New Definition of Pre-existing Diseases as Per IRDAI

Health Insurance is one of the most significant investments. It helps in availing proper treatment at the right time without being at risk of bearing the cost of medical treatment. With the right health insurance policy, you can face enormous medical expenses. However, all health insurance policies come with certain terms and conditions. A pre-existing medical condition is one such criterion where the health insurance provider sets specific terms. We all know that health insurance providers provide health insurance policies to individuals ailing from certain pre-existing diseases.

However, the waiting period is one crucial aspect which causes a hitch, it does not let the assured to avail the benefits of his/her health insurance policy until the waiting period is over.

So, to overcome this hitch, the Insurance Regulatory and Development Authority of India (IRDA), is all set to change the tone. The insurance regulator has recently amended the definition of ‘pre-existing diseases. This move by IRDA to change the definition is expected to reduce the rate of health insurance claim rejections.

What is Pre-Existing Disease?

The original definition describes pre-existing disease (PED) as the terminology used to refer a particular medical condition, injury or ailment, that existed when the policyholder purchased the health insurance policy. An insurance provider usually excludes PED from the scope of insurance cover until the completion of the initial waiting period. This waiting period ranges from 2 years to 4 years.

The IRDA has brought in 2 amendments in the original definition with an intent to widen the scope of insurance coverage for individuals ailing with PED and to reduce the rate of health insurance claim rejection. The two amendments done by IRDA are as under:

1. On September 27th, 2019 IRDA issued amendment regulation stating that insurance companies must include certain illnesses and diseases if they were diagnosed in the policyholder within 3 months of purchase of the policy.
2. On 10th February 2020, IRDA further amended the definition and now as per the recent circular, IRDA has deleted the ‘Additional/Modified Clause’. Thus, as per the new amendment, no disease or illness shall be considered as a pre-existing condition, if it is diagnosed within 3 months from the date of purchase of the policy or at any time later.

The new definition of pre-existing disease as per IRDAI circular consists of 3 important clauses as under:

1. IRDAI defines a pre-existing disease as any condition, ailment, injury or disease which has been diagnosed by a doctor within 48 months i.e. 2 years prior to the date of issuance of health insurance policy by the insurer,
2. As per IRDAI, pre-existing disease means any condition, ailment, injury or disease for which medical treatment was advised by or received from, a doctor within 48 months i.e. 2 years prior to the date of issuance of health insurance policy by the insurer,
3. IRDA states, the insurance provider may define the norms of PED applicability at the time of reinstatement.

The new definition of pre-existing disease has deleted the following clause related to PED in the old definition:

The pre-existing disease is any condition, ailment, injury, or disease for which any symptom and signs if presented are leading to an illness or disease within less than 3 months of issuance of the policy. Also, one of the most important aspects of pre-existing disease is that it does not apply to overseas travel insurance.

How does the new amendment in the pre-existing disease help policyholders?

With the recent change in the definition of pre-existing disease, IRDA has silently issued a tab on the health insurance companies. Owing to the earlier definition of PEDs the health insurance providers were rejecting insurance claim and even the waiting period was creating a hindrance for insurance cover. So even after paying a hefty premium amount, the claim rejection rate was high. However, the recent move could undoubtedly reduce the rate of health insurance claim rejection.

Additionally, the IRDAI has stated in its new directive, has advised all insurance providers, third-party administrators (TPAs), insurance agents, and brokers, wherever applicable, to make necessary changes and ensure complete compliance of new directive with immediate effect.

Top 3 things to remember

The following are certain things that every prospective policyholder must keep in mind:

1. To truthfully disclose medical history to the insurance provider
2. To truthfully disclose details of any pre-existing disease, if any
3. To understand that non-disclosure of the pre-existing disease might result in claim rejection or refusal from insurance provider to renew the policy

Final Words

Health insurance is an important investment. Ensure that you know and understand the terms and conditions as well as inclusions and exclusions of the policy. Do not forget to be transparent to the insurance provider.