Great News for Consumers: Health Insurance Claims can’t be rejected after 8 Years
There is clear trust deficit between
policyholders and insurance companies today. Policyholders aren’t sure if the
insurance company will honor claim. This has lead to non purchase of health insurance
policy even when there is awareness of impact of rising medical cost. Worsening
the matter are old policies wherein many people won’t renew health insurance as they see potential cost vs benefit analysis.
Government has now come forward
to provide some comfort for policyholders by formulating policy (draft) which states that claim on a health insurance can’t be rejected after 8 years from date of
commencement of policy.
Before going into details of
draft guidelines, let’s see different types of exclusions in a Health Insurance
Policy. most claims rejection happens due to these exclusions.
- Initial Waiting period: This is calculated from date of issuance of policy. Usually period is 30 days. No claim, except for any hospitalization due to an accident is admitted in this period.
- Waiting period for certain kind of treatments/procedures and pre-existing illness: For certain duration (generally 2-5 years), these treatments/illness aren’t covered in health insurance policy.
- Permanently excluded pre-existing diseases: In this case, the insurer, after taking your consent, can exclude treatment of a pre-existing illness permanently. These diseases are never covered under your policy. Normally HIV, Hepatitis B, Alzheimer’s disease, etc are covered here. These can differ from insurer to insurer.
- Permanently excluded Treatments: Treatment/surgeries such as Cosmetic / plastic surgeries etc can be put in this bucket.
As per the recent draft on the “Guidelines on
Standardization of Exclusions in Health Insurance”, IRDA has tried to control
menace of claim repudiation due to exclusions mentioned under point 3 and 4
Below is draft wording “
“After completion of eight continuous years under the policy no look back to be applied. This period of eight years is called as a moratorium period. The moratorium would be applicable for the sums insured of the first policy and subsequently, 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 policy 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. The moratorium period is applicable for health insurance policies issued by General and Health Insurers.”
Note: These are draft rules. The
final regulation may be very different
Here is point wise explanation of
the draft
- Moratorium mentioned here is period of 8 years.
- 8 years to be calculated from Date of Commencement of policy. The policy should be inforce continuous for a period of 8 years and any break will mean resetting of calculations.
- No claims can be denied by health insurance companies under any circumstances. Note, in case of fraudulent claims / misrepresentations, claims will be still denied.
Though these guidelines are in draft stage, we
are certain that they will see light of the day. In Life insurance, there are
rules which ensure claim settlement after 3 policy years. Such proactive regulations
will go a long way in instilling confidence in mind of potential / existing policyholders
and will help in increasing health insurance penetration.
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