Why the aged are denied mediclaim . . .

. . . and what can be done to fix this serious problem.

When government bodies set up committees, then there is a good chance that there is some sort of public outcry leading to it. So, when last month, the Insurance Development Authority of India decided to set up a committee on health insurance for senior citizens, it was clear that it was to address some serious loopholes in the health insurance industry in India.

The committee document says that the IRDA has received several representations relating to entry barriers for the aged, refusal of renewals, imposition of harsh terms without justification, sharp increase in premium rates, delays in claims service, etc.

Accordingly, some of the main issues that this committee is going to look into include the following:

• The problems in extending health insurance to senior citizens without age limit and at affordable cost and suggest possible solutions.
• The pros and cons of separate health insurance schemes for senior citizens considering the profitability and claim ratios of different segments of health insurance.
• Issues connected with 'portability' of health insurance by senior citizens from one scheme to another and from one insurer to another and suggest the manner and conditions in which such portability is achieved.
• Feasibility of offering a menu of options to the senior citizens in terms of the type of diseases (including 'pre-existing diseases') to be covered, the proportion of expenses to be paid, and the quantum of 'deductible'.
• Streamlining of procedures such that medical treatment is on 'cashless' basis and is rendered promptly. Incorporating alternative systems of medicine into the health insurance system.
• Feasibility of integrating travel insurance such as overseas mediclaim policy into the health insurance schemes of senior citizens.

Serious, it is. Explains Rahul Aggarwal, CEO, Optima Risk Management Services, "Insurance is about the probability of 'if it will happen' and 'when it will happen.' Medical expenses for senior citizens are a foregone conclusion. Since claims are bound to happen with people of higher age, insurance companies being commercial organisations, do not want senior citizens as customers."

Says D Sundarajan, investment consultant, "In the last one year or so, the general insurance companies have increased the number of entry barriers for the elderly." According to him, till the age of 55 one could provide self-certification and get insured in the past. "But that has been reduced to 45 years, which is a problem for many people today," he adds.

Agrees Sajag Sanghavi, financial planner, "Nowadays one has to go through a number of tests to get medical insurance and still could be denied if any one of the tests is not up to the mark."

Also, the premium goes up exponentially, if you enter at a later age. For instance, basic medical policies would cost you up to Rs 3,000 per annum (insurance cover of Rs 500,000), if you are till the age of 35. Even between 35-45 years, the cost is marginally higher at Rs 3,500 per annum. However, it shoots to almost Rs 5,000, once you hit 45 (besides the already mentioned tests). And this number keeps on rising exponentially as you grow older.

The biggest hit comes in the form of reimbursement. Many insurance companies have introduced this clause that for the elderly, only 80 per cent of the hospitalisation and treatment cost would be paid back.

"All these factors have made health insurance extremely unattractive for the elderly," laments Sundarajan.  However, as Aggarwal puts it, "It is also a case of selection against the insurers." That is, senior citizens do not get insured when they are young as they have adequate group insurance cover from their respective companies.

"And now in their older age they foresee hospitalisation happening and hence want to offload their expenses on the insurers," he adds. But he is quick to add that insurers should not impose the same conditions and pricing on the customers who have been with them for some time.

Here are few suggestions from experts on how this problem can be fixed.

Government's role

• The government should intervene and provide healthcare facilities at subsidised rates for old people.
• The IRDA should come out with clear-cut guidelines stating that at least 10 per cent of profits made by the insurance players should be utilised towards financing the costs of losses made on the age group of above 45 years.
• Standardise entry age.
• Standardise medical tests required by all the companies.
• If claim rejections are found to be unfair, the claimant or his family members should have the right to go for appeal with a high level officer appointed by IRDA.

Insurance company's role

• Insurers need to tie up with hospitals to standardise rates and negotiate package rates for standard procedures like cataract, hernia, hysterectomy, etc.
• Insurers can then introduce insurance policies at affordable prices wherein the senior citizens can get treated at such enrolled hospitals.

Individual's role

• Even if you are a part of a group policy, it is important that an individual family policy be taken to avoid inconvenience after retirement. Such a cover should be initiated before a person turns 45.
• Opt for a family floater, which covers husband, wife and two children under the age of 21 years. Suppose, you take a family floater with, say, a sum assured of Rs 400,000, anyone from the family can claim that amount. It is important to have such a policy, as there is a rare chance that all the family members will require hospitalisation in the same year.
• Add critical policies introduced by life insurance companies, along with your medical insurance policies to beef up your insurance requirements.