Health insurance claim settlements can prove to be a challenge if the health insurance company contests the claims and rejects or repudiates it. After all, with the policy promising assistance in a medical contingency, claim rejection can be a nightmare!! In such cases, policyholders face huge medical costs and might suffer a financial strain. To safeguard your and other policyholders’ interests, the Insurance Regulatory and Development Authority of India (IRDAI) has, therefore, issued fresh guidelines with regards to health insurance claim settlements. These guidelines are aimed to standardize health insurance terms and conditions and to simplify them for the common man. Let’s find out what IRDAI guidelines state –
IRDAI guidelines on health insurance claim settlements
According to the latest guidelines issued by the IRDAI, health insurance companies will not be allowed to challenge claims in a policy where premiums for eight continuous years have been paid. Thus, in simpler terms, if you have a health insurance policy which has been continuing non-stop for the last 8 years or above and you have paid regular premiums under the policy, your claims would be settled easily. The insurance company would not be able to challenge claims on such policies given the tenure for which the policy has been in existence.
The other points highlighted in the guidelines are as follows –
- Any health insurance policy which does not comply with this new guideline would be modified from 1st April 2021 as and when they are up for renewal. This means that on renewals after 1st April 2021, all health insurance policies would have to comply with the new guidelines.
- The eight years specified in the guideline would be called the moratorium period. During this moratorium period, health insurance companies can judge whether the claims that you make are genuine or not. However, when this trial period is over, health claims cannot be challenged and the contestability clause would be revoked.
- The moratorium period would apply to the sum insured originally chosen by the policyholder. If, however, the sum insured is increased, an additional moratorium period would be applicable to the enhanced amount. For instance, if you buy a health plan of INR 5 lakhs on 1st June 2020, the moratorium period would end on 1st June 2028. However, if the sum insured is enhanced to INR 8 lakhs on 1st June 2022, a moratorium on INR 5 lakhs would end on 1st June 2028 but a moratorium on INR 3 lakhs would end on 1st June 2030.
- Claims would be allowed to be contested only in cases of frauds which the company would have to prove and in the case when a medical cost is specifically excluded from coverage in the policy contract. In the case of frauds, misrepresentation or non-disclosure of material facts, the policy would be considered null and void and the premiums paid by the policyholder would be forfeited by the insurance company
- Any sub-limits or co-payments applicable under the health insurance policy would continue to apply
- The new guideline would apply only to indemnity oriented health insurance plans which cover the actual cost of hospitalisation
- Health insurance companies would have to settle or reject their claims within 30 days of receiving all claim-related documents. If there is any delay in claim settlement, the insurance company would be liable to pay interest on such delay. The interest payable would be calculated @ bank rate + 2%.
- Even in the case of portability, the moratorium period would be applicable on the ported policies from the date the policy was first bought. For instance, if you buy a policy on 1st June 2020, the moratorium period would end on 1st June 2028 irrespective of the number of times you port the policy to another insurance company.
Impact of the guidelines
IRDAI has issued these guidelines to simplify the claim process of health insurance plans and to protect policyholders from the fear of claim rejections in their existing health insurance plans. With these guidelines, the claim related terms and conditions of health insurance policies would be simplified for the common man and you can expect quick and easy settlement of your health insurance claims.
So, in a nutshell, this move by the insurance regulator would ease your claim settlement process. You would not have to lose your sleep on health insurance claims once eight years have passed. Your claims would be settled easily and quickly.
The IRDAI is the insurance regulator which makes necessary changes and regulations in the interest of policyholders. This guideline is also aimed in the best interest of policyholders and would definitely give you an advantage in your health insurance claims.