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Non Life Insurance - Standard Covid-19 Health Insurance Policy to Cover PPE Cost

23 Jun 2020

In a series of back and forth, the Insurance Regulatory and Development Authority of India (Irdai) has once again revised the proposed standard covid-19 health insurance policy. All general and health insurance companies will now have to offer two products: an indemnity as well as a benefit-based health product for covid-19 from July 15. The regulator earlier withdrew the indemnity policy, which it had proposed in the first week of June and recommended a benefit-based product. Read more here.

Mint reviewed the new draft guidelines for both the policies. Among other changes, the provision for covering the cost of PPE kits and no sub-limits on room rent stands out. Read on to know what the revised products are and whether they’ll benefit you.

What changes

The minimum entry age for both the policies shall be 18 years and the maximum is 65. Dependent children shall be covered from the age of three months to 25 years. The policy tenure could be three months, six months or a year.

Indemnity policy: The revised product will have a base cover with a cap on the sum insured up to ₹5 lakh. The minimum sum insured will be ₹50,000. You can opt for a cover in multiples of ₹50,000, up to ₹5 lakh. Insurers are allowed to offer one optional cover, the premium for which will be mentioned specifically.

The base cover will be offered on an indemnity basis whereas the optional cover shall be available on a benefit basis. The policy will pay for hospitalization expenses incurred by the policyholder for the treatment of covid-19 on positive diagnosis for the infection from a government-approved diagnostic center. It will cover room, boarding, and nursing expenses. Surgeons, anaesthetists, consultants, specialist fees, including consultation through telemedicine, will be covered.

Other costs such as oxygen, operation theatre charges, surgical appliances, drugs and medicines, PPE kits, and gloves among others will be admissible if hospitalized for a minimum of 24 hours. Intensive care unit and intensive cardiac care unit expenses will be covered too. Unlike the earlier draft, the revised policy does not have any sub-limits on room rent, which would work in the favour of the policyholder.

The policy will also cover the costs of treatment at home provided the medical practitioner advises home treatment and there is a continuous active line of treatment, which requires monitoring of health status by a medical practitioner through the duration of the home care treatment.

Policyholders can avail the services on a cashless basis, which shall be arranged by the insurer through network providers. If the services are availed from a non-network operator, reimbursement option shall be provided. Diagnostic tests conducted at home or at diagnostic centers, medicines prescribed, consultation and nursing charges, and cost of the oximeter, oxygen cylinder, and nebulizer will be covered under the home care benefit.

Ayush treatment, pre-hospitalization expenses incurred 15 days before the date of hospitalization and post-hospitalization expenses incurred 30 days after shall be covered.

The policy comes with an optional hospital daily cash cover in which the insurer will pay up to 0.5% of the sum insured for every 24 hours of hospitalization. The benefit will be payable for up to 15 days during a policy period.

The regulator has left it to the insurance company’s discretion to decide the premiums and the policy will be made available on a family floater basis as well.

Benefit-based policy

This product shall pay a lump sum benefit equal to 100% of the sum insured if the policyholder tests positive for covid-19 and requires hospitalization for a minimum period of 72 hours. The product shall cover an individual only. The earlier proposed add-on for a quarantine cover has now been removed. The minimum sum insured shall be ₹50,000 and the maximum limit is up to ₹3 lakh. An individual will be allowed to purchase only one such policy. “It shall be specified in the proposal form that the policyholder is not entitled to benefits under multiple policies of this standard product," said the draft guidelines. The policy shall come with 15 days waiting period during which no claim shall be accepted.

Will the products benefit you?

After multiple rounds of revision, the regulator has finally addressed the high cost of PPEs that could burn a hole in your pocket because PPE kits and other consumables are not covered by most insurance companies. “PPE kits have become a significant portion of the hospital bill. Deductions for such expenses have become a major source of contention for policyholders. Coverage of PPE, gloves, masks and other similar expenses, clears the ambiguity and provides comprehensive treatment for policyholders for covid-19," said Abhishek Bondia, MD and principal officer, Securenow.in. "In fact the regulator should encourage insurers to come up with add-ons to cover PPE in existing health policies."

Insurers we spoke with said that the regulator’s intention behind launching two separate products is to cater to the uninsured population and help them understand how health insurance works at an affordable cost.

“Through this product, the unaware and uninsured population can have the experience of health insurance, and then they may prefer to buy a regular health insurance policy. It’s a good starting point," said Dr S. Prakash, MD, Start Health and Allied Insurance Co Ltd.

The premium for these policies is expected to be lower than the standard Arogya Sanjeevani policy which all insurers are currently offering. “The cap on the sum insured for the benefit-based policy ( ₹3lakh) has been decided taking into account the average cost of covid-19 treatment in the country. This product is mainly for the low and middle-income groups who may not be able to shell out a lot on health insurance," added Dr. Prakash.

Though insurers will want to find out about the co-morbid conditions at the time of selling a policy, Dr. Prakash said the premiums will still have to be reasonable. According to the guidelines, admission due to Covid-19, irrespective of co-morbid conditions shall be covered under the policy.

If you already have a regular health insurance policy with adequate cover, buying a covid-specific policy would be of little use. Further, the home care benefit, which comes with the indemnity policy shouldn’t be a reason for you to buy the policy because some insurers such as ICICI Lombard General Insurance Company have started adding the feature in their regular health policies and others are expected to follow suit.

Bondia said home treatment may be relatively inexpensive, and unlikely to get the full sum assured exhausted. The benefit-based policy too requires hospitalization for 72 hours, which doesn’t serve much. Having said that, the fact that the indemnity policy specifically covers PPE costs is a plus. “I would still recommend buying a regular health insurance policy, which would cover any kind of hospitalization and not restrict you to just covid-19," said Bondia. Insurance companies have sent their feedback and the regulator is expected to publish the final guidelines soon.