Health insurance is the product that covers medical and surgical expenses of an insured party. It reimburses the expenses that are incurred due to illness or injury. An overall health check-up is done before a person signs up for Health insurance. By these tests, the insurance companies unable to provide applicants with the most suitable cover, as these tests bring the attention of any existing medical conditions and illnesses.
This article discusses how COVID-19 incorporates medical health insurance. Part I of the article deals with the conflicts that arise between the insurer and insured or policyholder in case of existing insurance policies. Part II deals with the Steps taken by Insurance Regulators during the pandemic outbreak of COVID-19. And the last part of the article provides the conclusion of the article.
Conflicts Between Insurer and Insured or Policy Holder in case of Existing Insurance Policies
As COVID-19 is a new disease, so it is not be treated as pre-illness and in the majority of the cases if any individual has any pre-existing health insurance then his treatment will be covered under the pre-existing policy. Now the important question being raised that whether the existing health insurance policies cover these new problems that arise by this strange nature of Coronavirus which are discussed below:
· Hospital Cost for Coronavirus
The highly infectious nature of the novel coronavirus and mandatory quarantine period of 14 days has significantly raised the cost of treatment in hospitals. These hospitals have increased the cost of treatment for Covid-19 patients to maintain the social distancing of patients. Due to this, a hospital ward where 20 people were treated, now only 10 are being treated due to patient distancing. So various conflicts arise between insured and insurer that which treatment part included under existing health insurance policies.
Currently, many existing health insurance policies are not covering the cost of PPE kits and other consumables which are used in the treatment of Covid-19. The use of these consumables is only for personal comfort or convenience and safety. It covers single PPE kit which includes a pair of nitrile gloves, a single-use coverall, goggles with transparent glasses, an N-95 mask, shoe covers, and a face shield, normally surgical accessories like tissue paper, crepe bandage, gown, foot covers, slippers, disposable gloves, sheets, syringes, gowns, masks, etc. Toiletries and cosmetics are also considered as consumables.[i] These consumables are considered as non-payable medical items and are required for one-time use due to sterility and infection concerns. Hence, these consumables are not payable under most health insurance covers as they are not covered under a health insurance policy. But these are included in the hospital bill of a coronavirus patient when treated at a hospital.
·When the disease is declared as epidemic or pandemic
As many existing health insurance policies denied to pay the claims because the disease is declared as an epidemic or pandemic by the World Health Organization (WHO) and the Indian government. While some health insurance policies in India are providing cover for the coronavirus infection. Like, the Multi Commodity Exchange of India (MCX) has tied up with Religare Health Insurance to insure its employees under the “Group Cover Covid-19” policy.[ii] It will cover all MCX employees for one year against Covid-19.[iii] As it depends on case to case basis that what are the terms included in their insurance policy.
· If a person hospitalized for at least 24 hours
In coronavirus, Health insurance claims will be payable only if anyone is hospitalized for at least 24 hours. As most of the indemnity type health insurance policies in India do not cover treatment if the patient is hospitalized less than 24 hours. So, if the person who is hospitalized due to coronavirus and takes treatment will be covered as any other illness. And the subsequent claims will be processed as per regular norms.[iv]
· If anyone or family member travels to a country affected by COVID-19 then what happens?
Several factors determine whether one’s claim will be covered in these scenarios.
If there was any governmental notification, circular, or advisory prohibiting traveling to any particular country, and the insured has disregarded a travel advisory by traveling to the country where they are not supposed to travel, then the insurer may have the right to deny a claim of insurance.
However, the special coronavirus insurance policy does not cover people, those travelled to coronavirus affected countries such as China, Hong Kong, Macau, Taiwan, Italy, Kuwait, Japan, Singapore, South Korea, Thailand, etc.[v] And even if any person contracts the disease or infection from a family member who has travelled to these places or countries, his claim will not get settled.
Steps were taken by Insurance Regulators during the pandemic outbreak of COVID-19
The Insurance Regulatory and Development Authority of India (IRDAI) has directed all general and health insurance companies to offer a standard Benefit Based Covid-19 health insurance product which is named Corona Rakshak Policy[vi]. This insurance policy provides coverage of up to Rs 2.5 lakh to individuals for hospital expenses which are related to Covid-19. There are five key features of this policy which are (1) it will take care of basic Covid-19 related health needs of the insuring public (2) terms or wordings in the policy should be common across the industry (3)it can be availed by persons between the age of 18 years and 65 years (4) it will be issued for three and half months, six and half months, and nine and half months (5) guidelines of this policy will remain valid till March 31, 2021.
