“I have a mediclaim policy for the last 5 years for myself and my wife. We were recently blessed with a child. The only thing that marred the joyful experience was the refusal of the TPA to reimburse the expenditure of Rs. 23,000 incurred during the hospitalization of my wife while giving birth. Is the TPA correct in refusing to reimburse this claim. How do I get this money? My agent had never told me that pregnancy expenditure is not covered. What is the use of a mediclaim policy that does not pay when you are hospitalized.”

This is one of many such emails that we receive at Apnapaisa daily from anguished mediclaim policy holders. Now pregnancy and childbirth related expenditure is permanently excluded from most individual mediclaim policies issued by the Insurance companies. Even in a few cases where it is allowed it is only for a limited sum of money (irrespective of the total sum assured) and that too after you have renewed the policy with the same company for quite a few years.

Similarly there are a host of other permanent (or temporary) exclusions that are not covered by most of the mediclaim policies such as :

• Wars, Invasion, Act of foreign enemy

• Nuclear weapons or radiations due to nuclear waste or fuel

• Circumcision unless necessary for treatment of a diseases or necessitated due to an accident

• Non-allopathic treatment

• Pregnancy and childbirth related complications

• Cosmetic, aesthetic and obesity related treatment

• Expenses arising from HIV or AIDS and related diseases

• Expenses arising due to misuse of liquor, intoxicating substances or drugs as well as intentional self injury

• Vaccination or Inoculation

• Vitamins, tonics, nutritional supplements covered only if needed as part of treatment.

• Any fertility, sub fertility or assisted conception operation or sterilization procedure.

• Cost of specs, lenses, hearing aids, crutches, limbs, artificial teeth

From the queries that we receive on our site it is clear that very few consumers are aware of these exclusions.

Clearly a lot of reasons exist for this ignorance :

First the consumers themselves :

For most people if you contrast the amount of time they spend on buying a pair of shoes versus buying a health insurance policy, the pair of shoes will show higher amount of time spent . Clearly unlike a pair of shoes that will be worn for maybe a year or at most a few years, a health insurance policy will be there with him for a substantial part of his lifetime. For that he will blindly depend on the suggestion of the agent without looking into the details himself. I think it is important enough purchase that he should spend some time to read the policy wording (or at least a detailed look at the brochure )

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There are two types of exclusions – permanent and temporary besides diseases covered with a limit.

Permanent Exclusions

• These are the main exclusions of the policy, which are never covered, in an insurance plan. These are the famous list of causes or condition because of which the claims are rejected and the company says that we don’t cover these diseases or we don’t cover these plans.

Temporary exclusions

• These are exclusions, which are there for some period of time say one year or two year. Diseases like cataract, hernia and many more come under this category. Other than that pre existing diseases if any are covered after certain number of years. This keeps on varying from policy to policy. It may start from completion of one policy year till five policy years.

Diseases covered with a limit:

• There are certain diseases which are covered within the policy but with a certain limit. Say for example a policy may say that it will cover Cataract but with a limit of only Rs. 15,000. This means that whatever cost you incur due to hospitalization for cataract, the maximum you can claim is Rs. 15,000.

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Second the Health Insurance Industry itself

A recent trend that has many disturbing implications for the future is the practice of having permanent exclusions that are worded very widely or sometimes specific exclusions that are particular to that company only. We tried to do the research on quite a few products available in the market. Some of the exclusions mentioned in the policy wordings took even us by surprise when we examined them a little deeply. This simply means how important it is to read these exclusions before buying the policy and how misleading it can be to buy a policy before understanding the exclusions of the policy.

Here is a partial list of such “surprising” and “individualistic” exclusions:

1. Injury caused due to the performance of hazardous sports of any kind

2. Act of terrorism

3. Puberty & ageing

4. Artificial life maintenance

5. Hereditary conditions

6. Treatment for any mental illness or psychiatric illness.

7. Treatment relating to birth defects and external congenital illnesses

8. Treatment by a Doctor which is outside his discipline; referral-fees or out-station consultations; treatments rendered by a Medical Practitioner who shares the same residence as an Insured Person or who is a member of an Insured Person’s family, however proven material costs are eligible for reimbursement in accordance with the applicable cover.

