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The Insurance Regulatory and Development Authority of India (Irdai) has mandated general and health insurance companies to offer standard covid-19 products, as the pandemic shows no signs of abating. Insurers are expected to offer these products from 15 July. The insurance regulator has also allowed all insurers, including life insurance companies, to offer short-term covid-19 products. However, regular health insurance policies already cover the costs for covid-19 treatment. Renu Yadav asked experts if there’s any real need for having specific products for the disease
The current design of health policies isn’t able to adequately cover covid-19 treatment. Patients are reporting significant out-of-pocket payment of around ₹50,000-2,50,000 in spite of having enough health insurance cover.
The deductions are largely in three areas. First, hospitals are levying charges for the infrastructure required for covid-19 like resident medical officer, nursing, care and hygiene. Insurance does not pay for these charges since these are considered to be part of room charges. Second, proportionate deductions against special room charges are being billed by hospitals that are substantially higher than the room rent limits.
Third, high non-medical expenses (like PPE charged at ₹9,000 per day) required for covid-19 treatment can result in 10-25% deductions, against an acceptable non-medical deduction of 3-5% for non-covid-19 treatments.
A short-term renewable fixed-benefit policy or an add-on with a cover of a minimum of ₹2 lakh can insulate patients from the high deductions and is the need of the hour.
Most health policies offer a cover for any kind of hospitalization arising out of non-cosmetic illnesses or injuries. Depending upon some conditions, there are certain permanent (such as congenital conditions) and temporary exclusions, and are named.
Covid-19 is a new disease and, therefore, is not excluded, specifically. Therefore, a hospitalization policy will cover the treatment and there is no need to buy a separate policy for covid.
However, covid-19 treatment protocol has a peculiarity. The usage of PPE kits and other consumables is very high and costly, which is normally not so in other situations. Normally, consumables like gloves, gauge and bandages are excluded from claimed amounts in existing policies. Therefore, it would be useful to seek out covid-19-specific policies, which would pay for such things. However, the regulator has directed all companies to be lenient in this regard also.
Covid-19-specific plans, which have come out so far are critical illness policies that pay a fixed amount on diagnosis. That money can be used to cover the shortfall in expenditure.
All existing health indemnity policies offered by major insurers cover hospitalization expenses, including covid-19 treatment and the pandemic in general.
However, covid-19 treatment protocols include home quarantine and treatment in makeshift hospitals or dedicated quarantine facilities. Expenses for these are not covered by existing health insurance policies.
That’s why a separate product is required in the current scenario.
Based on the current trends and market requirement, customers can opt for a combination of a benefit and an indemnity product. However, this may be a short-term requirement as we are in the defence stage now. We have to wait and see how the treatment protocol evolves.
As of now, all medical experts stress on boosting the immunity levels than prescribing specific drugs to treat the pandemic.
The need for a covid-19 specific policy may reduce depending at the stage or period post the discovery of a vaccine and the availability of appropriate drugs for the treatment of the infection.
A covid-19 specific cover is important, especially for someone who does not have any health insurance coverage or feels that the current coverage may not be adequate.
Since the hospitalization cost associated with this treatment is much higher than other infections, it is better to be adequately protected.
Since covid-19 policies are priced at affordable levels, I will recommend that three categories of people should consider having a covid-19 specific policy, in addition to any health insurance policy that they may already have. One, anyone with no health policy to cover themselves and their family. Two, anyone who has less than ₹10 lakh coverage under their current plan. Three, employees dependent on their corporate coverage, which may not be sufficient.
Covid-19-specific plans are available on indemnity basis, where the actual cost of hospital bills is paid by the insurer. Plans are also available on benefit basis, where a predefined lump sum amount is paid in the event of a claim. Customers can choose between them depending on their needs.
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