Health Insurance Notes

Overview of Health Insurance

Health insurance in India began with the Employees’ State Insurance Scheme in 1948. The World Health Organization (WHO) defines health as a state of complete physical, mental, and social well-being, not merely the absence of disease.

Determinants of Health

• Lifestyle factors: influence individual health (e.g., exercise, diet).
• Environmental factors: impact the spread of communicable diseases.
• Genetic factors: contribute to differing health trends.

Levels and Types of Healthcare

Healthcare includes services to promote, maintain, or restore health. Key factors determining healthcare needs include population size, death/sickness/disability rates, and socio-economic conditions. Types of healthcare include:

• Primary: First point of contact (e.g., doctor for fever).
• Secondary: Specialist care (e.g., intensive care).
• Tertiary: Specialized consultative care (e.g., oncology).

Evolution of Health Insurance in India

Key milestones:

• 1948: Employees' State Insurance Scheme.
• 1954: Central Government Health Scheme.
• 1986: Mediclaim policy launched.
• 2001: Private sector entry leading to growth.

Premiums paid for health insurance are tax-deductible under Section 80 D of the Income Tax Act.

Health Insurance Market

The market includes providers, insurers, and intermediaries like Third Party Administrators (TPAs). TPAs, registered with IRDAI, offer services such as claim servicing (pre-authorization or settlement) and pre-insurance medical exams.

Health Insurance Documentation

Proposal Forms

Contain information for risk assessment, including:

• Prospectus details
• Personal details (name, address, occupation, DOB, income, etc.)
• Medical history
• Past insurance and claims history
  The IRDAI provides a standard declaration format for health insurance proposals.

Acceptance

Insurers review the proposal form, medical reports, and possibly additional questionnaires to decide on acceptance and premium rates.

Prospectus

This document introduces the insurance product and is governed by the Insurance Act, 1938 and IRDAI regulations.

Policy Document

Must include:

• Insured's details
• Coverage description
• Sum insured
• UIN, contact details
• Date of birth, age
• Policy period, continuous coverage period
• Sub-limits, deductibles, co-pay limits, waiting periods
• Exclusions
• Details of grievance redressal, free-look period, portability, and migration facilities.

Conditions and Warranties

• Conditions: Policy provisions forming the agreement basis.
• Warranties: Insured's agreement to fulfill specific requirements.

Endorsements

Amend policy terms and conditions. Common endorsements involve changes in sum insured, family members, or coverage extensions.

Health Insurance Products

Classification

Health insurance products include:

• Indemnity covers: Pay actual medical expenses.
• Fixed benefit covers: Pay a fixed sum per day of hospitalization.

Based on customer segment:

• Individual covers
• Group covers
• Mass policies

Standardization

IRDAI guidelines standardize definitions, critical illnesses, and claim forms to reduce market confusion.

Hospitalization Indemnity Products

Cover hospitalization expenses with specific inclusions and exclusions. Key features include:

• Inpatient hospitalization expenses
• Day care procedures
• OPD cover
• Pre and post hospitalization expenses
• Domiciliary hospitalization
• Coverage options (individual, family floater)
• Pre-existing diseases (not covered for 48 months after policy begins)
• Renewability (lifelong renewability is compulsory)

Special features include sub-limits, co-payment, deductibles, and waiting periods.

Add-on Covers

• Maternity cover
• Critical illness cover
• Reinstatement of sum insured
• Coverage for AYUSH

Value-added covers include outpatient, hospital cash, and recovery benefits.

Other Products

• Top-up covers: High deductible policies for additional coverage above a threshold.
• Senior Citizen Policies: Designed for elderly individuals.
• Fixed benefit covers: Such as hospital cash or critical illness policies.
• Micro insurance: Affordable products for low-income individuals.

Government Schemes

• Rashtriya Swasthya Bima Yojana (RSBY)
• Pradhan Mantri Jan Arogya Yojana (PMJAY)
• Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Personal Accident and Disability Cover

Provides compensation for death and disability due to accidents.

Overseas Travel Insurance

Covers medical and non-medical expenses during international travel.

Group Health Cover

Designed for corporate clients and other groups.

Key Terms

• Network Provider
• Preferred provider network (PPN)
• Cashless service
• Third Party Administrator (TPA)
• Hospital
• Medical practitioner
• Reasonable and necessary expenses
• Notice of claim
• Free health check
• Cumulative bonus
• Malus/ Bonus
• No claim discount
• Room rent restrictions
• Renewability clause
• Cancellation clause
• Grace period for renewal

Health Insurance Underwriting

Underwriting assesses risk to determine insurance terms and premium. It prevents anti-selection and ensure equity among risks.

Factors Affecting the Chance of Illness:

• Age
• Gender
• Habits
• Occupation
• Family history
• Build
• Past illness or surgery
• Current health status
• Environment and residence

Instruments for Underwriting:

• Proposal form
• Age proof
• Financial Documents
• Medical reports
• Reports of sales personnel

IRDAI regulations for benefit of Insured

• Transparency in loading of the premium
• Early entry continues renewal will reward customer for favourable experience

Underwriting Process: At primary , Field Level & Underwriting Department Level

• Medical Underwriting process
• Medical Information is required for High Sum assured claims and Old age claims.
• Non-Medical underwriting Process
• Numerical rating method assessment for each component in risk.

Process Of Health Insurance At Group Level

Analysis of characteristics for Health Insurance claim needs underwriting to evaluate.

Overview on underwriting for:

• Overseas Travel Insurance policy
• Personal Accident Insurance