Times of India
06 June 2011
By Khyati Dharamsi

Benefit from changes in health plans
With the entry of new players, the health insurance scape has seen several innovations in the past couple of years. Here’s how to make the most from these.
Renewing a health insurance policy can induce a rare trauma. Ask 68–year–old Sarayu Arvind Parekh. In 1999, Mumbai–based Parekh bought a mediclaim, for which she paid an annual premium of 14,596 till 2007, an uneventful, claimless period. Then, in 2008, she had to undergo a knee surgery and made a claim. The shocker snuck up the same year at the time of renewal, when her premium shot up to 31,833. After last year’s eye surgery, it inched up to 41,000. Parekh hasn’t quite recovered. Not from the surgery, but the gravity–defying rise of her health premium.

The health insurance sector has been ailing from many such anachronisms, sustained primarily by insurer monopoly and lack of awareness. So, besides the rise in premium or even termination of policies during renewal, individual plans do not cover pregnancy or diabetics, doctor consultations are not entitled to an insurance, there’s a high waiting period for the coverage of pre–existing diseases, etc.

Such shortcomings have sorely stood out in the evolution of the Indian health insurance, which has seen a slow, albeit healthy, transformation since 1986, when the first health insurance plan, or mediclaim, was launched. The next big milestone came in 1999, with the setting up of the Insurance Regulatory and Development Authority, and the entry of private players and joint players.

This infused a rash of regulation and innovations aimed at fairplay and greater benefits for customers. Though the sector is rocked from time to time by issues and controversies, such as the furore over the cashless mediclaim facility eight months ago, the health insurance scape in India is gradually changing.

The latest round of changes have been triggered in the past couple of years by the new entrants whose prescience has resulted in improvisations and new products suited to the consumers. ET Wealthtakes a look at these new developments and how they can benefit you.

ASSURED RENEWALS: Health plans, unlike life insurance, require a renewal of contract every year.
Traditionally, this has been a problem area because a heavy claim meant that either your cover was not renewed or the premium was zoomed to tactfully avoid renewal. Now, however, two standalone health insurance companies, Max Bupa Health Insurance and Apollo Munich, are promising lifetime renewals without an unseemly rise in premium or threat of termination. These insurers are estimating the probability of a person falling ill in a lifetime and then calculating the premium for various age groups.

So the product may be expensive compared with a mediclaim, but at least your premium will not shoot up 20–30% during a renewal just because you made a claim. There’s hope for Sarayu Arvind Parekh.

In fact, not content with a simple guarantee of renewal, Max Bupa and Apollo Munich are incentivising it. While mediclaim policies typically offer a no–claim bonus for those who do not make a claim in a year, Max Bupa offers a bonus of 10% of the renewal premium in the form of health services and products every time you renew, irrespective of claims. Apollo Munich, on the other hand, assures a reduction in waiting period on various ailments by one year on every continuous renewal.

So, while earlier you could not claim for a pre–existing disease till three–four policy years, now you can do so in two, that is one year after the first policy renewal.

OPD & DENTAL TREATMENT: This addition is bound to elicit bigger, brighter smiles as dental treatment is now being covered by insurers. Under the Easy Health Premium Plan, Apollo Munich Health Insurance Company allows a claim of up to 5,000 for dental treatment, but only after you have completed three policy years.

Maxima Health covers medicine expenses, dental treatment, even spectacles and contact lens costs, up to a specified limit. Another happy inclusion is the doctor’s consultation fee and regular visits. While regular visits and consultation are insured by Max Bupa for a cover of 15–50 lakh, Apollo Munich offers four to eight consultations during a year depending on the number of people insured. So if one member is insured, four consultations are allowed, if two adults and two children are insured, you can get eight consultations.

FAMILY FLOATERS: The Indian joint family is clearly on the insurance radar. The family floater policy, a favoured recommendation by every financial adviser, has just become more appealing. The insurance that was earlier offered only to your spouse, parents and children has now been extended to cover 13 relationships in a family, along with a posse of benefits.

These include an individual sum assured besides the floating sum, a maternity benefit cover, insurance for a newborn, and health check–ups. This is the reason Mumbai–based Rameshchandra Sewani shifted about six months ago from three family floater policies to one, covering 12 members—seven adults and five children—of his family.

The 63–year–old has paid an initial premium of 1 lakh, forgoing the aggregate premium of 27,000 for the three policies. "In the earlier policies, I was not entitled to various facilities, including assured renewal, annual medical checkup and maternity benefits, " says Sewani.

