IRDAI proposes modifications in norms on proportionate deductions in health insurance products

With an aim to help health insurance policyholders, the Insurance Regulatory and Development Authority of India (IRDAI) has proposed modifications in norms on proportionate deductions in health insurance products. The changes are regarding how much of hospital bill should be reimbursed to a health insurance policyholder in case of a claim. The proposed changes are expected to benefit policyholders with insurance policies which have sub-limits.

In most health insurance policies, if the rent of the room taken by the insured exceeds the rent covered in the policy, then the hospital bill is not reimbursed fully. The insurer subjects the bill to 'proportionate deduction'. The proposed changes aim to restrict this proportionate deduction which would lead to, in most cases, the insured being able to get a higher percentage of the bill reimbursed by the insurer.

It added that expenses regarding cost of pharmacy, cost of implants and medical devices, and cost of diagnostics are not allowed to be part of the definition of ‘associate medical expenses’. Insurers shall not recover any expenses towards proportionate deductions other than the defined ‘associate medical expenses’ while processing claims.

Moreover, insurers shall ensure that proportionate deductions are not applied in respect of the hospitals which do not follow differential billing based on the room category. Towards this, the policy conditions shall be specified that the proportionate deduction would be applied only in case of a hospital that follows differential billing practice based on the room category occupied by a patient. It further noted that insurers are also not permitted to apply proportionate deduction for ‘ICU charges’ as there is not separate ICU category.