Published in Livemint.
After much deliberation, the Insurance Regulatory and Development Authority of India (Irdai) on Friday published the guidelines for the covid-19 standard benefit-based and the covid-19 standard indemnity health policies. All life, general and standalone health insurance companies have been encouraged to offer the benefit-based policy, while all health and general insurance companies are mandated to offer the indemnity policy.
Earlier in its draft guidelines to insurers, the regulator had mandated offering both the products. Read here.
Insurers will have to offer the indemnity policy starting 10 July and the regulator has suggested offering the benefit-based policy around the same time as well. While many insurers currently don’t pay for the cost of personal protective equipments (PPEs) and other hygiene-related consumables, which form a chunk of the hospital bills, the regulator-mandated covid-19 indemnity policy will have to pay for PPEs, gloves, masks and other similar expenses.
Also, there are no sub-limits on room rent, which is a plus. Capping of room rent usually results in increased out-of-pocket expenditure. It also has a bearing on other associated costs such as nursing and doctors’ fees.
The minimum entry age for both the policies shall be 18 years and the maximum is 65. Dependent children shall be covered from the age of three months to 25 years. However, only the indemnity policy comes with the family floater option. The policy tenure could be 3.5 months, 6.5 months or 9.5 months, including the waiting period, and health insurance rules such as lifelong renewability, migration, and portability shall not be applicable to these products.
Premiums for both the products shall be the same pan-India and geographic location-based or zone-wise pricing is not allowed. The option to pay premiums in installments is also not available for these products. Both policies shall come with 15 days waiting period, during which no claim will be accepted.
Indemnity policy: The product shall be called ‘Corona Kavach Policy’ followed by the insurance company’s name and will have a base cover with a cap on the sum insured of up to ₹5 lakh. The minimum sum insured will be ₹50,000. You can opt for a cover in multiples of ₹50,000, up to ₹5 lakh. The cost of treatment for any co-morbid condition, including pre-existing co-morbid conditions along with the treatment for covid-19, shall be covered.
Insurers are allowed to offer one optional cover, the premium for which will be mentioned specifically. The base cover will be offered on an indemnity basis whereas the optional cover shall be available on a benefit basis.
The policy will pay for hospitalization expenses incurred by the policyholder for the treatment of covid-19 on a positive diagnosis for the infection from a government-approved diagnostic center. It will cover room, boarding and nursing expenses. Surgeons, anesthetists, consultants, specialist fees, including consultation through telemedicine, will be covered.
Other costs such as oxygen, operation theatre charges, surgical appliances, drugs and medicines, PPE kits and gloves among others will be admissible if hospitalized for a minimum of 24 hours. Intensive care unit and intensive cardiac care unit expenses will be covered too.
The policy will also cover the costs of at-home treatment, provided the medical practitioner advises home treatment and there is a continuous active line of treatment, which requires monitoring of health status by a medical practitioner. This benefit is available only up to 14 days per incident. Daily monitoring charts, including records of treatment administered and duly signed by the treating doctor, is required to be maintained.
Policyholders can avail of the services on a cashless basis, which shall be arranged by the insurer through network providers. If the services are availed from a non-network operator, reimbursement option shall be provided. Diagnostic tests conducted at home or at diagnostic centers, medicines prescribed in writing, consultation and nursing charges, and cost of the pulse oximeter, oxygen cylinder and nebulizer will be covered under the home care benefit.
Ayush treatment, pre-hospitalization expenses incurred 15 days before the date of hospitalization and post-hospitalization expenses incurred 30 days after shall be covered.
The policy comes with an optional hospital daily cash cover in which the insurer will pay up to 0.5% of the sum insured for every 24 hours of hospitalization. The benefit will be payable for up to 15 days during a policy period.
The regulator has left it to the insurance company’s discretion to decide the premiums and the policy will be made available on a family floater basis as well.
Fixed-benefit policy: This product shall be called ‘Corona Rakshak Policy’ followed by the name of the insurance company. The policy will pay a lump sum benefit equal to 100% of the sum insured if the policyholder tests positive for covid-19 and requires hospitalization for a minimum period of 72 hours. On payment of 100% of sum insured the policy shall be terminated. The product shall cover an individual only. The minimum sum insured shall be ₹50,000 and you can pick for a sum insured in multiples of ₹50,000 up to ₹2.5 lakh. An individual will be allowed to purchase only one such policy. The regulator has left it to the insurers’ discretion to decide the premiums.
Who should buy?
For healthcare workers, because they’re more vulnerable to contracting the infection, buying a covid-19-specific policy or even a regular health insurance policy could be difficult. Irdai-mandated standard indemnity policy addresses this concern. Insurers have been asked to give a 5% discount on premiums to healthcare workers who buy the policy.
“There was a big gap because insurers didn’t want to offer covid-19 products to doctors because they’re high risk. The regulator is now encouraging insurers to issue policies at a discount. I think healthcare workers should definitely go for the indemnity policy,” Abhishek Bondia, managing director and principal officer, SecureNow.in.
The regular has also allowed life, general and health insurers to design short-term products of their choice to specifically cater to covid-19. You can read more here .
Given that covid-19 is a short-term product, the regulator is encouraging short-term policies. Every insurer will now have to offer at least one covid-19, product which is the indemnity policy, and over and above this, they could choose to offer their own short-term plans.
“Insurers may have a concern if they are lifelong renewable policies because they don’t know how long-tail the risk is, given there is no past data. That’s why the regulator is encouraging insurers to take a risk only for 11 months at best,” said Bondia. “If insurers want to offer add-ons or a higher sum insured, they can choose to design their own product.”
In the benefit-based product, the ₹2.5 lakh cap on the sum insured and the mandatory requirement for 72 hours hospitalization are actually limiting clauses in the policy.
The regulator wants insurers to come up with more covid-19 products because there’s a vacuum there, said Bondia. Since these policies are short-term in nature, from a premium-perspective, it is most likely to be affordable and something which the uninsured population could consider buying.
Bondia said the gap between this product and a regular health policy would be quite wide from a pricing perspective. “For people who already have a regular health plan, the decision of buying this policy (because it covers PPEs and has no sub-limits on room rent) would depend upon the pricing. Once the prices come out, that’s the time when existing policyholders should take a call,” he added.
However, note that all regular health insurance policies already cover costs for covid-19 treatment. So, if you have one such policy, there’s no need to panic and buy this policy.
Insurers and healthcare providers are also working on bringing about some kind of standardization on the PPEs front so that regular health policies too can cover these costs to a certain extent. Further, the home care benefit, which comes with the indemnity policy shouldn’t be a reason for you to buy the policy because some insurers such as ICICI Lombard General Insurance Company have added the feature in their regular health policies and other insurers are expected to follow suit.
If you’ve been looking to buy health insurance, it’s advisable to go for a policy that covers all kinds of hospitalization rather than buying a disease-specific product because hospitalization could come up for various reasons and not just covid-19.