Does Medical Insurances cover coronavirus treatment
Concerning health insurance, it is pertinent to ask whether the offerings of all the polices covers the treatment of coronavirus or not?
According to the circular passed by Insurance Regulatory and Development Authority (IRDAI) on Guidelines on handling of claims reported under the Corona Virus, it was clearly stated that insurers are advised to design products covering the costs of treatment for Corona Virus.[vii] This circular could be a blessing in disguise, as it ensures that every employee is entitled to basic health cover. Initially, organizations didn’t need to provide health coverage to their employees but after IRDAI mandated basic health insurance covers, claims regarding the treatment of the coronavirus were rectified provided that the patient must be hospitalized. Concerning this issue, labor law states that employees with a monthly salary of 21,000 or less are covered under Employee State Insurance (ESI) Act, 1948.[viii] This act provides the employee to avail of ESI benefits from Employee State Insurance Corporation (ESIC). In this time of coronavirus, the benefits include medical facilities from tie-up hospitals i.e. COVID-19 dedicated hospitals as well. All those other employees who have their salary more than 21,000 per month are covered under a group health insurance policy.[ix] These group insurance policies provided by employers generally cover coronavirus treatment as well.
Subsequently, it is pertinent to note that the coverage of the treatment also depends upon the medical insurance policy availed. Many insurers across the globe provide comprehensive health covers that provide hospitalization and inpatient treatment of the coronavirus. Hence the coverage also depends upon the terms of the policy.
With the rapid increase in coronavirus cases, we all have witnessed a hike in treatment costs as well. In India, it has been estimated that the cost of consumables accounts for 10% of the total treatment, however, in the cases of coronavirus, this cost has raised depending upon the severity of infection and duration of hospitalization. As these cost of non-medical items like PPE kit, mask, goggles with transparent glass has been on the rise. Consequently, putting the stress on the pocket of the insured. Even those who prevail the medical insurance could not claim this amount as the cost of non-medical items is not included in general health insurance. To avoid this suffering, health insurers can at their discretion include the cost of some consumables and can charge a premium for that. Even employers can charge extra premium from the salary of employees for the same. Thus, it is of primary importance that insurees choose their policy wisely. For those who are planning to avail of medical insurance any time soon or if an employer is providing medical insurance to its employees, it is of utmost importance to check, whether the policy includes the cost of consumables or not. For employers, it is suggested that the group insurance policy should not be limited to short- term disease-specific, but should also continue post- coronavirus to ensure complete and effective health coverage of its employees.
Due to these unprecedented times, health has been a significant issue. Though keeping up with the norms and preventive measures from the Covid-19 is of utmost importance, yet people and organizations have now started prioritizing one extra health measure in terms of health insurance. IRDAI as a regulator solved most of the problems by providing a basic guideline on the inclusion of coronavirus treatment in the medical health insurance policy. Further, the level of coverage of the treatment depends upon the discretion of various insurers, and the quality of policy availed.
Therefore, it can be concluded that even though there will be a lot of pressure on the health insurance sector of the insurance market to pay off the health claim of its consumers, a potential overall rise is expected in the health insurance sector.
[i] Navneet Dubey, Your insurance may not pay for significant part of hospital treatment for coronavirus, The Economic Times, Apr 09, 2020, https://economictimes.indiatimes.com/wealth/insure/health-insurance/coronavirus-treatment-in-hospital-costs-25-more-due-to-consumables-social-distancing/articleshow/76275572.cms.
[ii] Sutanuka Ghosal, MCX ties up with Religare Health Insurance to insure its employees against Covid-19, The Economic Times, Apr 04, 2020, https://economictimes.indiatimes.com/markets/stocks/news/mcx-ties-up-with-religare-health-insurance-to-insure-its-employees-against-covid-19/articleshow/74978001.cms.
[vi] Navneet Dubey, Will Standard Benefit Based Coronavirus Health Insurance policy help you?, The Economic Times, Jul 22, 2020, https://economictimes.indiatimes.com/wealth/insure/health-insurance/will-standard-individual-benefit-based-coronavirus-health-insurance-policy-help-you/articleshow/76352159.cms?from=mdr.
[vii] Guidelines on handling of claims reported under Corona Virus, Insurance Regulatory and Development Authority (IRDAI), https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4057&flag=1.
[viii] The Employees’ State Insurance Act, 1948, No. 34 (India).
[ix] Navneet Dubey, Post lockdown employers must mandatorily provide medical insurance to employees, The Economic Times, Apr 22, 2020, https://economictimes.indiatimes.com/wealth/insure/health-insurance/post-lockdown-employers-must-mandatorily-provide-medical-insurance-to-employees/articleshow/75263595.cms?from=mdr.