When Delhi-based Veena Sahay, 58, developed mouth ulcers, her family thought nothing of it. This was followed by cold and cough, and on 14 April, she developed fever. On testing for Covid, she was found positive. Her son Arjun immediately hired a nurse for Rs 6,500 a day and started home treatment. Her oxygen started to dip, but oxygen cylinders were not available.
After a frantic search, Arjun managed to hire one for Rs 6,000. Sahay’s condition continued to deteriorate, but they couldn’t find a hospital bed. After much scouring, Sahay was finally admitted to a hospital on 18 April. The hospital demanded Rs 1 lakh upfront, and subsequently 3-4 instalments upwards of Rs 35,000. This apart from the three Remdesivir injections Arjun bought for Rs 40,000 because the hospital did not have any. Despite best efforts, Sahay passed away within a week or so. Arjun spent close to Rs 3 lakh because Sahay was not insured.
Desperate scenes such as this were witnessed across the country in April and May as the Second Wave of Covid peaked with unexpected rapidity. While a 14-day quarantine at home had worked earlier, now the dipping oxygen levels required hospitalisation. The surge in demand, and shortage of hospital beds, oxygen cylinders and drugs, saw the prices shoot through the sky. Not just medical suppliers and vendors, but some of the hospitals, too, took undue advantage of the situation.
Many hospitals in the capital breached the Delhi government order capping per day package rates of Rs 8,000-18,000 for Covid treatment in private hospitals, by charging as high as Rs 50,000-60,000 per day; ambulance services, which typically cost Rs 1,500-2,000, were now available for Rs 10,000-12,000; the Remdesivir injection, which at the time cost Rs 2,800-5,400, was sold for as high as Rs 1 lakh; an oxygen cylinder that would have cost Rs 1,500-2,000, was being sold for Rs 30,000-50,000.
Besides these extremes, in many cases, entire families had to be hospitalised at the same time and new complications like fungal infections led to longer hospital stays. Those who could not find hospital beds had to be treated at home under complete medical supervision, with many hospitals providing home treatment packages, even as alternate medical centres were set up to take care of the deluge of sick people. All these factors resulted in some people paying as much as Rs 25-50 lakh.
“For hospitals, the cost of treatment for Covid patients has gone up as they have set up dedicated Covid wards, ensure social distancing norms during treatment, and sanitise the wards time and again. They are being forced to pass on a part of costs to patients, resulting in high bills,” says Sanjay Datta, Chief-Underwriting, Claims and Reinsurance, ICICI Lombard General Insurance.
While those with adequate health insurance did not feel the pain as much, others with smaller plans exhausted their covers and paid the shortfall from their pockets. “If more than one member of a family ends up being in a hospital, the sum insured hardly proves to be adequate,” says Datta.
In Delhi and Tamil Nadu, the average claim size was Rs 1.89 lakh, while the overall average claim amount reported was Rs 1.41 lakh, and the average settled claim amount was Rs 96,319 as of 20 May 2021, as per the General Insurance Council data. Contrary to what the country has witnessed in the past two months, the average settled claim size has come down from Rs 1.15 lakh in the first wave, as has the length of stay. “The high claim amounts or complications like mucormycosis are too few in the overall number of cases to affect the averages,” explains Bhabatosh Mishra, Director, Underwriting, Products & Claims at Max Bupa Health Insurance.
The settled claim amount may have shrunk, but the fact remains that 60-65% of medical expenses in India are out of the pocket and a large segment of the population remains uninsured. Given the unpredictable nature of Covid, the rapid evolution of new and more dangerous variants, as well as long-term complications associated with it, what if the predictions of a third wave come true? Would you be financially prepared to deal with another round of Covid?
A good place to start in terms of financial readiness is to buy adequate health insurance, but how much is ‘adequate’? This will primarily depend on your affordability and your place of residence, since hospitalisation in metros and tier 1 cities costs 30-40% more than in tier 2/3 cities. “However, you will need to consider whether you would want to come to a metro for treatment in case of complications because it will increase your treatment cost,” says Amit Chhabra, Head of Health Insurance, Policybazaar.com.
