In the past, the Insurance Regulatory and Development Authority of India (IRDAI) has changed the definition of pre-existing diseases twice. According to the latest norms, if a policyholder is diagnosed with any disease within the first three months of taking a health insurance policy, it will no longer be considered as a pre-existing disease.
"This change takes away problems that policyholders could have faced due to existing regulations. If an illness falls under the definition of pre-existing disease, the insurer could reject the claim, hike premium, or even terminate the policy," said Amit Chhabra, head - health insurance, Policybazaar.com, an online insurance marketplace.
WHAT'S THE CHANGE?
There were two categories of pre-existing diseases. The first are illnesses that policyholders have while taking a policy. If an individual had a disease 48 months before buying a health insurance plan, it is called as pre-existing, even if it was cured.
The modification is done to the second category, which said that any illness that an insured contract within three months of taking the policy; it would also be considered as a pre-existing disease. This meant, if an insured is diagnosed with a blockage in the heart or diabetes within three months of taking the policy, it would be considered as pre-existing. It has been changed.
The waiting period for the pre-existing disease is up to four years. But it varies from one insurer to another and also depends on the disease. "The problem is that each insurance company deals with pre-existing disease differently. Some may reject a claim, some may charge an extra premium, some may even terminate the policy if they feel that the risk is too high," said Chhabra.
HOW NEW RULES BENEFIT
Before the rules were modified last year, the pre-existing diseases had ambiguous wordings. It said: "Pre-Existing Disease means any condition, ailment or injury or related condition(s) for which there were signs or symptoms, and/or were diagnosed, and/or for which medical advice/treatment was received within 48 months prior to the first policy issued by the insurer and renewed continuously thereafter."
Industry experts say that it gave insurers much leeway. "The regulations included the words' signs' and 'symptoms'. If an insurance company could prove that the policyholder had signs and symptoms of an illness before taking the policy, it would be considered as pre-existing disease," says Mahavir Chopra, director – health, life and travel insurance, Coverfox.com, an online insurance marketplace. Insurers had the opportunity to do this up to four years of issuing a policy, until pre-existing diseases were covered.
According to industry experts, there have been rejections by insurers for chronic ailments based on the older definition. Say, a person is diagnosed with joints degeneration after 8-9 months of taking a policy, which may require surgery. Such ailments usually don't need urgent medical attention. An insured with the intention to fraud can take the policy and wait for even a year before undergoing treatment. Such claims usually come under strict scrutiny, and some insurers rejected them even if there were grey areas.
There have also been cases where the person had an ailment while taking the policy but was not aware of it. Even such cases had led to the rejection of claims and sometimes termination of policies.
In September 2019, the regulator standardised many aspects of health insurance and gave insurers time until October 1, 2020, to implement the new norms. At that time, the regulator added a new paragraph to the definition of pre-existing diseases. It also defined pre-existing illness as: "A condition for which any symptoms and or signs if presented and have resulted within three months of the issuance of the policy in a diagnostic illness or medical condition."
According to industry experts, this definition had taken care of the claim rejections due to the grey areas. After three months, an insurer could not say that the policyholder had not disclosed certain chronic conditions. But now IRDAI has removed this paragraph narrowing the definition of pre-existing diseases, which benefits the customers.
The definition now says that a pre-existing disease means any condition "that is/are diagnosed by a physician within 48 months prior to the effective date of the policy issued by the insurer or its reinstatement, or for which medical advice or treatment was recommended by, or received from, a physician within 48 months prior to the effective date of the policy issued by the insurer or its reinstatement."
TREATMENT AT BLACKLISTED HOSPITAL
In the same notification, the regulator has also slightly relaxed norms for treatment at hospitals that insurance companies have blacklisted. Earlier, insurers rejected claims made at a blacklisted hospital unless a person was admitted in it after an accident that was life-threatening.
Now, policyholders can get treatment not just after accidents but in any life-threatening situation at blacklisted hospitals. "Insurers would admit such claims only until the stage a patient is stabilised. Expenses after that will not be reimbursed," said Chopra. Stabilisation in most cases would mean when an insured is moved out of intensive care unit (ICU) to a regular room. Chopra also says that whether the situation was 'life threatening' or not would depend on the call the treating doctor takes.
The regulator has brought in the much-needed relief for policyholders, taking away most of the ambiguities in the pre-existing diseases area. However, when taking a policy, ensure that you fill out correct details to the best of your knowledge. Don't rely on the agent to do this job. If the insurer finds out that the customer had not disclosed information, it can lead to termination of the policy. Also, most health insurance policies come with a cooling period of one month. During this time, only accident-related claims accepted.