Lets take an example of hereditary conditions. So if any of my father or my grand father was suffering from heart disease and I happen to get the same long after I have taken the policy , it may not be covered even though it was not pre-existing at the time when I took the policy. Similarly, artificial life maintenance system forms a part of permanent exclusion of a particular policy where this is the most costliest part of the hospitalization expenses in today’s time.

There is a huge necessity for the regulator to look in to the same, as most of the conditions mentioned in the exclusions part of the wordings are too complicated to be understood by the common person (in fact it took our team of seasoned experts here about 2-3 days to make some sense of all the exclusions ). Secondly, if we pick up brochures of any of the company, then they mention a synopsis of the exclusions and not all of them. Lastly, any particular exclusion mentioned in two policies is different in wordings in both the policies. And it is very difficult for anyone to understand that both the exclusions effectively mean the same.

There is a huge need to standardize these exclusions. Any of the insurance company, which wants to keep exclusions over and above this list (or in a different wordings), should highlight the exclusions, which are not a part of those standardized exclusions. This will need to be enforced by IRDA – which is the regulator.

Contrary to popular opinion exclusions are not necessarily bad for consumers as most of them prevent the abuse of the system. If the abuse is allowed it will add to the cost of the cover and all consumers will suffer for the acts of a few. There is then a big need to carry out an extensive public awareness program about the standardized exclusions (and the need for them) as well as how to look at any exclusions that are different from the standard set of exclusions.

Let’s all hope that urgent steps are taken to make the health insurance policies more transparent and effective so that this essential pillar of social need can be spread far more widely.

I would welcome the views of the readers on this most vital issue.

My friend Raj was staying in a 5-star hotel while on a trip to Mumbai from New York, invited me and two of our other friends over for dinner at one of its posh restaurants. We enjoyed an excellent dinner and all went fine till the time comes for paying the bill. The maitre-d comes over and asks you if we are staying with them and if so whether you are staying in their regular room or their suites or the presidential suite. When we asked him the reason for the question, he tells you that the charges for the dinner will depend on the class of the room that you are staying in.

Don’t you find that strange? I bet you do. After all, this service (the dinner) is outside the room you are staying in, the ambience is the same for everyone in the restaurant, the chef and his staff and the kitchen is the same, the food is the same and it is delivered by the same set of waiters in the same room irrespective of which class of room you stay in (or whether you stay in the hotel at all or not). You will no doubt argue that for the room itself you will be required to pay a daily charge in accordance with the class you choose to stay in and why should any other service not provided in the room be charged on a differential basis.

But strangely nobody argues when hospitals charge for everything based on the class of room that you stay in. If you choose to stay in single air conditioned room (called first class or deluxe or whatever) not only the daily room rent but even the operation room charges, medical procedure charges, doctors fees, etc. will be 2-5 times higher than if you were staying in one of their general wards. In fact, if you are unfortunate enough to be shifted to the ICU from your room, the charge in the ICU (which is exactly the same for everyone irrespective of which room you originally were in) also follows the same lop sided pricing pattern. The only reason hospitals have this pricing basis is because unlike the hotel (where the guest can go to another hotel/restaurants for dinner) they know that their consumer is captive and can not go anywhere else for his treatment. In fact for the only item where the consumer has some choice (medicines) most hospitals do not have this differential pricing based on class of bed. A quick check with medical practitioners reveals that this kind of differential pricing is unique to India and not practiced in any other major country. The only argument given in favour of this practise is that this is to cross subsidise the poor general ward patients who the hospitals are required to treat for free (or at highly concessional rates) as most of them (the hospitals) have got the land at a cheap rate from the government and/or have also availed other fiscal concessions from the government.

Most consumers may be forgiven if they think this only affects the rich people since they are the only ones wanting to stay in first class (or deluxe) rooms where such differential is the highest. However, as anyone who has had the unfortunate experience of trying to get an unplanned admission for a loved one will attest, invariably most hospitals will say that all beds are available only in the private first class rooms. Consumers have no choice but to accept that or do the round of the hospital administration pleading with them to give them rooms in the lower class, which are more affordable.

