The insurance regulatory and development authority of India (IRDAI) has recently removed the age limits on health insurance policies. This news has delighted all age groups of people, particularly senior citizens. While it seems a welcome step, we must assess the new provisions and their viability and affordability for policyholders.
On 20 March 2024, IRDAI issued a notification modifying certain rules and guidelines to meet growing market demands and ensure better governance for policyholders. The rules are effective 1 April 2024. Although the rules cover various insurance products, I will focus on health insurance, because of its distinct nature. This is a segment where several aggrieved policyholders have approached Moneylife Foundation to seek my guidance as a counsellor. Schedule III of the notification outlines specific provisions applicable to health insurance – a few of these have been altered, although most remain unchanged.
Exclusion Period Reduced to 36 Months
Most insurance companies had fixed the exclusion period for treatment in case of pre-existing diseases at 48 months. The IRDAI notification has reduced this period to 36 months. Clause 1.6 now defines a 'pre-existing disease' as any condition, ailment, injury or disease, which was diagnosed or treated by a physician, or for which a physician recommended medical advice or treatment not more than 36 months before policy commencement. This change offers new policyholders a significant 12-month relief but it does not apply to overseas travel policies.
Lower Waiting Period for a Few Diseases
Clause 1.7 indicates that 'specific waiting periods' up to 36 months may apply for certain diseases or treatments that cannot be covered under a policy. However, clause 7 allows insurers to specify shorter waiting periods for pre-existing and specific diseases. Although currently followed by insurers, IRDAI should ensure waiting periods against specific diseases are reasonable, given medical advancements.
Will Ayush Treatment Receive Equal Rights?
Clause 5 directs insurance firms to create a 'board approved policy' that places Ayush treatments on par with other treatments. Ayush encompasses ayurveda, yoga, naturopathy, unani, siddha and homeopathy. Personally, I respect these ancient treatments and have no qualms using them for minor issues like coughs, colds and mild fevers. I rely on home remedies and kadha (a liquid derived from medicinal herbs and spices) for relief. However, I have yet to encounter proven data on the efficacy of these treatments for more serious ailments.
An expert panel for Ayush treatments may be necessary at the company and ombudsman levels to facilitate the claims process. I recall a case where a mediclaim was rejected because uterus removal surgery was not performed in a specific manner. My carefully drafted letter to the insurer was disregarded. I advised the complainant to approach the insurance ombudsman with a copy of my letter. The ombudsman not only took cognisance of my letter, but medical experts at the hearing also supported this type of surgery. The insurer was directed to settle the claim immediately. In this context, I believe that patients’ options for Ayush treatment may face similar rejections if the insurer has a different perception of what treatment should be considered appropriate for a certain ailment. Ideally, the insurance ombudsmen should have the support of experts in the field to guide in such situations.
Cost of Insurance for Very Senior Citizens Is a Concern
Medical insurance now caters to all age groups, but high premium costs for senior citizens are a matter of concern. Section 6 offers health insurance products for various demographics, including senior citizens, students and children, covering all existing medical conditions.
While younger generations may benefit from lower premiums, senior citizens might not enjoy the same advantage. At Moneylife Foundation, we receive frequent complaints about the exorbitant increase in premium on renewal, even for claim-free policies that have been running for years. Although regulators permit insurers to revise premiums based on claim experience, there should be a cap on such revisions to protect policyholders from financial strain. Otherwise, even healthy senior citizens will pay a hefty increase in premium every three years.
Lack of Awareness about Co-payment
Generally, all senior citizens must make a co-payment of 20% of medical expenses from their own pocket. Insurance companies will consider reimbursing the remaining 80%. Removing age barriers and including existing diseases may lead to substantial increase in medical expenses being claimed under health policies. Most policyholders are still unaware of what their share of these expenses will be.
Existing Medical Conditions
Some media reports suggest that the new notification prohibits insurance companies from declining policies to individuals with severe medical conditions like cancer, heart or renal failure, and AIDS. Regrettably, I did not find these specific diseases mentioned in the said notification. Clause 6.3 states that “Insurers shall endeavour to offer coverage for persons with all types of existing medical conditions.” It does not appear to be mandatory for insurers. The key question is the pricing of policies for people with such conditions. It is likely that many will not be able to afford the premium, especially when IRDAI has specified such pre-existing medical conditions.
Need to Curb Mis-selling?
Lifestyle diseases such as blood pressure, diabetes, and asthma are now common; a few others are also not considered very serious. However, ailments such as cancer, heart disease, renal failure and AIDS are life-threatening depending particularly upon the stage at which they are discovered. The regulator needs to be more specific in its guidelines to avoid any confusion or mis-selling of health insurance and their claims being repudiated later.
Grievances Redress
Section 11 of the notification directs insurers to establish a separate channel to address claims and grievances of senior citizens and make the details available on their websites. It has not specified whether this would be an online channel or provide doorstep services that are required by senior citizens.
Practical Difficulties Ignored
Gone are the days when large families and readily available relatives provided support during hospitalisation. Nowadays, families often lack sufficient manpower to manage the various tasks involved. These include finding an appropriate hospital, admitting the patient, completing paperwork, making a down payment for non-cashless facilities, procuring prescribed medications and informing loved ones. On top of all this, there is the added pressure of reporting the hospitalisation to the insurance company within a specified timeframe.
As life becomes increasingly hectic, it seems only logical to reconsider these stringent reporting norms or redesign regulatory guidelines to adopt a more practical process that works both for the insurer and insured person—unfortunately, there is no fresh thinking on this crucial issue.
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Retired banker Abhay Datar is a consumer activist and an expert counsellor at Moneylife Foundation. He was a member of the Managing Committee of Mumbai Grahak Panchayat (MGP) and also the treasurer at MGP for over two and a half years. After working at Bank of Baroda for 29 years, he retired as IT Manager. Mr Datar has resolved many cases related to banking and has also handled cases related to insurance and mediclaim.)
a) the need for incentives /discounts for maintaining a claim free policy year and in our case for over 2 decades but not considered any different to others in the same age group.
b) premiums will be higher for the seniors, but the GST @ 18% weighs it d0wn further as does the max limit of 50000/- relief on Health insurance.
c) With advent of technology, every Ins co has opted for solutions that makes the policy holder do all the work from online policy renewal payments to uploading claims documents to talking to chat bots, receiving incomprehensible text messages with links to click on. So, a door is opened to insure seniors but it also needs complementary support fit for the seniors.
Co-payment by policy holders is also not a good practice especially when Insurance companies charge a very hefty premium without looking into the co-payment clause. There must a well written and explained distinction between zero co-payment policy and co-payment policy so that the policy holder can understand the difference upfront and weight her benefits and cost.
The patients are kept in ventilators even if there is no chance of survival
Bills for medicines can't be rechecked by common man and there is overcharging
The hospitals put a cap for surgery and copay applies
Claim settlement through TPA is tedious process