MATERNITY BENEFITS: Non–working pregnant women will now have something to look forward to when it comes to maternity expenses and a cover for their newborns. Most of the existing individual policies do not cover hospitalisation during childbirth, the cover being confined to corporate group schemes.

Now, insurers are offering individual policies, under which you can avail of maternity benefits after a waiting period of three–four years. Star Health and Allied Insurance’s Medi Classic Policy offers a cover of 10% of the mother’s sum assured to the newborn.

Another of its policy, Star Wedding Gift Insurance, covers childbirth expenses after a waiting period of three years. However, there is a claim limit in most policies, which ranges from 15,000–25,000 in case of normal delivery to 25,000–40,000 if it is caesarean. Maxima Health provides a claim range of 15,000–25,000 based on the type of delivery and after a waiting period of four policy years, while Heartbeat Health Insurance offers a cover starting from 20,000 and up to 1 lakh based on the sum assured.

In this case, you will have to wait for three years before making a claim. Then there are policies that offer the facility at the end of two renewals. So, if you are taking a cover for your pregnant wife this year, she might not be able to make a claim.

As for the infant’s insurance, Max Bupa covers the child’s vaccinations till he turns 12, if you take a cover of 15–50 lakh. Such a cover is optional in the case of Apollo Munich.

ALTERNATIVE MEDICINES: A glaring hiatus in the health insurance scape, insurers are trying to bridge it by offering covers for treatment under the ayurvedic, homoeopathic and unani systems of medicine. This, of course, doesn’t mean that your massage and rejuvenation procedures at spas will be covered. Star’s Unique Health Insurance covers non–allopathic treatment (ayurvedic, homoeopathic and unani) costs up to 25% of the sum assured or 25,000 per treatment, per year, while the New India Assurance Company covers treatment under ayurvedic, homoeopathic and unani systems to the extent of 25% of the sum insured, but only if taken at a government hospital. Most policies are yet to consider the naturopathy treatment.

LONGER TERM: As mentioned earlier, health plans have so far been one–year contracts, requiring an annual payment of premium. Now, the Star Health and Allied Health Insurance has come up with the Star Unique Health Insurance plan for a two–year period, where even the premium is to be paid in two instalments—at the start of the first year and that of the second year.

This means that you will be cushioned from any changes, such as a rise in premium, brought about by the company during this period. The cover limits, however, will be applicable for each year and will not be carried forward. Oriental Insurance and the New India Assurance are also planning to introduce such plans.

PRE–EXISTING DISEASES: Till now, a waiting period of three–four years was the norm for covering pre–existing diseases, but this has come down to as little as one year in some cases. Under the Star Unique plan by Star Health and Allied, pre–existing diseases, other than those for which periods are specified, will be covered after 11 months of coverage.

HIGHER COVER LIMIT: The highest health cover available in the industry so far was 10 lakh. Now you can buy one for 50 lakh, with Max Bupa’s Individual Health Insurance plan offering a cover range of 15–50 lakh. As Damien Marmion, chief executive, Max Bupa, says, "With the rising cost of healthcare, it is important to have insurance that can help take care of an entire family. An individual and a family have unique health insurance requirements, so we offer comprehensive plans with covers ranging from 2–50 lakh. "

One can also buy top–up plans for additional coverage of up to 10 lakh beyond the regular cover. This kicks in only if one has exhausted the base mediclaim limit. Bharti Axa General Insurance’s Smart Health–High Deductibles Insurance covers people up to 65 years (75 for renewed plans) for top–ups of 3–10 lakh.

DIABETES AND HIV COVER: There are now policies that cater to the people with diabetes, and even HIV, which was not included in health plans earlier, has been brought under the insurance umbrella. However, this doesn’t mean that the treatment of HIV/AIDS itself is covered. It’s only the treatment cost of any disease that an HIV positive patient suffers from that is insured. As RS Nayak of Star Health says about its Unique Health policy: "HIV/ AIDS treatment is not covered, but the hospitalisation of an HIV/ AIDS patient is. "

While New India Assurance’s Mediclaim policy does not cover HIV/AIDS, it includes pre–existing diseases and conditions such as hypertension, diabetes, and related complications, after two years of continuous insurance, by paying extra premium. "In case of an HIV patient, drugs are given to improve the immunity, besides the antibiotics that are needed to treat a particular disease. So, the insurer will not cover the charges for HIV treatment or additional drugs for immunity improvement, but the treatment cost for the other disease will be covered, " says Sudhir Sarnobat, co–founder and CEO, Medimanage, a health insurance broking firm.

