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IRDAI Redefining Sub Limit Rules for Health Insurance

​As coronavirus pandemic is taking over the world, the need for health insurance has also increased. To standardize health insurance claims, the Insurance Regulatory and Development Authority of India’s (IRDAI) has put out a draft exposure where insurance companies have to define associate medical expenses in the terms and conditions section of the policy contract. IRDAI has underlined expenses related to implants, pharmacy, diagnostics, and medical devices will not be allowed to be part of the definition of ‘associate medical expenses.’ IRDAI want insurers to design product in a way in which they can proportionate deductions of the associated medical expenses if the insured person chooses a higher room category than the one, they are eligible for as per terms of health insurance policy’s terms.

1. Room Rent

The draft by the Insurance Regulatory and Development Authority of India (IRDAI) will change the norms used to govern how much of the hospital bill will insurer reimburse if the policyholder makes a claim. Many experts say that this draft exposure will be advantageous for policyholders whose health insurance policy has a sub-limit.

Before this draft, if the policyholder rents a room that exceeds the rent covered in the policy, the insurance provider won’t reimburse for the extra room rent bill. In such cases, the insurance companies subject the bill to proportionate deductions. The main aim of the proposed changes by the IRDAI regulator is to restrict proportionate deduction.

2. Regulatory Changes

According to IRDAI, the health insurance company will not recover any expenses towards proportionate deductions other than the defined ‘associate medical expenses’ while processing claims. The policy conditions specified that the proportionate deduction would only be applied in the case of a hospital that has a different billing process based on room category.

Also, according to the draft, the insurance company is not permitted to apply proportionate deduction for ‘ICU charges’ as different categories of ICU are not there. This proposal from regulators will help policyholder:  

• In getting better claims settlement 

• Increase transparency on policy benefits 

• Will enhance customer experience

3. Proportionate Deduction

Proportionate deduction in a health insurance policy happens when an insured opts for a room that has a high rent than the rent covered by the insurer. Other than this, associated medical expenses are also linked to the proportionate deduction. Room rent, doctors’ fees, nursing expenses, surgery/ operation charges, medicine cost can have sub-limits.

If this proposal from IRDAI is implemented, it will surely benefit policyholders who have opted for sub-limits. When you go out in the insurance market to buy health insurance, you will find many insurers that have such sub-limits, which means you will not be able to get the entire claim amount. That’s why many analysts advise that it is always better to opt for a health insurance policy​ that does not have any sub limit on medical expenses and room rent. You should know that these policies will come at a high premium rate but it very beneficial in the long run, especially when there is a claim.

So, get a health plan from of the reputable insurance company such as Reliance General Insurance and get yourself and your loved ones financially covered.