IRDAI’s Landmark Guidelines on Health Insurance

IRDAI issued a remarkable circular (Ref: IRDAI/HLT/REG/CIR/177/09/2019 dated 27.09.2019, to be effective from 01.10.2020 onwards) titled: Guidelines on Standardization of Exclusions in Health Insurance Contracts. The rationale of the circular is explained as under:

1.           To enhance health insurance coverage

2.           Prohibit certain exclusions

3.           Ensure uniformity across the industry

4.           In order to enable the individuals suffering with any existing diseases to get health   insurance coverage excluding the coverage to such existing disease, by permanently excluding the coverage to such existing diseases or illnesses.

What is the Central Focus of the Circular?

The purpose is to enable every insurer to extend health insurance coverage to all the persons to be insured who disclosed pre-existing disease at the point of underwriting in accordance to Regulation (8) of IRDAI (Health Insurance) Regulations, 2016.

Salient Features:

1.      Exclusions Not Allowed by any Insurer

Exclusions not allowed in Health Insurance Policies are given in Chapter II of the Guidelines (see below). It is specifically stated that no exclusion that may potentially circumvent these “exclusions” is allowed in Health Insurance Products. Further, insurers shall incorporate the same wordings for Exclusions as drafted by the Regulator in-verbatim in the policy contracts as prescribed in this chapter.

CHAPTER II: Exclusions not allowed in Health Insurance Policies:

1. On examining the extant wordings in the health insurance policy contracts and the prevailing exclusions, it is directed that the following exclusions shall not be allowed in health insurance (Other than PA & Travel) policies.

a. Diseases contracted after taking the health insurance policy, except for the conditions excluded for which standard wordings are prescribed in Chapter III.

b. Injury or illness associated with hazardous activities. (Explanation: However, only treatment necessitated due to participation in adventure or hazardous sports is permitted as exclusion.)

c. Impairment of Persons’ intellectual faculties by usage of drugs, stimulants or depressants as prescribed by a medical practitioner.

d. Artificial life maintenance, including life support machine use, where such treatment will not result in recovery or restoration of the previous state of health under any circumstances unless in a vegetative state as certified by the treating medical practitioner.(Explanation: Expenses up to the date of confirmation by the treating doctor that the patient is in vegetative state shall be covered as per the terms and conditions of the policy contract).

e. Treatment of mental illness, stress or psychological disorders and neurodegenerative disorders.

f. Puberty and Menopause related Disorders: Treatment for any symptoms, Illness, complications arising due to physiological conditions associated with Puberty, Menopause such as menopausal bleeding or flushing.

g. Age Related Macular Degeneration (ARMD)

h. Behavioural and Neurodevelopmental Disorders:

        i. Disorders of adult personality;

        ii. Disorders of speech and language including stammering, dyslexia;

i. Expenses related to any admission primarily for enteral feedings.

j. Internal congenital diseases, genetic diseases or disorders.

k. If specified aetiology for the medical condition is not known.

l. Failure to seek or follow medical advice or failure to follow treatment.

Rationale for Existing Disease to be Permanently Excluded

This is to enable every insurer to extend health insurance coverage to all the persons to be insured who disclosed pre-existing disease at the point of underwriting in accordance to Regulation (8) of IRDAI (Health Insurance) Regulations, 2016. However, it is open to insurers that while granting health insurance coverage to the persons with the existing diseases (referred in Chapter IV of the circular) to levy suitable health loading based on objective criteria as laid down in the board approved underwriting policy. All diseases other than those allowed to be permanently excluded shall be covered subject to the norms applicable for pre-existing diseases (i.e. up to 48 months waiting period).

Only 16 diseases and their subcategories as given in the circular are allowed to be permanently excluded.

1.           Sarcoidosis

2.           Malignant Neoplasms

3.           Epilepsy

4.           Heart Ailment Congenital heart disease and valvular heart disease

5.           Cerebrovascular disease (Stroke)

6.           Inflammatory Bowel Diseases

7.           Chronic Liver diseases

8.           Pancreatic diseases

9.           Chronic Kidney disease

10.         Hepatitis B

11.         Alzheimer's Disease, Parkinson's Disease

12.         Demyelinating disease

13.         HIV & AIDS

14.         Loss of Hearing

15.         Papulosquamous disorder of the skin

16.         Avascular necrosis (osteonecrosis

It is made clear by IRDAI that only those existing diseases as referred above be limited to the ICD Codes of the respective diseases. No claim which does not relate to the ICD codes referred in the circular can be denied.

CHAPTER V: Modern Treatment Methods and Advancement in Technologies:

IRDAI wants to ensure that the policyholders are not denied availability of health insurance coverage to Modern Treatment Methods.  The following Procedures shall be covered (wherever medically indicated) either as in-patient or as part of domiciliary hospitalization or as day care treatment in a hospital.

A. Uterine Artery Embolization and HIFU

B. Balloon Sinuplasty

C. Deep Brain stimulation

D. Oral chemotherapy

E. Immunotherapy- Monoclonal Antibody to be given as injection

F. Intra vitreal injections

G. Robotic surgeries

H. Stereotactic radio surgeries

I. Bronchial Thermoplasty

J. Vaporisation of the prostrate (Green laser treatment or holmium laser treatment)

K. IONM - (Intra Operative Neuro Monitoring)

L. Stem cell therapy: Hematopoietic stem cells for bone marrow transplant for haematological conditions to be covered.

However, insurers can make suitable sub-limits for the above treatments. It has been further reiterated that Insurers may endeavour to cover any other modern treatment methods, which means that future treatments also need to be considered as and when they are used.

