Good news! Health insurance to cover OPD charges

There is finally some good news for health insurance buyers. Insurers are now beginning to cover outpatient department (OPD) expenses.

At least two players -- Apollo DKV and ICICI Lombard --have come out with such a policy that was so far denied by insurance companies on fears of misuse by policyholders.

Apollo DKV's Maxima and ICICI Lombard's Health Advantage Plus come at a fixed annual premium of Rs 13,000 and Rs 15,000, respectively. Unlike other medical insurance policies -- which require a minimum 24-hour hospitalisation -- the sum assured is linked to the age of the policyholder.

To check against possible misuse, companies have, for the moment, decided to cap the OPD expenses. So, if an insured person is in the 19-35 year age bracket, he/she can opt for a health cover of either Rs 200,000 lakh or Rs 300,000 on paying an annual premium of Rs 15,000.

In case of  the Rs 300,000 cover, OPD expenses will be capped at Rs 8,800. For Rs 200,000, the OPD coverage is Rs 9,000.

However, one can claim OPD charges only once during the during policy term. In addition, both the policies do not allow, an insured person to claim OPD cost within 90 days of commencement of the policy.

To claim OPD expenses, a policyholder will have to submit the doctor's prescription and medical expenses bill.

"The whole idea of covering OPD expenses is to ensure early detection of diseases, and this will lead to better healthcare," ICICI Lombard's head of health insurance Sanjay Dutta said.

"This product can be a perfect match for urban employed who do not get the benefit of employer health programmes," added Apollo DKV managing director and chief executive officer Antony Jacob.

The move is part of a strategy to step-up focus on the retail segment as general insurers are saddled with losses on corporate health insurance, something that they were doling out for free to get the fire and engineering business over the last few years.

In recent months, insurance companies are increasingly focusing on reducing claims and have gone to the extent of terminating a corporate health insurance policy midway through the term. In addition, they have got the insured employees to shell out a part of the claim.

For general insurers, retail health contributes 40 per cent to the total health premium income, which was estimated at around Rs 2,500 crore (Rs 25 billion) for the year-ended March 2009.

Lower claim ratio in the retail health business has also tempted insurers to focus on this segment. While the claim ratio in retail health is 100 per cent, the total health claim ratio stands at 130 per cent. So, insurers paid claims of around Rs 8,500 crore (Rs 85 billion) on health insurance premium income of Rs 6,500 crore  (Rs 65 billion) during 2008-09.

Lower claims in the retail segment have helped the general insurance industry push the standard cover and seen the premium income from the segment grow at around 35 per cent over the last few years.

Under the existing tax laws, an individual gets tax benefits on annual health insurance premium of up to Rs 15,000 a year.

For purchasing a policy for elderly parents, an additional annual benefit of Rs 20,000 is available. Tax sops have also spurred individuals to purchase health covers.