Health insurance: Pre-existing diseases rules changed, to benefit policyholders

The insurance regulator, IRDAI has changed the rules regarding ‘Pre Existing diseases’ for health insurance purposes in a circular dated 10th February 2020. This move will benefit many customers and will bring down the rate of rejection of claims of customers based on pre-existing diseases. The regulator wants to standardise the exclusions in health coverage and ensure that an increased number of illnesses are covered under the policy.

What are the Pre-existing Diseases?

Pre-existing diseases are diseases that a policyholder has while buying a health insurance plan . Generally, Pre-existing conditions are not covered by the insurance companies or are included at additional cost, for an initial waiting period. This waiting period is four years for most of the policies. Many insurance companies used to reject claims based on a pre-existing condition. Some policies were also terminated on this basis.

They are defined as any conditions, ailments, injuries or diseases that are diagnosed by a physician within 48 months prior to the effective date of the policy issued by the insurer for which medical advice or treatment was recommended by, or received from, a physician within 48 months before the effective date of the policy or its reinstatement.

Pre-existing diseases also include diseases, which have been cured.

What has changed?

Earlier, pre-existing diseases also included the disorders which were diagnosed within three months of issuance of the policy. This clause has been removed in the recent circular. Now, no such diseases will be treated as pre-existing diseases even if diagnosed within three months, or later, after purchasing the health insurance. The regulator also mentioned that the modification would be included in the guidelines on standardisation in health insurance policies.

As the removed clause had the words “any sign or symptom”, it was easier for insurance companies to prove that the insured has signs of an ailment before buying the insurance and thus reject claims on this basis.

In the same circular, IRDAI has also changed the rules regarding blacklisted hospitals, relaxing it for policyholders. Earlier, the companies did not cover costs for treatment in a blacklisted hospital unless the person had met a life-threatening accident. After the amendment, the policyholders will be eligible for coverage of cost treatment in a blacklisted hospital in any life-threatening situation and not just an accident.

However, such costs will be covered only till the stage the insured person is stabilised, i.e. moved from the Intensive Care Unit (ICU) to General Ward.

ReferenceExisting RulesNew Rules
Definition of Pre-existing diseasesPre-existing Disease means any condition, ailment, injury or illness:a)That is/are diagnosed by a physician within 48 months prior to the effective date of the policy issued by the insurer or b)  For which medical advice or treatment was recommended by, or received from, a physician within 48 months prior to the effective date of the policy or its reinstatement. c)  A condition for which any symptoms and or signs if presented and have resulted within three months of the issuance of the policy in a diagnostic illness or medical condition. (Life Insurers may define norms for applicability of PED at Reinstatement)Pre-existing Disease means any condition, ailment, injury or disease:a)    That is/are diagnosed by a physician within 48 months prior to the effective date of the policy issued by the insurer or its reinstatement orb)    For which medical advice or treatment was recommended by, or received from, a physician within 48 months prior to the effective date of the policy issued by the insurer or its reinstatement (Life Insurers may define norms for applicability of PED at Reinstatement) c) (Deleted)
Exclusions regarding Blacklisted HospitalsExpenses incurred towards treatment in any hospital or by any Medical Practitioner or any other provider excluded explicitly by the Insurer and disclosed in its website / notified to the policyholders are not admissible.  However, in case of life-threatening situations following an accident, expenses up to the stage of stabilisation are payable but not the complete claim.    Expenses incurred towards treatment in any hospital or by any Medical Practitioner or any other provider excluded explicitly by the Insurer and disclosed in its website / notified to the policyholders are not admissible.  However, in case of life-threatening situations or following an accident, expenses up to the stage of stabilisation are payable but not the complete claim. 

Table: Guidelines on amendments regarding Health Insurance (Source; IRDAI)

{Changes made are shown in Red Colour}

How will it affect customers?

The move is definitively a welcome one for the policyholders and is expected to increase the approval of claims by the insurance companies. This has also removed ambiguity and cleared the air regarding the definition of Pre Existing diseases.

However, misinformation or non-disclosure of information by the policyholders remains one of the primary reasons for rejection of claims. Hence, it is advised that all the information must be disclosed to the insurance company during the purchase of a policy, and the terms and conditions must be carefully read to avoid rejection of claims.

Also, the customer must get a full health check-up done (provides by insurance companies in many cases) to know of any existing ailments.

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