Published in Mint on 5th September, 2017
If you are a regular Mint Money reader, then you know some of the basics of buying health insurance. At Mint, we prefer health policies that are comprehensive and with no restrictions in the form of sub-limits, co-payments or disease-wise capping. In fact, the Mint SecureNow Mediclaim Ratings (MSMR) also rate health insurance plans on how comprehensive they are. But is getting a top-rated health insurance policy enough? Yes, to a large extent. But some issues can still crop up. Mint spoke to experts that work with insurers, customers and hospitals to understand some of the recurring issues customers face.
Spike in renewal premium
Experts agree, and reader feedback confirms, that a sharp hike in renewal premiums is one of the biggest customer worries. Yes, premiums go up with age as well as medical advancement; but sometimes the hike can make renewing the policy unaffordable. For instance, a 54-year-old reader wrote to us that his renewal premium had increased from Rs19,212 to Rs26,524 for a sum insured of Rs6 lakh, and that ageing people like him had no recourse but to continue. Also, if you have made claims on your policy or are saddled with an illness, porting to a different insurer becomes difficult. “The insurance regulator does approve huge hikes in premiums because it looks at the books of health insurance (companies), which are bleeding. That is a result of poor underwriting (that is: ascertaining how much premium should be charged based on various factors) and later on it gets compensated by hiking the premium,”said Mahavir Chopra, director-health, life and strategic initiatives, Coverfox.com, an online insurance broker. “There should be a cap on how much the renewal premiums can increase,” he added.
Regulations do not mandate these, but technology has enabled service providers to send you reminders for better customer service. So, when you buy a policy, the insurer typically sends you reminders over email or phone to renew. Sometimes there can be slip-ups, putting the onus fully on customers to remember the renewal dates. Sending reminders is important for two reasons. First, health insurance is a long-term product and needs to be renewed every year. Second, if you don’t renew, then you need to buy another policy afresh, which means you lose all your continuity benefits. And if you have a health condition, the new insurer will factor it in. You could be denied a policy, get a loading on the premium or have to go through the waiting period on pre-existing ailments.
“In many cases, 20-30% of renewal reminders are undelivered. That’s because the insurers’ database are not complete or their systems are not geared for systematic follow-up,” said Kapil Mehta, co-founder, SecureNow.in. According to Chopra, this laxity sometimes seems deliberate. “We see a pattern emerging, where customers who have made huge claims often don’t get renewal reminders. Health insurance is renewable for life, which for the insurers is the biggest cause of worry because over time, the policyholders—who have high probability of claiming—stick to the policy. For insurers this means their books will bleed over time, unless they keep acquiring new customers,” added Chopra. It’s always advisable to remember your renewal date.
Not always Cashless
Cashless claims are often not cashless and the insured end up paying from their pockets. “A health insurance policy comes with deductibles, which means that the policy (would) pay up to 90% of the medical bill and the patient will still need to pay from her pocket. In some cases, hospitals might take up to 45 days to settle their bills with the insurer. In the likelihood of delay in cashless health insurance approvals, some hospitals may take a deposit from insured patient,” said Munish Daga, director and chief executive officer, Remedinet Technologies Pvt. Ltd, an online platform that aims to simplify the back-end of cashless claims by connecting hospitals to insurers.
According to Varun Gera, founder and chief executive officer, HealthAssure, a primary healthcare aggregator, the main reason for cash deposits is that insurers don’t maintain their database well.
“Sometimes, the database of insured customers is not updated, then the third-party administrator could take time to identify the insured, or the insurer could take long to respond to a pre-authorization request—and so the hospital will insist on a cash deposit,” he said.
While in an emergency there isn’t much you can do, but for a planned hospitalization make sure you reach out to the insurer well in advance.
Lack of communication
“At the time of policy issuance, policyholders who have borderline issues, like high cholesterol or sugar, are kept waiting before a decision is taken. The lack of transparent communication explaining the delay leads to vexation among policyholders. In the case of reimbursement claims (where the policyholders pay and then gets it reimbursed from the insurer), the policyholder often has to wait far longer for the insurer to clear the dues,” said Daga. Even the definition of a pre-existing ailment is not explained properly, says Mehta: “Health insurance contracts tend to describe pre-existing ailments in general terms. This can be disconcerting to people who have well-defined ailments. For example, if the buyer claims to have knee pain, and all joint treatments are excluded, then it is unfair. The matter is compounded because the grievance cells are not well-equipped to answer these queries. There is an over-dependence on standard responses to get back to customers.”
Insurers often refile their products and the new product that hits the market has many added features. But beware of the added exclusions too. “When insurers refile, they are looking to decrease their outflows; so they identify conditions that cause losses and put restrictions or exclusions on those. This is very common and it gets applied to fresh customers, and not to those who are renewing their contracts,” added Daga.
It is a good idea to go through the exclusions carefully as they can significantly add to your out-of-pocket expenses. “One policy contract now excludes oral chemotherapy. This is a cause of concern as medical advancement is leading to many day care treatments, and insurers are excluding such expensive treatments by excluding day care procedures. Insurance contracts shouldn’t change to the detriment of the policyholder—new or old. They should only change to capture medical advancements and needs of the customers,” added Mehta.
Having a good health insurance policy is recommended, but you may still face some of these issues. Which is why it is important to be proactive and understand well what you have bought.