During the novel coronavirus pandemic, on average an insured Indian has been paying at least 40% of the covid-related medical expenses from their own pocket. In other words, health insurance policies have not been fully paying for the medical expenses incurred by people due to the virus.
According to General Insurance Council of India data, from since beginning of the covid 19 pandemic last year till May 14, 2021, on average an insured Indian was paying around 40% of the covid treatment costs from his/her own pocket with average payment of Rs 95,622 against a claim size of Rs 1.54 lakh. A total of 14.82 lakh Covid-19 claims worth Rs 23,000 crore were reported during this period out of which only 12.33 lakh (83%) claims worth Rs 11,700 crore (51%) were settled by insurers since the pandemic.
Even after more than a month the situation hasn’t improved. As per T.L. Alamelu, Member (Non-Life), IRDAI, out of over 19.11 lakh Covid related health insurance claims reported as on June 22, India’s health insurance companies have settled 15.39 lakh medical claims with an amount above Rs 15,000 crore. The number of reported claims has risen by 4.29 lakh which is by 29% since then. However, the gap between claimed amount and actually paid amount appears far from being bridged as the settlement amount rose only by 28%.
Will your health insurance cover provide you full financial protection in case you or someone in your family gets infected with Covid-19?
Covid related new cost not covered completely
One unique cost that has been added to the overall expenses on hospital treatment is the use of consumables like PPE kits, disposable gloves, sheets etc. While the insurance regulator has asked companies to pay the cost as per the terms and condition of the policy, however, it is often not paid entirely by the insurers. So, depending upon the hospital and length of stay in the hospital this could become a substantial part of the out of the pocket expense which a patient has to pay despite having health insurance.
Cost beyond sum insured in post covid complications
There are patients who have recovered from covid and are now developing certain medical complications. “Either they develop diabetes or if they are already diabetic, they start suffering from uncontrolled diabetics. So those people if we don’t attend on time, they may develop target organ damage like heart problem or kidney problem or brain problem or eye problem. If there is a blood clot in the brain or in the gastrointestinal tract or in the kidney it can have severe complications due to small vessel being blocked subsequent to covid,” says Dr S. Prakash, MD, Star Health Insurance.
Apart from this, a new post covid complication is mucormycosis which has grown to a level of being an epidemic in itself. “Couple of weeks after being discharged people develop mucormycosis which has high mortality that goes to 40% and the cost of treatment, investigation and the length of stay in the hospital warrants to heavy cost,” says Prakash.
“After a covid disease if they develop mucormycosis they may not have enough money in their insurance product. For people who have only a comprehensive cover up to Rs 5 lakh definitely that will not be enough for them if they are diagnosed with mucormycosis,” adds Prakash.
Insurance cover restrictions and limitations
At the time of buying the health plan if your focus was more towards going for lower premium, then the chances are the that your health plan may have various sublimits, copayment or deductibles.
Check if there is a sublimit in your health plan
Despite the total sum insured being higher many health plans come with various sub limits which are the maximum payment the insurer will pay in case of a given condition.
Disease or medical procedure sublimit: Some plans come with treatment procedure related sublimits. “A sub-limit clause in a health insurance policy is a cap that the insurer places on the policyholder’s expenses for a specific medical procedure. It is usually a predefined limit set by the insurer on the total claim amount for certain diseases or medical treatments,” says Indraneel Chatterjee, Co-Founder RenewBuy.
“Sub-limits are commonly placed by insurers on doctors’ consultation fees, hospital room rent, ambulance charges, and some pre-planned medical procedures such as plastic surgery, cataract surgery, knee ligament reconstruction, and a few others,” says Chatterjee.
Proportionate coverage sublimit: “In certain cases, the sub-limit may be a percentage of the total amount insured or a specific amount set by the insurance company. In other words, a healthcare insurance policy’s overall coverage is divided into maximum payable for specific expenses and/or diseases,” says Chatterjee.
Moreover, a good part of overall treatment cost is often linked to the room rent of the hospital. If you go for higher room rent either due to unavailability of eligible room or due to own preference all related costs will rise proportionately.
