What are IRDA’s New Health Insurance Changes 2024? How is it going to impact our health insurance policies? Let us try to understand in detail.
On May 29th, 2024, the IRDA released a circular titled “Master Circular on IRDAI (Insurance Products) Regulations 2024- Health Insurance.” This circular introduces significant changes to your health insurance policy. Let us delve into each of these changes individually.
IRDA’s New Health Insurance Changes 2024
Let’s examine each of them individually and analyze their influence on your health insurance.
# Health Insurance Claims can’t be rejected after 5 Years
I have covered this important change in my earlier post. However, repeating here.
What is the moratorium period in health insurance policies?
After the completion of FIVE continuous years under the policy no look back to be applied. This period of five years is called as moratorium period. The moratorium would be applicable for the sums insured of the first policy and subsequently, completion of 5 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 claim 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, and deductibles as per the policy contract.
Earlier this moratorium period was 8 years (For a detailed understanding of this, I suggest you to refer my earlier post “Health Insurance Claims can’t be rejected after 8 Yrs“). However, effective from 1st April 2024, this period is reduced to 60 months (5 years) than earlier 96 months or 8 years.
The wordings of the circular are as below.
“After completion of sixty continuous months of coverage (including portability and migration) in a health insurance policy, no policy and claim shall be contestable by the insurer on grounds of non-disclosure, misrepresentation, except on grounds of established fraud. This period of sixty continuous months is called as moratorium period. The moratorium would be applicable for the sums insured of the first policy. Wherever, the sum insured is enhanced, completion of sixty continuous months would be applicable from the date of enhancement of sums insured only on the enhanced limits.”
Even if you have been enrolled in the insurance plan for 5 years, your insurance claim may still be denied if it relates to treatment or hospitalization that is not covered by your health insurance plan. Additionally, there are certain expenses that are not eligible for reimbursement, and you will have to pay for them out of your own pocket. It is crucial to note that if you have concealed important information or failed to disclose relevant facts when purchasing the policy, known as “misrepresentation” and “non-disclosure,” your claim may be rejected even after 5 years.
# TIMEBOUND 100% Cashless Claim Settlement in Network or Non-Network Hospitals
Many are unaware that now there is no concept of a network hospital or non-network hospital in health insurance. On the 24th January 2024 press release, GIC (General Insurance Council) launched the “Cashless Everywhere” initiative.
Under Cashless Everywhere, the policyholder can get treated in any hospital they choose, and a cashless facility will be available even if such a hospital is not in the network of the Insurance Company. This Cashless Everywhere is subject to:
- For elective procedures, the customer should inform the Insurance Company at least 48 hours prior to the admission.
- For emergency treatment, the customer should inform the Insurance Company within 48 hours of admission.
- The claim should be admissible as per the terms of the policy and the cashless facility should be admissible as per the operating guidelines of the Insurance Company.
Continuation of this is 100% cashless facility rules by IRDA.
Insurers must make every effort to accomplish a 100% cashless claim settlement within a specified timeframe. They should make every attempt to minimize the number of claims settled through reimbursement, reserving such cases for exceptional circumstances only.
The insurer must make a decision regarding the cashless authorization request promptly, within one hour of receiving the request. The insurer must establish the necessary systems and procedures immediately, no later than July 31, 2024.
Insurers have the option to establish dedicated Help Desks at the hospital to handle and support cashless requests in a physical setting. Additionally, insurers are required to offer pre-authorization to policyholders through digital means.
# No more discharge delays
Typically, the cost of your hospital bill is also determined by how fastly you settle the bill amount. To illustrate, a few years ago, my wife had a minor surgery that required one day of hospitalization as per the hospital’s recommendation. However, because of a delay in processing the claim by the insurance company, I had to pay the expenses for an additional day. From now onwards, no such delays.
The insurer must provide final authorization within three hours of receiving the discharge authorization request from the hospital. Under no circumstances should the policyholder be delayed in being discharged from the hospital.
In the event of a delay lasting more than three hours, the insurer will be responsible for covering any additional charges imposed by the hospital from the shareholder’s fund.
If the policyholder passes away during the course of treatment, the insurer will promptly initiate the claim settlement process and arrange for the immediate release of the deceased’s mortal remains from the hospital.
# Claiming from multiple health insurance policies
The policyholder has the freedom to file a claim for settlement according to their preference under any policy. The chosen policy’s Insurer will be considered the primary Insurer.