Issue of Non-declaration/Misrepresentation of Material Facts (Chapter VI 2)

A great boon to all prospects is the guideline on the above. Insurers traditionally cancel Health Insurance Policies on alleged non-declaration/misrepresentation whether material or not. Such cancellation can not only result in repudiation of the claim but also in effect shut out all future insurance coverage, because any other insurer will refuse, if an earlier insurer had cancelled the policy on the above grounds. In order to prevent this tragedy, the IRDAI offers three options for insurers:

a) If the non-disclosed condition or disease is from the list of the Permanent exclusions specified in Chapter IV above the insurer can take consent from the policyholder or insured person and permanently exclude the existing disease and continue with the policy.

b) If the non-disclosed condition is other than from the list of permanent exclusions, then the insurer can incorporate additional waiting period of not exceeding 4 years for the said undisclosed disease or condition from the date the non-disclosed condition was detected and continue with the policy subject to obtaining the prior consent of the policyholder or the insured person. The within referred additional waiting period that may be imposed for the undisclosed conditions is allowed notwithstanding the moratorium period referred in the circular. However, the additional waiting period, shall be imposed, only in those cases where had the medical condition / disease been disclosed by the policyholder or the Insured person at the point of underwriting, the insurer would have imposed the waiting period not exceeding forty-eight months at the time of underwriting.

c) Where the non-disclosed condition allows the Insurer to continue the coverage by levying extra premium or loading based on the objective criteria laid down in the Board approved underwriting policy, the Insurer may levy the same prospectively from the date of noticing the non-disclosed condition. However, in respect of policy contracts for a duration exceeding one year, if the undisclosed condition is surfaced before expiry of the policy term, the Insurer may charge the extra premium or loading referred herein retrospectively from the first year of issuance of policy or renewal, whichever is later.

IRDAI also states that the above three options will not prejudice the rights of the insurer to invoke the cancellation clause of ‘Disclosure to Information norm’ under the policy for non-disclosure /misrepresentation subject to its underwriting policy. The options specified above for the purpose of continuing the health insurance coverage to the policyholders and the underlying claim, if any, shall be subject to terms and conditions of the applicable policy contract.

Moratorium Period Clause (Chapter VI 3)

A great and necessary innovation is the moratorium clause. It states that after completion of eight continuous years under the policy no look back to be applied. The moratorium would be applicable for the sums insured of the first policy and subsequently completion of 8 continuous years would be applicable from date of enhancement of sums insured only on the enhanced limits. After the expiry of Moratorium Period no health insurance policy shall be contestable except for proven fraud and permanent exclusions specified in the policy contract. The policies would however be subject to all limits, sub limits, co-payments, deductibles as per the policy. The moratorium period is applicable for health insurance policies issued by General and Health Insurers.

Lifestyle Benefit – (Chapter VI 5)

Waiting period for life style conditions namely, Hypertension, Diabetes, Cardiac conditions is not allowed for more than 90 days except if these diseases are pre-existing and disclosed at the time of underwriting.

Pre & Post Hospitalisation Benefit Allowed under Domiciliary Treatment Benefit (Ch. VI. 7)Covid-19 has brought home the need for treatment at home due to unavoidable circumstances and hence the IRDAI has stated that Pre/Post hospitalization cover under Domiciliary Treatment benefit shall not be excluded where pre/post hospitalization cover is offered in case of in-patient hospitalization under the product and the underlying product covers domiciliary hospitalization.

Additional Covers and Clarity on What is Covered

The Exclusion Clauses made compulsory and uniform has also brought in certain welcome beneficial covers with clarity.

1.           The most important is the coverage for Surgical Treatment of Obesity as under:

Exclusion F. Obesity/ Weight Control: Code- Excl06

Expenses related to the surgical treatment of obesity are payable where:

1) Surgery is conducted upon the advice of the Doctor

2) The surgery/Procedure conducted is supported by clinical protocols

3) The insured is to 18 years of age or older and

4) Body Mass Index (BMI): a) greater than or equal to 40 or b) greater than or equal to 35 in conjunction with any of the following severe co-morbidities following failure of less invasive methods of weight loss:

i. Obesity-related cardiomyopathy

ii. Coronary heart disease

iii. Severe Sleep Apnoea

iv. Uncontrolled Type 2 Diabetes

2.           Plastic Surgery Treatment Allowed for: Reconstruction following an Accident, Burn(s) or Cancer or as part of medically necessary treatment to remove a direct and immediate health risk to the insured. For this to be considered a medical necessity, it must be certified by the attending Medical Practitioner.

3.           Hazardous Activities cannot be excluded but only Hazardous or Adventure sports (Exclusion I. Code- Excl09)

4.           Excluded Hospitals can Treat Emergency Cases and the Insured can get the claim (Exclusion K. Excluded Providers: Code- Excl11) However, in case of life-threatening situations following an accident, expenses up to the stage of stabilization are payable but not the complete claim.

5.           Ectopic Pregnancy and miscarriage due to accident will be covered (Exclusion R. Maternity: Code Excl18). Expenses towards miscarriage due to an accident is also covered.