Considering the loopholes in the health insurance schemes as pre-existing ailment clause more so works in the favour of insurance companies, the IRDAI in its latest report proposes a much clear definition for pre-existing ailment. This is because the clause is open to wide understanding and many a times insured lose on insurance benefit or fails to get the claim processed due to pre-existing disease.
The insurance regulator hence formed a working group in July 2018 in order to simplify and standardize exclusions in health insurance plans. The report by the group released early this month includes several customer-friendly proposals which are listed here below:
Clearer definition in respect of pre-existing ailment: In the current context, pre-existing ailment is defined as any ailment, condition, related conditions or injury for which there were signs or symptoms against which medical advice or treatment has been suggested within 4 years time just prior to the issuance of first health insurance policy.
So, as per this definition, an ailment falls in the category of pre-existing one, if the insured person has been diagnosed with symptoms. Now these symptoms can be mild or the person might be completely unaware of the symptoms of the ailment until he or she visits the doctor. And health insurance contracts reject claim to even such a person who is genuinely not known to his or her pre-existing ailment and this is being deemed as unfair for customers who pay heavily as premiums.
Hence the report recommends a sharper definition for pre-existing ailment that says that the contours of pre-existing disease should include any disease that has been diagnosed or against which a medical advice or treatment has been recommended before the policy comes into effect. This is far better a definition as there is no mention of signs or symptoms which results in more of claim rejection. Also, the waiting period in respect of a pre-existing ailment cannot be over 4 years.
Claims to face no rejection after a waiting period of 8 years: It is not just in the initial policy years that you face the risk of claim rejection but any time insurers can reject your claim due to non-disclosure. And as per the report it is proposed that health insurance companies will be given a moratorium period of 8 years of continuous policy renewal post which policy claim cannot be rejected on grounds of misrepresentation or non-disclosure except in the case of genuine fraud.
Permanent exclusions against some ailments to be not allowed if it is contracted after policy inception: Besides waiting period of some 4 years on pre-existing ailments, few of the diseases such as HIV, Parkinson's disease remain permanently excluded i.e. if an insured contract such an ailment after commencement of health plan, there is no claim available against its treatment. However, in the report, the committee recommends that all of the diseases including Alzheimer's, Parkinson's, AIDS/HIV and morbid obesity cannot be left permanently excluded in case they are contracted after a person buys the contract.
Interestingly, there are some general exclusions for maternity, infertility etc. But the new proposal puts forth that other than the generic exclusions, insurers cannot deny or exclude ailments by including them under permanent exclusions.
To allow insurers to permanently exclude existing ailments: In the current regime, health insurers deny health cover to individuals who have serious ailments as a waiting period is a must as per norms but such that these individuals are not denied insurance altogether, the committee recommends allowing health insurers to permanently exclude such ailments. And there have been identified 17 such conditions for which the insurer can incorporate permanent inclusion, if they have been pre-existing during underwriting of health cover.
Insurance for new-age treatment: Also given the pace at which medical industry is advancing in respect of treatments and drugs, the report recommends setting up of a health technology assessment committee (HTAS) that would engage in examining as well as recommending inclusion of new drugs and treatments and medical technology advancements.
Also, to include such advanced and new-age treatment, insurers may be allowed to include co-payments due to higher costs.