If the coverage provided by the selected policy is insufficient to cover the eligible claim amount, the primary Insurer will request information about other policies held by the policyholder. They will then collaborate with the other Insurers to ensure the remaining balance is settled in accordance with the policy terms, without causing any inconvenience to the policyholder.
# Claim rejection not by single person
The repudiation of any claim requires the approval of either the PMC or a sub-group (3 members committee) of the PMC known as the Claims Review Committee (CRC).
If the claim is rejected or partially denied, the claimant will be informed with comprehensive information referencing the specific terms and conditions of the policy document.
Upon receiving notification of the claim, Insurers and Third Party Administrators (TPAs) will gather the necessary documentation from the Hospitals. The Policyholder will not be obligated to provide the documents.
# Entry Age limit removed
Previously, Health Insurance regulations imposed a minimum maximum-entry-age restriction of 65 years. Consequently, insurance providers were obligated to create health insurance schemes that catered to individuals aged 65 and above. However, as of April 1st, 2024, this age limitation has been eliminated.
The removal of this provision by IRDAI does not imply that the cap has been lifted, allowing older citizens to obtain health insurance. Instead, it grants insurers the freedom to set any minimum or maximum entry age limit for their products. Consequently, policies can now impose entry restrictions at 50 years, 60 years, or even 20 years, depending on the insurer’s discretion. This newfound flexibility enables insurers to create innovative products tailored for younger customers. However, the downside of this change is that insurers can now limit older individuals from accessing comprehensive policies they develop.
# Change in Free-Look Period rules
Previously, the Free-Look Period was exclusively offered for policies with a minimum term of three years. However, it is now accessible for policies with a term as short as one year.
Also, earlier the insured will be allowed a period of at least 15 days (30 days in case of electronic policies and policies sourced through distance mode) from the date of receipt of the policy to review the terms and conditions of the policy and to return the same if not acceptable. Now, for all policies, it is 30 days.
# Customzed products based on your age, medical condition, types of treatment, occupation, region, and categories
Insurers are required to make available products/add-ons/riders to provide wider choices to the policyholders/prospects catering to age, medical condition, types of treatment, occupation, region, and categories.
Policyholders shall not be denied coverage in case of emergency situations. The above does not imply that the Insurer shall have one product to cater to all of the above. Insurers shall allow for customization of products by customers by providing the flexibility to choose products/add-ons/riders as per his/her medical conditions/specific needs.
# Cancellation of policies
Health insurance policies are commonly referred to as Indemnity policies, in which the insurer provides compensation for the expenses incurred during medical treatment. This compensation can be provided through cashless treatment or by reimbursing the insured individual for their medical claims.
The policyholder may cancel his/her policy at any time during the term, by giving 7 days notice in writing. The Insurer shall –
a) refund proportionate premium for the unexpired policy period, if the term of the policy is up to one year and there is no claim (s) made during the policy period.
b) refund premium for the unexpired policy period, in respect of policies with terms more than 1 year and risk coverage for such policy years has not commenced.
Note that if you have claimed during the policy period, then you are not allowed to get a refund (for policies where the term is up to 1 year). In case of more than 1 year policy period, as risk coverage usually commences from day one itself means such policies are not eligible for refund? I am unsure of this point.
# Standardization in a grace period for renewal
Earlier the grace period to renew your health insurance policy varies from company to company. Few used to offer 15 days grace period and few used to offer 30 days grace period. Now the rules say that the grace period is 15 days for the policies where the premium payable is monthly and for the rest of the policies, it is 30 days.
If the policy is renewed during grace period, all the credits (sum insured, No Claim Bonus, Specific Waiting periods, waiting periods for pre-existing diseases, Moratorium period etc.) accrued under the policy shall be protected. The same is applicable for both Indemnity and Benefit products.
Do note that during such a grace period, you still enjoy the coverage.
# Right to renew the health insurance
The policyholder is entitled to renew the policy unless there is non-representation, non-disclosure, established fraud, or if the product is no longer available. In the event of product withdrawal, the insurer must offer the policyholder appropriate alternatives for migration.
The renewal of a policy cannot be denied by an insurer based on the fact that the policyholder has made claim(s) in the previous policy years.
An insurance company is prohibited from conducting new underwriting unless there is a rise in the insured amount. If the policyholder requests an increase in the insured amount, the insurance company may only underwrite up to the extent of the increased sum insured.