“Besides, if you stay in zone 2 and come to zone 1 for treatment, you may have to shell out a co-pay amount depending on your insurer,” says Prasun Sikdar, MD & CEO, ManipalCigna Health Insurance. This is because insurers offer three options: no zone-based pricing, zone-based pricing with or without co-pay.
“The cost of a 15-day treatment for a moderate case of Covid in a Delhi hospital ranges from Rs 1.8-2.5 lakh. It can go up to Rs 6-8 lakh depending on associated comorbidities. In extreme cases, it can go up to Rs 25 lakh,” says Mayank Bathwal, CEO, Aditya Birla Health Insurance.
These rates include the cost of consultation, nursing charges, room stay, meals, Covid testing, monitoring and investigations, imaging, physiotherapy, PPEs, drugs and medical consumables,” says Bathwal.
These rates will be higher in case of a severe case. Besides, you will need to consider some Covid-specific issues while deciding the size of your cover. One, unlike in other illnesses, there is a high probability of more than one member of the family needing hospitalisation at the same time.
Two, Covid may lead to unexpected complications which may require surgery or long-term hospitalisation, as happened with the fungal infection that turned into an epidemic in itself. Three, not only is there a chance of relapse, but it may also impact other body organs or lead to long-term impairment unrelated to Covid, which may require repeated hospitalisation. Finally, in case of a demand-supply mismatch in hospital beds, you may require home treatment with medical supervision.
What should you do if …
…you have no health insurance?
- If you are a family of four in a metro or tier 1 city, buy Rs 20-25 lakh of health insurance.
- In a tier 2/3 city, buy at least Rs 10-15 lakh plan. If you are single, buy a Rs 7-10 lakh plan.
- If you’re at high risk and can’t afford a big plan immediately, pick a Corona Kavach for now. Then look for a good comprehensive plan.
…you have an old insurance plan of Rs 5-7 lakh?
- If renewal is due shortly, port to a new plan with minimum sub-limits or capping, no copay, restoration benefit, and home treatment.
- If not, buy a Corona Kavach plan for now, and at renewal, port to a new plan.
…you have a new plan with a low cover of Rs 3-5 lakh?
- Buy a top-up or super top-up plan of Rs 15-20 lakh, preferably from the same company
…you have a family floater plan?
- If the sum insured is high, say, more than Rs 20 lakh, continue with it. If sum insured is low, buy a top-up or super top-up plan.
…You only have an employer policy?
- Buy an independent new plan of adequate sum insured immediately.
So while the standard Corona Kavach may be a good, cost-effective, short-term option if you are at high risk and cannot afford a bigger cover at the moment, it may be a better idea to buy a bigger, comprehensive, family floater plan for the long term. Since a Rs 5 lakh cover in a place like Delhi may no longer be enough, opt for at least a Rs 20-25 lakh cover if you are a family comprising 3-4 members. A cost-effective option is to go for a basic health plan of, say, Rs 5 lakh and combine it with a super top-up plan of Rs 15-20 lakh with a deductible of Rs 5 lakh. A super top-up plan may be better than a top-up because it will consider all hospitalisations in a year for the deductible, instead of for each hospitalisation.
In case you have an old (pre-Covid) insurance, you are likely to end up paying more from your pocket because of various limitations. The older plans typically have room rent sub-limit of 1-2% of sum insured; no restoration benefit, where the entire sum insured is restored if it is exhausted in a policy year; standard waiting period of 30 days; and co-pay of 10-30%. The newer post-Covid plans typically do not have these restrictions. “For instance, there are plans with 7 and 15 day waiting periods, and no co-pays or room rents now,” says Chhabra. This means the insurance covers most of your costs and you pay lesser from your own pocket. It is a good idea, therefore, to port to a new plan at your next renewal.
Whether new or old, it is crucial to check if your plan covers home treatment. Given the confusion regarding coverage by different insurers, there is a need for a standardised protocol regarding home treatment. While most plans, old and new, have always covered domiciliary hospitalisation (DH), Covid being an ‘upper respiratory tract infection’ was excluded. However, after the Irdai mandate last year, most insurers are covering it though their terms and conditions vary.
