What is IRDAI's proposed COVID-19 health insurance policy and do you benefit?

The proposed insurance product has a maximum sum insured of Rs 5 lakh and covers hospitalisation costs incurred while undergoing treatment for COVID-19.
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Nearly 3 lakh people in India have so far been infected by the coronavirus, with the country adding over 9,000 cases each day for the past week. With COVID-19 changing how we view health, hygiene and safety, the need for a health insurance policy has increased among people. Insurance companies say that there has been a massive surge in enquiries for health insurance policies, especially ones that would cover COVID-19 treatment costs.

Taking this into account, the Insurance Regulatory and Development Authority of India (IRDAI) has asked general and health insurance companies to devise and offer a standard COVID-19 policy from June 15.

It is pertinent to note that as per IRDAI regulations, all health insurance policies must cover COVID-19 as well. This is a separate policy, in addition to the health insurance policies offered by insurers.

What does this policy offer?

The IRDAI has issued a set of draft guidelines outlining all the features that a standard COVID-19 health insurance policy should cover.

The proposed insurance product is a policy with a minimum insured sum of Rs 50,000 and a maximum insured sum of Rs 5 lakh. It covers hospitalisation costs incurred by the policyholder while undergoing treatment for COVID-19. The tenure of the policy would be one year.

The proposed policy covers room and nursing charges of up to 2% of the total sum insured and is capped at Rs 5,000 a day. It includes quarantine charges of up to Rs 3,000 per day and Intensive Care Unit (ICU) charges at Rs 10,000 per day.

The insurance policy would have a minimum age entry of 18 years and a maximum of 65 years and can be taken by an individual on a family-floater basis. What this means is: all members of the family can avail the insurance limit. For instance, if an individual, with a family of four, takes a plan on a family-floater basis for a maximum sum insured of Rs 5 lakh, then each member of that family can claim insurance under that policy for a total combined limit of Rs 5 lakh.

This proposed insurance product covers room, nursing expenses, fees of the surgeon, anaesthetist, consultants and specialists. It includes operation theatre charges, blood, oxygen, medicines, anaesthesia and surgical appliance charges as well.

However, any consumables such as masks, PPEs, etc, would not be covered under the insurance policy.

The proposed policy has a fixed co-payment clause of 5%. This means that 5% of the hospital bill will be paid by customers and the remaining 95% by the insurance company.

While several health insurance policies don’t cover medical costs prior to hospitalisation and the diagnostic cost for COVID-19, these will be part of the proposed standard COVID-19 health insurance policy. It covers medical expenses incurred for up to 30 days before the date of hospitalisation. If the insurance claim is acceptable by the insurer, then the expenses incurred by the person for 60 days from the date of discharge can also be included.

It offers two add-ons. The first is a quarantine cover, under which the insurer will pay 1% (up to Rs 3,000 a day) of the total sum insured, if they have been quarantined either for a suspected infection, or after being tested positive for coronavirus.

The second add-on is hospital daily cash cover, which is a fixed amount of cash for each day of hospitalisation. As per the proposed policy, the insurer will pay 0.5% of the total sum insured as hospital cash every day, for every 24 hours a person remains hospitalised after testing positive.

How is this different from a regular health insurance policy?

A regular health insurance policy covers hospitalisation costs of a vast array of illnesses right from an infection, to hospitalisation due to diabetes or a heart ailment. All these insurance policies, as mandated by the IRDAI, will also cover your treatment costs for COVID-19.

Loopholes and challenges with the standard COVID-19 health insurance policy

Amit Chhabra, head of health insurance at PolicyBazaar, says that while the proposed product is a very comprehensive one, it is important for customers to note that the maximum sum insured in this policy is Rs 5 lakh and comes with a cap on room and ICU charges. This may not work in metro cities, where in most large hospitals, the room rent would be very high.

In the case of a family-floater as well, the maximum sum insured may not suffice.

Anand Roy, Managing Director of Star Health and Allied Insurance, says that this policy would benefit someone undergoing regular treatment that doesn’t require them to be admitted in the ICU. However, in the unfortunate event of them being admitted to the ICU, or needing a ventilator, this policy may not be sufficient.

The policy also doesn’t take into account the challenge of hospitals charging exorbitant rates for PPE kits, and other consumables. Customers will have to pay for this from their own pocket.

However, Anand says that this is a challenge that needs to be addressed by the hospital industry and the government, which needs to step in to standardise rates.

The policy has a maximum age entry of 65 years. Given that the elderly are most vulnerable to COVID-19, and are likely to incur hospitalisation, ICU costs, this bracket has been left out of the policy.

Some experts believe that the add-ons too, could have been part of the main policy itself, especially for quarantine charges. Add-ons are something one would opt for by paying extra money over and above the base health insurance policy.

Whom does the standard COVID-19 health insurance policy benefit?

Anand, Amit and other insurance experts TNM spoke to have said that if you are uninsured, and can afford it, it is recommended that you avail a comprehensive health insurance policy, that covers all ailments. Insurers also offer an affordable standard health insurance plan called the Arogya Sanjeevani.

“We have seen a rampant surge in people enquiring about and buying health insurance policies. Interestingly, even though most enquire for COVID-related policies, what they end up buying is not a COVID-specific policy. They realise that while COVID-19 cover is important, the benefit of health insurance is that it covers you not just for COVID, but for everything else like diabetes, heart ailments, cancer, etc,” Amit says.

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