Health Insurance Regulations 2016 – 5 changes you must know

IRDA announced Health Insurance Regulations 2016 on 12th July, 2016. There are few positives to insured individuals to look for. Let us know about all these changes.

Below are the major five changes of IRDA’s Health Insurance Regulations 2016.

Health Insurance Regulations 2016

# Life Insurance Companies can’t sell Mediclaim Policies

There are two types of health insurance policies. One is Indemnity Plans and another is Defined-Benefit Plans. Indemnity Plans means the insured will indemnify against hospitalisation expenses up to the pre-defined limit i.e. reimburse the actual expense incurred during hospitalisation up to the sum insured available in the policy. For example, let us you admitted to hospital. The bill amount is Rs.1,00,000 and the sum insured under the policy is Rs.5,00,000 with co-payment clause as 20%. In this case, you have to pay Rs.20,000 and rest will be payable by the insurance company.

However, in the case of defined benefit health plans, the entire benefit defined in policy will be paid in full if the predefined diseases occur. Plans like critical illness plans or Hospital Daily Cash plans are such type of plans.

As per Health Insurance Regulations 2016, from now onward life insurance companies not allowed to float any medical insurance products. But they can continue offering defined benefit health insurance plans. However, policies already issued will continue until the end of policy term.

# Pilot Products-New close ended health insurance products

In order to offer innovative products and features, now IRDA’s Health Insurance Regulations 2016 allowed health insurance companies to offer pilot products. These will be offered to you up to the maximum 5 years. After this period, the product will turn to regular health insurance product.

However, if the pilot product is not feasible to continue by health insurance companies, then they can discontinue the same. If it is feasible, then they will convert to regular health insurance product.

This I think will bring in more innovative and attractive health insurance product to customers.

# Discounts for early buyers and health conscious customers

From now onwards if someone buys health insurance at the early age, renewed regularly or practice preventive or wellness habits, then you will get some discounts in premium or discounts and/or benefits on diagnostic or pharmaceuticals or consultation services of providers in the network are permitted.

This I think a good point to motivate health insurance awareness among the population.

# Credit or Loan linked Health Insurance

You may know that life insurance companies offer term insurance based on the existing loan or credit. If the policyholder dies, then nominees can pay back the loan dues using claim amount of term insurance.

Note it here that such benefit will come into picture only in case of death of insured. However, what if he fell sick and due to high medical cost not able repay the loan? To avoid such events, now onwards health insurance companies will offer credit linked group health insurance products.

The term of such products will be maximum of 5 years. Earlier the maximum tenure of such products used to be 1 year. Now it is increased to 5 years.

# No commission to agents if you opted portability option

As per new IRDA’s Health Insurance Regulations 2016, if you opt for health insurance portability, then agents will not earn any commission from portability. However, they continue to earn the commission when the same insurance policy will be renewed on the regular basis.

Portability of health insurance is nothing but your mobile number portability. There are some rules and regulations set for that. The portability options allow insurers to provide the quality product and good service.

However, if there is no commission to agents due to portability, then they may sell new products than forcing you to use portability option.

Hence, if your decision is to go for portability then stick to it than heeding advice of an agent who offering you new product. Because instead of buying a new plan it is best to go for portability. The advantage of portability is that all the benefits of the existing policy like accumulated bonuses, pre-exiting conditions and waiting period are carried forward to the new policy. However, policyholders are required to port their policy at least 45 days prior to the expiry date.

Download the full text of IRDA’s Health Insurance Regulations 2016.

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18 Comments

  1. Dear Sir
    I have posted a query here
    Where it has vanished?

    Reply
    • Desai-Not sure when you posted. If you still facing any doubts with respect to above post, you can now also post the query.

      Reply
    • Thanks Sir for your reply
      The query is
      –My relative was hospitalised and remained in the hospital for a period which happened to be overlapping over two policy periods .As per 2013 guidelines I should get the benefit twopolicies . But now the insurer wants to settle on the basis of date of admission and not willing to take cognisance of subsequent period/year policy
      How IRDAI shall resolve this if I approached them
      Does 2016 regulation totally override provisions of 2013?
      m s p desai

      Reply
  2. Hi ,Can you please specify which plans are available un context of loan linked health insurance

    Reply
  3. Is it applicable on existing policies?

    Reply
      • Sorry.. it was on discounts for those who renew regularly..
        Will the existing policy holders get some discoint on renewing regularly?

        Reply
  4. I have an Insurance via my Company, do I also have portability option in case I leave my job?

    Reply
      • Hi Basu,
        Thanks for the insights on the new regulations.
        I differ with you on your response to Tejas’s question.
        As I understand, portability is permitted from group to individual cover. Just that you must port to the same insurer which had issued the group cover.
        Once you are in the individual plan from the same insurer, you can port to any other insurer from the second year.

        Reply
        • Deepesh-Check the definition of PORTABILITY in the Health Insurance Regulation 2016, it clearly states-“Portability” means the right accorded to an individual health insurance policyholder (including family cover), to transfer the credit gained for pre-existing conditions and time bound exclusions, from one insurer to another or from one plan to another plan of the same insurer.”. Only individual health insurance products and family floater products allowed but not group mediclaim policies.
          Hope now you got a clarity.

          Reply
          • Hi Basu,
            Thanks for the swift response.
            Could you please refer to pg 42, clause 16(b)?
            As I understand, group plans are referred in that clause.
            An individual under a group plan can migrate to a plan with the same insurer.

            Reply
            • Deepsh-I know that clause. But the definition of PORTABILITY differentiate with that. In the clause you mentioned, it is clearly states that WITHIN same insurer. But definition of portability is different.

              Reply
  5. Hi Basu Sir,
    I am Gauttam Panchal
    I have Sent my pf withdrawal docs to KR PURAM BANGLURU REG. OFFICE BUT BECAUSE OF MY TOTAL PF AMT IS MORE THEN RS. 50000 THEY HAVE REJECTED THE APPLICATION BECAUSE OF NOT ATTACHED PAN CARD COPY & FORM 15G / 15H BUT ON UAN PORTAL MY PAN NO , BANK A/C NO & ADHAR IS APPROVED BY MY EMPLOYER SO KINDLY ADVICE ME WHAT TO DO

    THANKING YOU,
    GAUTTAM

    Reply

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