AGE CHECK: Earlier, 46 years was the cut–off age after which a health check–up was mandatory in order to buy a policy. Now, this has increased to 50–55 years. ICICI Lombard asks for a check–up if the person is above 55 years, while Star and National Insurance Company have fixed it at 50 years.

OTHER SERVICES: Besides taking care of your insurance needs, companies are coming up with assistance aids and services, such as dial a doctor service, and conducting of health and preventive tests. The Max Bupa website helps store health information, test records, profiles and claims made under a policy. If you need a second opinion on a health condition, online assistance can be provided by Bajaj Allianz General Insurance, Apollo Munich Health Insurance and Max Bupa Health Insurance.

Bajaj Allianz, along with Yes Bank and Visa, also runs a Jiyo Fit programme, where one can opt for a health debit card while buying a medical policy. The card entitles you to discounts at gymnasiums, beauty and skin clinics, spas, retail chains, chemists and restaurants. So you earn loyalty points each time you exercise.

You can also get a rebate if you buy healthy food and beverages at partner restaurants, record an improvement during diagnostic tests, or buy medicines from a partner chain of chemists. It has nearly 100 partner tie–ups, including those with More, VLCC, Make me Healthy, Hetero, Talwalkar’s, Gold’s Gym, and Dr Batra’s. The points can be redeemed using the Visa network. However, there is no discount on premium yet.

Adverse changes
Not all improvisations in health insurance are for the better though. Insurers have come up with changes that are likely to increase your financial burden or inconvenience you. Here are some you need to watch out for.

CO–PAYMENT: Insurers have started including a co–payment clause, wherein the patient is asked to pay a percentage of the treatment cost under certain conditions, such as age or treatment outside the preferred network of hospitals. For instance, Bajaj Allianz General Insurance’s Health Guard Policy requires a 10% co–payment if the treatment is done outside its hospital network, while Max Bupa has a 20% co–payment condition for those aged 65 years and above.

LOADING: This is another clause that is likely to add to your financial outgo. All the companies providing health insurance, except for Max Bupa and Apollo Munich, are adding the loading clause, according to which they will raise the premium during renewal in case of heavy claims.

These insurers are assessing the risk and loading the premium depending on the claim. So, the United India Insurance states that if the claims are 100-125% of the premium, then the loading will be by 30%, if it is between 126–150% it is 50%, and for 150–200%, the loading will be 80%. So, there is a chance that your premium could double.

PRE–APPROVAL: Insurers have begun to insist that you have to inform the insurer or the third party administrator (TPA) even if you are not using the cashless facility. "There is an intimation clause in the policy, wherein you have to inform within 24 hours of getting admitted even if you are not taking a reimbursement claim. Some companies such as the National Insurance Company, have a seven–day limit, " says a TPA official, who handles claims for public and private insurers.

Notwithstanding these disadvantages, the conveniences and services are a welcome change. However, these come at a higher cost. So, if earlier, you paid a premium of 5,054 for a health plan, the new standalone insurers will charge 13,795–21,460 for the same policy. Still, one should not compare on the basis of cost as some covers, such as those for OPD, maternity, dental treatments and annual health checkups, are not part of regular policies. "Customers are looking for value and better service, and are willing to pay for these, " says Marmion.

"We are charging more for a particular policy as that target group is more likely to make claims. Being a private company, we don’t want to make a loss. The premium is double because the claim pattern will be different, " says RS Nayak.

JR Raje, 66, Mumbai
Raje realised the benefits of a corporate group cover over an individual policy last year when he underwent a surgery for prostate gland. Bought a health cover of 2 lakh Made a claim of 62,000 in Oct 2010 Claim settled in January 2011 Raje’s son got a company group cover of: 3 lakh Made a claim for 45,000 for his 5–year–old daughter in November 2010 Claim settled in November 2010 What should Raje do? If possible, his son should include him in his company’s group insurance plan.

Sarayu Arvind Parekh, 68, Mumbai
Her health insurance premium has shot up nearly three times in the past two years because she has made heavy claims twice during this period. Bought a health cover in 1999 Premium paid in 2009 14,596 Premium paid in 2011 41,000 CLAIMS MADE: Two In 2008–9, she made a knee surgery claim after which the premium went up to 31,833, followed by cataract surgeries for both eyes in 2009–10. The insurer has not paid the entire claim for the eye surgeries yet.

What should Parekh do?
She should switch to a standalone health insurer, which does not raise the premium during renewal because of claims made in the previous year.