epilepsy faced rejections from coverage in the past, because insurers found it unviable to give pre-existing cover to such users even after 48 months of waiting period.

Now, instead of declining coverage, insurers can offer to cover the user for health insurance for all illnesses and injuries, on the condition that the user agrees to exclude their existing disease permanently.

This helps people who otherwise did not get access to health insurance at all, to at least get access to health insurance for all diseases, with the exception of specific diseases they already suffer from.

Some diseases where insurers can put a permanent exclusion: Cancer, Epilepsy, Heart Ailment, Stroke, Liver, Pancreas, Bowel, Kidney Disease, Hepatitis B, HIV, Alzheimer's.

Diseases where insurers cannot put a permanent exclusion: Diabetes, Hypertension.

Note:

• This does not impact people with existing insurance policies who are later diagnosed by a serious illness. In such cases, you will get full coverage without any exclusion or waiting period.
• Insurers might cite complications during claims and still not offer health insurance to people with Epilepsy, Cancer - even with permanent exclusion. We will have to wait & watch.

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Insurance companies are now required to keep up with modern times and cover a list of 12 modern treatment methods like Oral Chemotherapy, Robotic surgeries, and Stem cell therapy. Many insurance companies earlier had exclusions with respect to such treatments. This change disallows insurance companies to introduce such exclusions.

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The current policy you hold will automatically be upgraded with all the above benefits on your next renewal.

While Insurers are now enabled to provide access to many people who could not get health insurance earlier, Insurers being private for-profit companies, IRDAI cannot force them to provide anyone with an insurance policy.

In essence, people who are applying for a new policy, or upgrading their existing policy, Insurers will continue having the power to accept or decline your proposal/application based on your declarations.

*For instance, unfortunately, insurers can still decline proposals for people with a history of Mental Illness, Cancer, Epilepsy going forward. *

With this guideline, IRDAI does two things 

a) Standardisation - reducing ambiguity amongst plans. 

b) Enable Insurers to provide better access to certain segments of the population. Insurers beyond a point cannot be forced to accept a certain kind of risk.

This industry-wide update is a welcome change - bringing much-needed clarity to individuals exploring health insurance. It will ensure that there is more transparency and accountability between the insurer and the insured, leading to fewer conflicts and complaints. However, these changes might slightly increase the cost of health insurance.

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