New health insurance rules could lower out-of-pocket costs

Out-of-pocket expenses for health insurance policyholders are set to be lowered because the IRDAI has decided to ensure uniformity when insurers apply proportionate deductions to health insurance claims when policyholders opt for a hospital room of a higher category (and hence, price) than that for which they are eligible.

Currently, where there is a sub-limit on the hospital room charge in health insurance contracts, in the event that policyholder opts for a room with a higher tariff than the one that he is eligible for, health insurance plans, subject to product design, may stipulate recovery of proportionate deductions in respect of various associated medical expenses. IRDAI wants to ensure that there is uniformity in the way these other cost heads are adjusted, reported Financial Express.

Under the new rule, insurers shall not recover any expenses towards proportionate deductions other than the defined ‘associate medical expenses’ while processing claims.

The following expenses are not allowed to be part of the definition of ‘associate medical expenses:

a. Cost of pharmacy;

b. Cost of implants and medical devices

c. Cost of diagnostics.

At the same time, the insurers shall ensure that proportionate deductions are not applied in respect of hospitals which do not have differential billing by room category. Towards this, the policy conditions shall be specified that the proportionate deduction would be applied only in case of a hospital that has a differential billing practice based on the room category occupied by a patient.

Source: Asia Insurance Review