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Is a 5 lakh health cover enough for covid-19 treatment?

Ever since the pandemic broke out in India, insurers are seeing more traction for the purchase of health insurance policies. Photo: iStockphotoPremium
Ever since the pandemic broke out in India, insurers are seeing more traction for the purchase of health insurance policies. Photo: iStockphoto

  • While there is a cap on what private labs can charge for the covid-19 test, there is no limit on how much private hospitals can charge for treatment
  • According to claims that have been filed for covid-19, treatment can cost anywhere between 50,000 to 4.5 lakh depending on how critical the patient is

NEW DELHI : In a bid to lower confusion involved in the purchase of health insurance, the Insurance Regulatory and Development Authority of India (Irdai) in January this year mandated all health and general insurance companies to offer a standard product called the Arogya Sanjeevani policy starting 1st April 2020. As many as 29 insurers are now offering this product which comes with a maximum sum insured of 5 lakh.

Ever since the pandemic broke out in the country, insurers are seeing more traction for the purchase of health insurance policies. Irdai in a circular dated 4 March said all health insurance policies will have to cover the cost of covid-19 treatment. The Arogya Sanjeevani policies too will cover the hospitalisation treatment costs of covid-19 and can be bought directly from the insurance companies. If coronavirus is a good enough trigger for you to purchase health insurance, should you settle for the Arogya Sanjeevani policy or look beyond?

Note that the government has now allowed private hospitals to treat patients for covid-19 and if you possess a health insurance policy, you are eligible for the cover. While there is a cap on what private labs can charge for the covid-19 test, there is no limit on how much private hospitals can charge for treating the infection. According to claims that have been filed for covid-19, treatment can cost anywhere between 50,000 to 4.5 lakh depending on how critical the condition of the patient is. You can read more about this here: https://bit.ly/3aNQEQY

If you’re buying a health insurance policy with the intent to protect yourself against the pandemic, it’s a good first step but we recommend you look beyond just this.

In the Arogya Sanjeevani policy, room rent is capped at 2% or maximum 5000/- per day and ICU capping is 5% or maximum 10,000/- per day. In addition to this, there’s also mandatory 5% co-payment on the total claim amount. Also, insurers are not allowed to offer any add ons with the policy.

Mint spoke to third-party administrators to understand if a 5 lakh cover would suffice the need. According to Nayan C Shah, managing director, Paramount Health Services (TPA), the cost would be lower if a patient gets admitted in secondary care hospital versus a plush private hospital in one of the metros.

“Irdai is asking insurers to cover the cost of covid-19 treatment but based on the terms and conditions of the policy. In the Arogya Sanjeevani policy, there’s a room rent cap so that will be applied unless Irdai clearly states that sub-limit cannot be applied in COVID-19 cases. But this directive hasn’t come yet. We’ll have to wait and see how it pans out," said Shah.

“In general, for someone living in metro a 5 lakh cover is quite less, especially if it’s a family floater plan," Shah added.

Mahavir Chopra, a health insurance expert, suggests if you’re buying a health insurance policy, don’t restrict the cover to 5 lakh. “You must look at health insurance with a long-term perspective. The pandemic should trigger you to buy health insurance not just to protect you against covid-19 but all future health emergencies. Hence, a 5 lakh cover wouldn’t help 10-15 years from now considering the medical inflation," said Chopra. Also, the Arogya Sanjeevani policy comes with cap on room rent which would have a bearing on all associated medical costs. Chopra said go for a policy which mentions the type of room (private) instead of settling for a policy that comes with a financial cap on room rent. You could also go for a policy which comes with no restriction on the type of room but note that premiums are relatively higher for such policies.

The room rent cap and co-pay clauses in the Arogya Sanjeevani policy may push you to shell out a part of the claim from your pocket. “If someone asks me, I’d say the current pandemic situation is a good trigger to buy a health insurance policy but buy something that’s good for you for the next 20 years and not just for the next couple of years. covid-19 just stresses on why you must not compromise on your health insurance needs by settling for a lower sum insured. If you can’t afford a more expensive policy, then Arogya Sanjeevani is a good start," said Chopra.

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