Guidelines on Health Insurance (mediclaim) policies regarding claim, NCB, entry age and portability
Some new important guidelines issued by the insurance regulator will benefit many who have taken a health insurance policy. The regulator has announced in its Health Insurance Regulations, 2013 notification that:
1.. No claim Bonus:
In an event of filing a claim, the ‘no claim bonus’ accrued in a health (mediclaim) policy should not become zero. Instead the cumulative bonus accrued may be reduced at the same rate at which was accrued. The insurers may offer cumulative bonuses on indemnity based health insurance policies, which has to be stated explicitly in the policy document. Cumulative bonus shall not be allowed on benefit based policies.
It will also help an insured person to file a low value claim as the loss of no claim bonus will not be lost completely. At the same time, insurance companies will now be more reluctance to offer ‘No Claim Bonus’ feature in their policies.
Lets take an example. An insured has a health insurance (mediclaim) policy of Rs. 5,00,000/- for last 10 years and has never taken a claim. He is getting a 5% ‘No Claim Bonus’ every year and has accumulated an additional 50% NCB , i.e., a sum of Rs. 2,50,000/- as bonus in all these years. He gets ill in 11th year and files a claim of Rs. 50,000/-. In such case the policyholder would lose all the NCB accrued under the policy. However, as per the new guidelines, having a claim in 11th year will only reduce his NCB from 50% to 45%.
2.. Claim in overlapping policy period:
If a claim is filed in two overlapping policy periods, it will get the benefit of available sum insured in both of those two policy periods, including the deductibles for each policy period. However, such eligible claim payable to the policyholder shall be reduced to the extent of premium to be received for the renewal of such policy in the overlapping second year.
Lets take an example. An insured has a policy with a sum insured of Rs. 5,00,000/- which is due for renewal on 16th June 2013. This insured person falls ill on 10th June, stays in hospital till 25th June and his total hospitalisation bills comes to Rs. 6,00,000/-. In such case the insured will get Rs. 5,00,000/- from the year before 15th June 2013 and Rs. 1,00,000 from the policy period starting 16th June 2013, subject to other sub-limits imposed by the contract. If the insured has not paid the premium for this new policy period, then it will be deducted from his claim amount.
3… TPA not to settle claim:
Another important guideline ensures that only insurer will settle the claim and not the TPA. Role of a TPA has been restricted to only processing of claim and not its settlement.
4.. Entry age to be not less than 65 years
All health insurance policies shall ordinarily provide for an entry age of at least up to 65 years.
5.. Renewal of policy:
A Insurer shall not deny the renewal of a health insurance policy on the ground that the insured had made a claim, except for the benefit based policies where the policy terminates following payment of benefit covered under the policy.
Further it is advised by the regulator that the insurer shall provide a mechanism to condone a delay in renewal up to 30 days from the due date of renewal without deeming such condonation as a break in the policy.
6.. Claim in 30 days:
An insurer shall settle claims, including is rejection, within 30 days of the receipt of last ‘necessary’ document.
Further it is expected that the insurer shall ensure that all the documents required for claim processing are called for at one time and shall not call for the documents in the piece meal manner.
Insurer may stipulate a period within which all necessary claim documents should be furnished by the policyholder / insured to make a claim. However, claims filed even beyond such period should be considered if there are valid reasons for any delay.
7.. Portability of health insurance policies:
A policyholder desirous of porting his policy to another insurance company shall apply to such insurance company, to port the entire policy along with all the members of the family, if any, at least 45 days before the premium renewal date of his / her existing policy. And insurer may not be liable to offer portability if policyholder fails to approach the new insurer at least 45 days before the premium renewal date.
where the outcome of the acceptance of portability is still waiting from the new insurer on the date of renewal, the existing policy shall be allowed to extend, if requested by the policyholder, for the short period by accepting a pro-rate premium for such short period, which shall be of at least one month.
And if for any reason the insured intends to continue the policy further with the existing insurer, it shall be allowed to continue by charging a regular premium and without imposing any new condition.
The portability shall be applicable to the sum insured under the previous policy and also to an enhanced sum insured, if requested by the insured, to the extent of the cumulative bonus acquired from the previous insurer. For example, if a insured had a sum insured of Rs. 2,00,000/- and an accrued bonus of Rs. 50,000/- with insurer A; when he shifts to the insurer B and the proposal is accepted, insurer B has to offer him sum insured of Rs. 2,50,000/- by charging the premium applicable for Rs. 2,50,000/-. If insured demands the sum insured of more than Rs. 2,50,000/-, portability would be available only upto Rs. 2,50,000/-.