The standard product Corona Kavach with cover limit of Rs 5 lakh is a good option as it covers home treatment comprehensively. However, in the long term, you will need to combine it with a more evolved health plan. Besides, the short tenures meant that the people who had bought it last year did not renew it this year and failed to benefit when they needed it most.
In regular plans, DH covers all that is included in regular hospitalisation, including drugs, diagnostics, doctor’s fees, even ICU care. However, it has to be prescribed by the medical practitioner and an active line of medical treatment has to be followed. It is being covered partially or fully and is both cashless and reimbursed. It is best, however, to call up or check the insurer website for all that is covered and the conditions that need to be fulfilled for making a claim. Intimate the insurer the moment the patient tests positive and is recommended home treatment, and preserve all the documents.
Exclusions & emergency fund
“While health insurance undoubtedly reduces out-of-pocket expenditure for Covid hospitalisation, it will not be entirely safe to assume that it’s enough to cover the entire cost of treatment,” says Datta.
Apart from the fact that you may run out of insurance if you have a low cover or the entire family needs to be hospitalised at once, there are several non-payable components in insurance. “Insurance does not cover 100% of the claim cost. Even though Max Bupa has a rider called ‘Safeguard’ which pays for non-payable items, by and large, all policies have a list of non-payable items, which comprise 8-12% of the claim, and these have to be paid out of the pocket,” says Mishra.
These typically include attendant charges or twin-sharing accommodation, and consumables, that is, PPE kits, gloves, masks, etc, though many news plans are covering the latter. “Others include expenses related to OPD or daycare treatment, admission for diagnostics and evaluation, for enforced bed rest, not treatment, custodial care either at home or in a nursing facility for personal care, such as help with bathing, dressing, etc,” says Bathwal.
Then there are exclusions for dietary supplements and substances that can be purchased without prescription, like vitamins and minerals, unless these are prescribed by a doctor as part of hospitalisation claim or homecare treatment. Unproven treatments, procedures or supplies that lack medical documentation to support their effectiveness will also not be covered by insurance.
Tele-consultation in Covid times is another cost that insurance will not cover and can add up to a large amount. Ludhiana-based Sonia Victor knows it well. When her husband, Marc, 56, was diagnosed with Covid, she decided to consult a doctor, who not only charged her Rs 25,000 for 10-12 days but also mistreated him, which resulted in his hospitalisation. “In the absence of any standard protocol, doctors have been charging as much as Rs 15,000 for a few days of treatment,” agrees Mishra.
Given that you will have to finance these costs yourself, it is essential that you keep an emergency corpus for this. “As with any risk management, it’s a good idea to adopt a multi-layered strategy,” says Nitin Vyakaranam, Founder, ArthaYantra. “Have a combination of health insurance— an independent plan as well as that from your employer—and a medical emergency corpus,” he says. “A good option is to keep Rs 2-3 lakh emergency fund if you are in a tier 2/3 city and Rs 5 lakh if you are in a metro,” says Mumbai-based Financial Planner Pankaaj Maalde.
“Keep emergency funds under two heads. For out-of-pocket expenses, keep Rs 3-5 lakh in easily accessible liquid funds, and the other in two-three months’ worth of assets to run the household in case the breadwinner is hospitalised,” says Dinesh Rohira, Founder & CEO, 5nance.com.
Don’t go wrong with claims
There have been four main reasons for claim rejections or truncated approvals for Covid: people are not fully aware of what their plan covers, failure to disclose vital information, inability to furnish required documents, and drugs or equipment bought in black without proper invoices.
If you have an old plan, for instance, it will typically not cover consumables, or have a limited room rent. Not providing health-related details at the time of issuance is another big reason. “Even if the condition had no relevance to Covid, the claim can be denied because had the insurer known about it, the policy may not have been issued in the first place,” says Sikdar. Similarly, if you have bought an injection costing Rs 3,000 for Rs 15,000 without a proper receipt, it will be denied.
Make sure to provide requisite documents to the TPA or insurer. You will typically need to submit claim form; photo identity proof of patient; medical practitioner’s prescription advising admission; original bills with itemised break-up; payment receipts; discharge summary; OT notes or surgeon’s certificate with details of operation; NEFT details and cancelled cheque, among others.