Buy a health policy that covers treatment at home and pays for consumables

Go for cashless treatment where available, as the reimbursement route is more burdensome

A non-governmental organisation (NGO), Manav Seva Dham, filed a public interest litigation (PIL) in Bombay High Court alleging that insurers had been arbitrary in rejecting health insurance claims during the Covid-19 pandemic. The Insurance Regulatory & Development Authority of India’s (Irdai)'s counsel assured the court that it would treat the plea as a representation and consider the NGO’s grievances. Even as the regulator reviews the cases of claim rejection, the pandemic holds many lessons for health insurance customers, which they should apply both while purchasing a health policy and making a claim.

Issues that arose during pandemic

Globally, insurers don’t cover catastrophic events like pandemics. Policy provisions in India also stated this. Once Covid-19 was declared a pandemic, insurers rejected claims on the basis of this provision. However, the Irdai issued a notification saying insurers must consider these claims. Insurers then started paying Covid-19 claims.

Another issue that arose around consumables (personal protection kits, gloves, etc). “Prior to the pandemic, consumables accounted for only 5-10 per cent of the bill. But during the pandemic their share rose considerably. But since many health insurance policies didn’t cover the cost of consumables, insurers didn’t pay for them,” says Nayan Goswami, head- group business and sales & service, SANA Insurance Brokers.

Home treatment was another contentious issue. While some policies covered domiciliary treatment, many didn't. The latter type of policies turned down these claims.

Many patients received treatment in makeshift medical facilities. “If the medical facilities were not medically graded, or if people had got isolated in hotels, their claims were rejected,” says Nikhil Chopra, chief business officer, Medi Assist, a third-party administrator (TPA).

Initially, doctors used antibody cocktails to treat Covid-19. Insurers refused to bear the cost of such treatment protocols on the ground that they were not scientifically validated. They also turned down requests for reimbursing the cost of vaccination since policies didn’t cover this cost.  

Most policies require hospitalisation for 24 hours for claims to be honoured. Where this condition was not met, claims got rejected.

Key learnings

Customers need to understand their insurance policies. “Buyers must carefully scrutinise the policy features at the time of purchase. And they should have a good idea of what is covered and what is not to avoid unpleasant surprises at the time of claim,” says Chopra.

The sum insured must keep pace with rising medical costs. “Many people had health policies, but their sum insured proved to be grossly inadequate during the pandemic. Those who had to stay in a hospital for a long duration found that their sum insured got exhausted midway through their hospitalisation,” says Viral Bhatt, founder, Money Mantra. Customers should get adequate sum insured for their families based on where they live: those living in a metro should have a higher sum insured than those in a tier-2 or 3 town.

Healthcare needs are changing and insurance policies must keep pace with them. If a customer’s policy doesn’t, she should migrate to one that offers better features. “Increasingly, one should opt for a policy that covers outpatient department (OPD) and day-care treatment,” says Chopra. Pre- and post-hospitalisation treatment should also be covered.

Choose policies that cover the cost of consumables and allow home treatment.

Avoiding claim rejection

As far as possible, go to a network hospital and opt for the cashless route (especially if you are undergoing a planned procedure). “In this route, most issues get sorted out prior to hospitalisation. Also, the hospital, the third-party administrator (TPA) and the insurer deal with the paperwork and other issues and the onus doesn’t fall on the customer,” says Goswami.

The reimbursement route is more complicated. The customer needs to fill the right forms. She may have to submit 30-40 pages of documents—reports, vouchers, and prescriptions. These must be filed in the right order. “Incorrect or incomplete submission of documents can lead to claim rejection,” says Goswami.

What you must know about waiting periods and sub-limits  

• Understand the various types of waiting periods in your policy, the first being the initial waiting period: insurers typically don’t honour claims during the initial 30 days or so of a new policy

• Waiting periods for pre-existing diseases (PEDs) can range from two to four years

• There are specific disease waiting periods that can range from one to two years

• Understand sub-limits: Policies can have room rent, ICU and disease-specific capping

• Reveal all past and present surgeries and diseases at the time of purchase; non-disclosure of PED is a key reason for claim denial