“Some insurance providers offer policyholders the flexibility to opt for or opt out of sub-limits by offering them the option of paying an extra premium. Depending on their budget, policyholders can opt for either of the two options, they also have to remember that an insurance plan with no sub-limit has a higher premium,” says Chatterjee. If you have a flexibility to opt out of this sublimit by paying some extra premium it may be worthwhile as it will enhance your protection.
Considering the high cost of treatment, many policyholders will find the overall coverage on an individual plan inadequate. In such a case you need to check if you have additional coverage under a family floater plan or corporate plan or another group policy.
However, with regards to family floater plans, there is a limitation – the sum insured might not be adequate. Given the infectious nature of covid, the possibility of multiple family members falling ill simultaneously and some needing prolonged hospitalisation or treatment for post covid complication is high. In such a situation the sum insured of a family floater plan may fall significantly short in meeting the entire expense of all the family members.
A copayment clause will make you pay more
One of the ways for people to get health insurance plans at a lower premium is to opt for a co-payment clause. Under this clause a policyholder agrees to pay certain part of the bill each time a hospitalisaiton is required. For instance, if you opted for 20% co-payment and if the bill is Rs 5 lakh then you will have to pay Rs 1 lakh of the bill as per the copayment clause.
Let us now take a look at how one can increase the financial protection offered by their health insurance cover.
4 ways to beef up your health protection cover
1. When to add a new comprehensive plan: You not only have to make sure that each family member gets adequate sum insured but in worst case if many members need treatment simultaneously your policy cover should be sufficient. “All existing medical health insurance policies cover Covid-19 treatment costs. However, having an adequate sum insured is required, and to increase the sum insured of the base policy,” says Chatterjee. So if you find that the sum insured is not enough it is time for you buy additional comprehensive cover either with the same insurer or with another one.
2. When to go for a super top-up plan: When you feel that you have reasonable total protection for your family, however, you foresee a risk of cover falling short in case of multiple simultaneous hospitalisations or prolonged post covid complications, then you can go for a super top-up health insurance policy.
“These plans are a way of ensuring that the policyholder’s medical emergency is covered in a cost effective manner. Once the deductible is met, a super top-up plan pays the complete cost of any hospitalisation costs and the deductible is applied to the total amount of claims that are acceptable in a given year,” says Chatterjee.
For instance, if you have a super top-up plan which has a total sum insured of Rs 20 lakh with deductible of Rs 5 lakh then in case of a Rs 20 lakh bill your super top-up plan will pay Rs 15 lakh, while you will have to pay first Rs 5 lakh through another health policy or by yourself.
Even if you or any of the members have already exhausted the limit of a family floater plan you should top it up with a super top-up plan so that all family members can enjoy a higher coverage again.
3. When to go for an Arogya Sanjeevani cover: “People who cannot afford even a comprehensive cover or people who wanted to pay for their employees, maids, drivers where they want everyone protected they can go for disease specific policy or they can avail standard health insurance product like Arogya Sanjeevani. This is a standard product promoted by regulator which all companies where all conditions are standard and they are available at a lesser price,” says Prakash.
If you find your policy having various sublimits or copayment clause then adding an Aarogya Sanjeevani Policy can help you bridge the gap at lowest premium. If you wish to enhance your protection further after a basic comprehensive plan and Arogaya Sanjeevani, you can buy a super top-up plan with higher deductible as it will comes at very low premium.
4. When to go for Corona specific plans: If you want just a quick fix arrangement which helps you beef up your protection temporarily then you can consider short-term corona specific polices promoted by the regulator IRDAI. This is helpful especially to those people who are facing some loss of income, salary reduction or job loss.
“Corona Kavach Policy aims at covering hospitalisation, pre-post hospitalisation, home care treatment expenses and AYUSH treatment in case anyone has tested positive for Covid-19 infection,” says Chatterjee.
Corona Kavach is an indemnity-based policy which pays the actual cost if you need hospitalisation of 24 hours or more. Corona Rakshak policy is a benefit based policy where the pre-decided sum insured is paid irrespective of actual cost if the covered person is infected and requires more than 72 hours hospitalisation.