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Changes In Health Insurance Policies – Part 2

The IRDAI has modified guidelines on proportionate deductions under health insurance policies that will take effect from October with the goal to reduce out-of-pocket expenses for policyholders.

According to the IRDAI, as a part of product design, insurers are to propose proportionate deductions of the associated medical expenses when a policyholder chooses a higher hospital room category than the category that is eligible as per terms and conditions of the policy.

The following expenses will not be part of the ‘associate medical expenses’:

• Cost of pharmaceuticals
• Cost of implants and medical devices
• Cost of diagnostics

The insurers will have to ensure that proportionate deductions are not applied in respect of the hospitals which do not follow differential billing by room category nor for those expenses in respect of which
differential billing is not adopted based on room category.

In addition, insurers are not permitted to apply proportionate deductions to ‘ICU charges’ because there
are no different categories of ICU.

The insurance regulator has also asked the insurer to standardise exclusions — listing diseases or medical
conditions that are not covered under a policy.

The new conditions have to be incorporated in the new policies filed by insurers on or after 1 October and
for existing products which are due for renewal from 1 April 2021.

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Optima’s core group has more than 100 man-years of experience in insurance. Our experience has trained us in reading the fine print of insurance policies, understanding it and applying it for the benefit of our clients.

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