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Standardization in Health Insurance Policies

In order to bring about (a) a semblance of order, transparency and comparability and (b) to reduce ambiguity and confusion among the various health insurance plans being offered by different insurers, IRDA has announced certain guidelines to standardize health insurance. These are set to become effective from Oct 1, 2013. 

The IRDA circulars in this regard stipulate
a) Standard definition of commonly used terms in health insurance policies
b) Standard nomenclature and procedures for critical illnesses
c) Standard pre-authorization and claim form
d) Standard list of excluded expenses in hospitalization indemnity policies

Some notable definitions in the aforesaid circulars are listed below.

Eligible Hospital: Definition of hospital has been relaxed, treatment wherein would be eligible for claim settlement. These would include hospitals registered with local authorities under the Clinical Establishment Act of 2010 or complying with certain criteria (having qualified nurses 24 hr/day, at least 10-15 beds, fully-equipped operation theatre, medical practitioner in charge 24 hr/day, maintaining daily record of patients)

Hospitalization: Admission in hospital for a minimum period of 24 in patient care consecutive hours (except for specified procedures and treatments). Till now some companies had 24-hr stipulation and some 48-hrs

Room rent: Amount charged on per day basis and shall include associated medical expenses.

Portability: As you would be aware, portability allows you to change your policy along-with the credit for the period gained for pre-existing conditions and time-bound exclusions. Earlier this included policies switched with the same insurance company. Now portability would be allowed only if the policyholder changes the insurer.

Co-payment: This is a cost-sharing arrangement wherein a pre-specified "percentage of the admissible claim amount" would be borne by the policyholder. The balance claim amount would be paid by the insurance company. Co-payment does not reduce the Sum Insured. [Co-payment is good as then the policyholder is careful about the expenses incurred and does not let the hospital charge extra amount. This makes claim settlement easier and faster; and also keep future premiums under check.]

Deductible: This is also a cost-sharing arrangement wherein the insurance company will not make any claim payment if the claim is upto a pre-specified amount (in case of indemnity policies) or for a pre-specified no. of hours/days (in case of hospital cash policies). Claim over and above this level would be paid by the insurer. Like co-payment, deductible too will not reduce the Sum Insured.

Pre-existing diseases: Diseases within 48 months prior to the first policy issued by the insurer

Maternity expenses: Will cover all expenses related to childbirth including complicated deliveries / cesarean section and also lawful abortions.

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