The Indian health insurance industry is becoming large and accounts for a significant portion (around 8%) of the hospitals billings and one would have thought that they would use their clout to get such practices changed. However, very clearly the health insurance industry has yet to acquire that much clout. Most insurance companies try to reduce the burden by restricting the daily room rents that they will reimburse under the health insurance plan. In such cases consumers have to bear the difference between the maximum room rent payable under the insurance plan and the actual room rent charged. However, in a worrying trend, at least one company has introduced a co-pay provision under which the consumer will pay for the higher expenses (on operations, doctor’s fees, etc.) charged due to the customer opting (or being forced to take) for a private air conditioned room even though the total expenditure may be well within the policy limits. Clearly the insurance company is transferring the entire burden arising from such differential pricing practices on to their consumers.

Health care reform, especially for issues that affect only the middle classes, is still not big enough to become an election issue in India. However with the growing assertiveness of the middle class which is no longer prepared to accept the below standard services in public hospitals and who bear the brunt of such differential pricing policies in the private health care hospitals will ensure that sooner rather than later these kind of practices will invite regulations from the government. Till then the consumers must take care to choose their insurance company appropriately or just grin and bear it.

The new Policy from United India Insurance is a good idea. Now only it’s own offices knew where the application forms are available.

http://www.apnainsurance.com/health-insurance-india/super-top-up.html

Today there is an increased awareness about healthcare costs and mediclaim insurance that helps mitigate the risk of such costs. One question for the first time buyer is whether to take individual insurance polices for each family member or a family floater policy.

Before we look at the pros and cons of each type let us quickly look at what each of these policies mean. An individual policy means a separate policy for each of the family members. That means if in a family of 3 members, each of the family member is covered for Rs. 2,00,000/- and the hospitalization expenses for a particular.  member is Rs. 3,00,000/- then only Rs. 2,00,000/- will be reimbursed. In contrast in a family floater plan the limit can be utilized by any of the family member. If the same family takes a family floater plan for Rs. 4,00,000 then under similar circumstances the full amount of Rs. 3,00,000 will be fully reimbursed. So in many ways the family floater plan offers flexibility in terms of utilizing the overall insurance coverage among the family as a group. This would seem to indicate that a floater plan is always more beneficial for a family. However there are several other considerations that need to be taken into account before taking this decision. We have used some examples to understand this better.

Given below is a table for the cost of an individual insurance policy for 2 typical families from Star Health (This company has been chosen at random since it offers both Individual policies and Family Floater policies and has very similar policy wordings for both individuals as well as family floater policy and hence any comparison will be on a like to like basis).

We then tried to find out the value of a family floater policy that they will get for about the same amount of premium. And we found that the older family would be able to get a family floater plan for Rs. 4,00,000 at almost the same cost (Rs. 13,092 as compared to Rs. 13,106 for the individual policies). The younger family fares much better with a family floater policy of Rs. 5,00,000 available at a much lower cost (Rs. 6,998 instead of Rs. 7,776 for individual policies).

As you can see for the older family for the same amount of premium the family floater plan doubles the amount available for each family member (Rs. 4 lacs from Rs. 2 lacs) while halving the overall family cover (Rs. 4 lacs from Rs. 8 lacs). For the younger family the flexibility is increased dramatically (Rs. 5 lacs from Rs. 2 lacs) without a significant impact on the overall family cover (Rs. 5 lacs from Rs. 6 lacs) and with money saved to boot. The reason for this is not far to seek. The family floater plans are priced on the basis of the age of the senior most member and as he/she gets older the flexibility decreases and/or the cost increases significantly.

There are other disadvantages to a family floater policy as well. The policy will be renewed only till the senior most member reaches the maximum age of renewability allowed by that company. As it stands today, at that stage, the other family members will need to take a fresh policy without having the benefit of their claim history and pre-existing disease coverage that comes from continuous renewal of the policy. The same thing applies to children who reach the maximum age (normally 25 years in most cases) after which they will need to buy a separate policy for themselves without the benefit of the earlier continuous coverage that they have got under the family floater policy. Most policies also make no specific provision for continuing cover of the surviving members in case of the unfortunate death of the senior most member.

All in all since continuous coverage and claim history is critical in this category and currently there does not seem to be any stated basis for taking these with you when you are forced out of a family floater plan we would strongly recommend taking individual policies for the whole family.

Health care costs for hospitalization in India have risen sharply in recent years in tandem with global trends. Many a family has seen their financial planning go for a complete toss due to unexpected costs on hospitalization of a family member. Also due to increasing exposure to media there is a far bigger consciousness about medical insurance. In fact the biggest question asked to us by first time mediclaim buyers is which is the cheapest mediclaim policy?