# Migration Rules (Moving within the same company)
If a policyholder decides to migrate from one policy to another within the same insurer, they have the option to transfer the accumulated credits from the previous policy to the migrated policy. This includes the Sum Insured, No Claim Bonus, Specific Waiting periods, waiting period for pre-existing diseases, Moratorium period, and any other relevant benefits. This ensures that the policyholder retains the benefits they have earned and continues to receive appropriate coverage under the new policy.
# Portability Rules (Moving to another company)
The Policyholder is given the option to transfer their policies from one Insurer to another. Both the Acquiring and Existing Insurers will work together to guarantee a smooth transfer of all underwriting details and claim history for the Policyholders.
The current insurance provider must furnish the requested information to the acquiring insurer promptly, within a maximum of 72 hours upon receiving the request via the Insurance Information Bureau of India.
The Acquiring insurer is required to promptly make a decision and communicate it regarding the proposal, within a maximum of 5 days from receiving the information from the Existing insurer.
The insured individual has the right to transfer any accumulated credits up to the Sum Insured, No Claim Bonus, specific waiting periods, waiting periods for pre-existing diseases, Moratorium periods, etc. from the current insurer to the new insurer in the previous policy.
# Customer Information Sheet (CIS)
CIS is to be provided with every policy in the format. It is a document provided by the Insurer along with the policy document that explains in simple words, the basic features of a policy in one place. This will be applicable to both individual and group policies. It includes information like type, sum insured, coverage, exclusions, sub-limits, deductibles, waiting period, free-look-in period, policy renewal, migration, portability, and moratorium period. Acknowledgment in physical or digital will have to be obtained from the Policyholder. On request, CIS will be made available in the local language.
# Definition Of Pre-Existing Disease
When buying health insurance, if the policyholder has pre-existing conditions such as diabetes, high blood pressure, thyroid issues, etc., they are categorized as pre-existing diseases.
Any condition, ailment, injury or disease –
- that is/are diagnosed by a physician not more than 36 months prior to the date of commencement of the policy issued by the insurer; or
- for which medical advice or treatment was recommended by, or received from, a physician, not more than 36 months prior to the date of commencement of the policy.
Earlier the maximum period was 48 months. Now it is reduced to 36 months. It means if any diseases are diagnosed and completely cured 36 months before the commencement of the policy will not be any waiting period and such diseases are not considered pre-existing diseases.
However, it does not mean you can hide such information. If insurance companies ask for diseases that are more than 36 months old, then you must provide them. In simple, don’t hide any diseases whether they are cured before 36 months or after 36 months. However, the new waiting period will be 36 months than the earlier 48 months.
# Specific Waiting Period
Health insurance policies usually impose a waiting period of one to four years for certain specified ailments and procedures, like ENT disorders, hernia, osteoporosis, joint replacement surgery, cataracts, and more. Medical expenses related to these conditions or procedures are eligible for coverage only after the completion of the designated waiting period.
“Specific waiting period” means a period up to 36 months from the commencement of a health insurance policy during which period specified diseases/treatments (except due to an accident) are not covered. On completion of the period, diseases/treatments shall be covered provided the policy has been continuously renewed without any break.
Earlier this waiting period was also the maximum of 48 months. Now it is reduced to 36 months.
# Maximum Waiting Period For Pre-existing Diseases
As the definition of pre-existing diseases was reduced from a maximum of 48 months to 36 months, the maximum waiting period for pre-existing diseases was also reduced to a maximum of 36 months.
“Waiting period for pre-existing diseases disclosed by the persons to be insured shall be a maximum of up to 36 months of continuous coverage under the Health Insurance policy. Insurers may endeavor to have a lesser preexisting disease waiting period and specific waiting period in the health insurance products.”.
# No more delay in settlement on Ombudsman judgements
On numerous occasions, it has been noticed that few insurers have failed to comply with the rulings of the Ombudsman. But now there is a strict regulation in this regard too.
The Insurer must adhere to the decision made by the Insurance Ombudsman within 30 days of receiving the decision. If the Insurer fails to comply with the ombudsman’s decision, they will be required to pay a penalty of Rs. 5000/- per day to the complainant. This penalty is in addition to any penal interest that the Insurer may be liable to pay under The Insurance Ombudsman Rules, 2017.
Conclusion – Even though these are welcome move in serving the policyholders, we have to look into how seriously the insurance companies implement them. Download the PDF Circular of IRDA’s New Health Insurance Changes 2024
