Having a health insurance is absolutely pivotal in today’s world as healthcare cost is on a rise and turning quite expensive for many. For those who just meet their means, footing medical bills can be a big challenge. We have seen that quite a number of individuals do not opt for an individual health insurance policy if their employer provides the same. And those who have do opt for in individual capacity, have time and again are sub-optimally insured.

At the time of claim settlement while there exceptions, many policyholders have had a harrowing experience with Third Party Administrators (TPAs). They have rejected claims or paid them only partially on unjust reasons. TPAs have also been found asking for documents repetitively instead of demanding them once and for all, causing inconvenience to the policyholders and their families. There are many Public Interest Litigations (PILs) pending in the honourable Courts already since disputes between policyholders, insurance companies and TPAs are frequent.
 

In one such PIL, the double bench of the honourable Bombay High Court passed an order stating that decisions pertaining to rejecting or partially disallow health insurance claims, is to be taken by the insurer and not by the TPAs who offers various services to the policyholders on behalf of insurance companies. Only the communication in such cases may be done by TPAs.

The order was passed based on circular issued by Insurance Regulatory and Development Authority, (IRDA) placed before the bench, that calls for strict compliance of Regulation 12(d) of the IRDA (Health Insurance) Regulations, 2013.

During the course of arguments being put up before the Court, it was observed that insurance companies induced TPAs to lower the claims amount by offering them incentives to lower their outgo on claims. Documents were produced before the Court to exhibit staff of TPAs being involved in this. The proceedings also brought forth a point that TPAs had sanctioned different amounts for the same disease in the same hospital.

Hence now with the aim to tighten the screws, IRDA has now come out with draft guidelines for insurers and TPAs. If accepted, these norms have a potential of reducing instances of TPAs rejecting claims may help serve policyholders better.

What will change if draft guidelines are accepted?
 

• No TPA would be able to reject your claims
• Powers of claim rejection would solely be accorded to insurance companies
• If TPAs bargain with hospitals on rates in cashless facility and manage to get discounts, they have to subsequently pass on the benefit to policyholders and such discounts should reflect in the final bill
• In case of co-payment or final bill exceeding the sum assured, aforesaid discounts may come handy to policyholders
• Insurance companies would have to maintain all records pertaining to the claim settlement
• TPAs would not be allowed to solicit any business on behalf of insurance companies
• Burdensome clauses such as requirement of informing TPAs within 24 hours of hospitalisation would be sufficiently loosened up
• Insurance companies and TPAs will have a right to ask for supportive documents only once and for all
• TPAs can only give recommendations to insurance companies on claim settlement
• Insurance companies will have to issue one pager giving information about entitlements of policy holders
• If insurance companies take more than 30 days to settle a claim, they will have to pay interest on the amount to the policyholder
   

PersonalFN is of the view that introducing stricter regulations for TPAs and insurance companies, would serve in the interest of policyholders. Once the draft guidelines are accepted, TPAs would be made more accountable and onus on the insurance companies will rise too. PersonalFN expects IRDA to proactively protect the interest of the policyholders and curb malpractices of insurance companies and TPAs without waiting for the honourable Courts to get things going.

PersonalFN believes that, policyholders should also be careful and vigilant while buying a health insurance policy. Simple things such as filing your proposal form by yourself, disclosing all health related particulars correctly, providing additional information if and when asked for, get you on the right footing. You should know terms and conditions of insurance contract.

Your financial plan is incomplete if you don’t have health insurance. In case if any major ailment strikes, you may end up paying all bills from your own pocket or from your investments, which leave a damaging impact on your long term financial wellbeing. So, be wise and take the right health insurance policy with an optimal risk cover.

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