Unfortunately if this is the only parameter used by a consumer he is likely to end up making a wrong choice. An example will illustrate this point:

If you have diabetes, would you (all other things being the same) rather buy a mediclaim policy that may be a little more expensive but will immediately cover the hospitalization expenses arising from complications connected with this disease (heart problems, kidney or eye problems associated with diabetes) without considering them as pre-existing disease rather than a comparatively cheaper policy which treats all such diseases as pre-existing and hence not immediately coverable.

The following paragraphs lays down the broad parameters apart from premium which you must compare before you buy:

1) Pre-existing disease: This is probably the most important parameter. The relevance is because if a disease is treated as pre-existing then the policy normally provides no coverage or very restricted coverage for expenditure incurred due to that disease in the immediate future. The various things to be considered under this head are

a. Definition of Pre-existing disease: Most policies provide that any disease that was present at any time in the past (including any disease which the insured person may not have been aware of) is treated as pre-existing. But some have a narrower definition, which may extend to only diseases for which the insured person had sought consultation for or was treated for or he was aware of during say the last 4 years. The narrower the definition the better it is for the consumer

b. After how many years of continuous coverage by the company will the pre-existing disease get covered: This is important as after the expiry of the cooling off period even pre-existing diseases get covered. A fine point is to find out if the company you are considering allows your track record of continuous coverage from another insurance company for the purpose of calculating this cooling off period or insists only on continuous coverage with itself for this purpose.

c. Special dispensation for diabetes/hypertension: Diabetes and hypertension have acquired epidemic status in India with one estimate putting the figure at around 5% of India’s population. Also a host of illnesses/diseases such as heart disease, kidney failure, paralysis, stroke, eye problems can trace their root cause to either diabetes or hypertension or both. Since the definition of pre-existing illness includes any complications arising there from, this has been a major reason for disputes between the mediclaim providers and the consumers in the past. Now some insurers provide immediate coverage for at least complications arising from this (ese) disease(s) even though expenses on treating the main disease itself may not be covered. If you already have diabetes/hyper tension then this is a vital consideration for you. Off course it comes at an additional cost and may also involve pre-acceptance medical tests. All these factors need to be taken into account before taking a decision.

2) Sub- limits: Sub limits mean where the overall coverage is broken down into the maximum payable for a particular kind of expense. For eg. A few insurance companies now provide that room rent cannot exceed 1% of the covered amount or that doctors/consultants fees cannot exceed 20 or 25% of the covered amount. Whilst most of these sub-limits are reasonable it is better to take a decision after being aware of them.

3) Co-Pay requirements: Quite a few companies now require that the insured bear a certain percentage of the eligible expenses either unconditionally or under certain conditions. This is called a co-pay requirement. Some companies provide a discount in premium if you agree to co-pay. Some others might want a co-pay if you choose to get treated in a non network hospital or others may have a co-pay for choosing a single air conditioned room or for getting treated in a hospital in a higher cost city. The co-pay feature is built in to ensure that the insured chooses the appropriate hospital/room/doctor level relevant to his economic status and also watches the reasonableness of the charges levied by the hospital to ensure that there is no overspend or overcharge just because of the existence of the mediclaim policy. Again there is nothing inherently unfair about this provision as long as you take a conscious decision after being aware of it.

4) Specific Exclusions: Almost all policies have general exclusions such as costs incurred for Aids/Sexually transmitted diseases or congenital diseases, etc. However some policies have specific exclusions that may be relevant to you.

5) Maximum Coverage Amount: This is important, as a particular policy that suits you may not be available for the amount of coverage that you seek.

6) Maximum age at entry: This is relevant for senior citizens as quite a few policies may not be available to them.

7) Renewability upto what age: This is relevant for senior citizens as well as people in their 50s since they need to be able to enjoy the benefit of their track record

This is not a comprehensive list of parameters by far. Each policy may have specific positive or negative features that may be relevant to you such as restricted coverage for angioplasties or certain other kind of treatments or features such as free diagnostic tests offered after a certain number of claim free years, etc.

Now presumably it is far clearer why you need to study the policy features rather than just buy the cheapest policy available. The parameters listed have been summarized in the accompanying table.

In the next article in this series I will cover the debate on whether to go in for individual policies or for a family floater policy.

So best of luck with your hunt for the most suitable mediclaim policy.