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Yet, it is partially relieving because when they need to claim Health-related expenses using the health insurance policy, the settlement takes times and is inconvenient. The paperwork involved is too much, even though the policyholder can reimburse through the insurance company directly or a Third-Party Administrator (TPA).

Recently at the Health Insurance-Rethinking Business models and Excellence Awards event organised by the Associated Chamber of Commerce & Industry of India (ASSOCHAM) held on 14th February 2020 at Kolkata with an intent to provide the best health insurance for the people, a non-life member of Insurance Regulatory and Development Authority of India (IRDAI) Ms T L Alamelu spoke about the various discrepancies in the health insurance space which have to be streamlined for the people.

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One announcement that came forth through her speech was the standardising of the claim settlement procedure. The IRDAI is planning to launch an online platform to settle health insurance claims, with a click of a button, which will be developed by the Insurance Information Bureau.

At the event, reported by the Business Standard, "We hope this will bring a paradigm shift in the way claims are settled in health insurance," Alamelu said.

As per current norms, a policyholder can make a claim in either of the two ways:

1. Cashless basis through a TPA

   For a claim on a cashless basis, the treatment done must be only at a network hospital of the Third-Party Administrator (TPA) who is servicing the policy. One must seek authorisation to avail the treatment on a cashless basis as per procedures laid down by the insurance provider in the prescribed form.

   The coverage of hospital network of TPAs is larger than that of the in-house claim settlement department of insurers and the insurance companies select the TPAs.

2. Claims on a reimbursement basis through in- house settlement.  

   When a claim arises, one should inform the insurance company directly as per the procedures required. After hospitalisation, one must obtain and keep the documents ready such as claim form, discharge summary, prescriptions, and bills that you should submit for a claim.

   Many large private insurers have in-house claims processing department. Some insurance companies prefer to settle these in-house through their department. Since, the process is in-house, the turnaround time to resolve queries and manage claims is faster.

Overall, both have been effective claim settlement procedures because they are governed as per the rules and regulations set by IRDAI.

The proposed implementation of launching an online route to settle claims will bring all stakeholders, insurers, the insured, as well as hospitals on a common platform and will ensure that payments are done in a time-bound, hassle-free way.

Alamelu further mentioned that "All claims will be settled via this platform. This will give a rich wealth of data, apart from standardising settlements and ensuring that settlements are done within a specific period in time."

It is good that the IRDA, over the past few months, has and is making positive changes in the interest of policyholders. Hopefully, it will be a less harrowing experience.

At the event, she touched on the disparity in hospital charges of some procedures which account for rising hospital costs, and which the regulator is also in the process of standardising.

"There is a mismatch (in pricing). IRDAI is thinking about how to handle it. In this context, the General Insurance Council's talks with TPAs are on course to standardise charges for some procedures such as cataract and hysterectomy,"

"It has been noticed that hospital inflation at present is 10 per cent to 15 per cent and tariffs are being changed on a regular basis...There is nobody to check that," Alamelu said. IRDAI is also planning to let customers choose their TPAs, she added.

Earlier, the policyholder had no choice but to continue with the same TPA even if their prior experience was unsatisfactory.

Although IRDAI is working on the matter, it may take some time before we see results; it is a "tough challenge", Alamelu added. IRDAI is mulling a plan to introduce a system where people will choose their TPAs directly for further standardisation to simplify for policyholders.

This move is to encourage the service providers (insurers and TPAs) to ensure that the customers get the best quality services, which will ultimately benefit the policyholders and curb miss selling.

[Read: IRDAI's New Guidelines Aim To Curb Mis-Selling And Instill More Transparency...]

Hence in an effort to provide standardisation to policy holders, IRDAI asked health and general insurers several months ago to offer a standard individual health insurance product- Aarogya Sanjeevani Policy, with an effective deadline of April 1 2020.

Keep in mind that having adequate health insurance cover helps in effectively dealing with the medical inflationary costs and should be a part of the contingency reserve. Remember, financial and health security are the basic tenets for an individual; the purpose of insurance is indemnification of risk from an untoward event. However, as far as wealth management is concerned, it is best to keep insurance and investment needs separate.

Ensure that health insurance policy cover can be availed for the family as well. Young families can choose family floater health covers where children up to the age of 25 are covered. At around age 40, one can consider buying a critical illness cover.

Do review the amount of coverage every 3-5 years and, more importantly, maintain a healthy lifestyle.

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