What to do if you are denied mediclaim due to diabetes

Thirty-five million people suffer from diabetes in India, which is 15% of the global diabetes burden. Projections show that this will increase to 70 million by 2025. Diabetes disproportionately affects people of working ages and accounts for about Rs10,000 crore in annual healthcare costs in India alone — 

-As India has a population of 1.1 billion, 40% of whom are under-18, investment in the health of India’s future workforce is crucial.

-Poorly-controlled diabetes leads to complications, amplifying disability and mortality rates and leading to high direct, indirect, and intangible costs.

-If immediate action is not taken, diabetes threatens India’s emerging economy. Projections show that in the next decade, India will lose $237 billion in national income due to diabetes, stroke, and heart disease. Yet policymakers do not yet perceive the epidemic as a priority. No wonder India is called the ‘diabetes capital of the world’.

If you are wondering what this passage from a research paper on diabetes is doing in a personal finance column, let me explain.

As highlighted above, one of the several costs incurred due to diabetes are hospitalisation costs for diseases arising from diabetes such as heart disease, stroke and organ failure. But if you are already suffering from diabetes and are looking to buy a new mediclaim policy (or increase the coverage on your existing one) to meet such costs, you will find the going tough.

In fact there has been a bunch of cases relating to mediclaim policies leading all the way to the Supreme Court where insurance companies appealed against high court orders disallowing them to deny mediclaim policies/non-renewal of mediclaim policies.

The Supreme Court too ruled that public-sector insurance companies cannot refuse to provide mediclaim policies to those suffering from pre-existing diseases and said such an action was arbitrary, illegal and unconstitutional.

A bench of Justices S B Sinha and V S Sirpurkar also asked the Insurance Regulatory Development Authority (Irda) to frame suitable guidelines to ensure that both public sector and private insurers do not deny medical insurance to the public.

The apex court said that public sector insurance companies, in particular, cannot indulge in such practices as they are ‘State’ within the meaning of Article 12 of the Constitution and are expected to be fair and reasonable in their dealings with the public.

The Irda has already issued a guideline (in the context of senior citizens but it will logically apply to all) that any proposal for health insurance, which is denied on any grounds, should be made in writing with reasons furnished and recorded.

The regulator has further provided that such reasons should stand the scrutiny of reasonableness and fairness.

So from a legal and regulatory perspective, the situation appears to be addressed to a large extent. But the ground situation is worrisome.

From over 20 general insurance companies with more than 40 medical insurance plans, there is only one plan that is specially designed for diabetics (that too a limited cover policy only for diabetes type-II) — diabetes Safe offered by Star Health.

The policy provides a maximum cover of Rs5 lakh and covers one for diabetic retinopathy requiring laser treatment for eyes and diabetic nephropathy to treat chronic renal failure of kidney. The policy also covers diabetic foot ulcer requiring micro-vascular surgical correction. These all are basically repercussions of diabetes.

To be fair, two public sector companies — New India Assurance and United India Insurance provide coverage for hospitalisation expenses arising from diseases caused by diabetes (and/or hypertension) but with certain limitations and on payment of extra premium.

Most other insurance companies will provide coverage for such diseases only after a waiting period of 3-5 years.

Even that would not be a problem if a patient suffering from diabetes was actually able to get the medical policy in the first place.

In actual practice, most companies (including those having special dispensation for diabetics) will deny a policy if a diabetic approaches them for the first time.

Curiously, the other not so favoured class — senior citizens, have it slightly better when it comes to those of them who are diabetics. There are two specific policies (from National Insurance and Star Health) meant for them where the policy is likely to be issued even if they are diabetics. The reason is probably the very high co-payments (see box for what is co-payments) that ensure that the insured persons tries to keep the hospitalization expenses under control as he will also be bearing a significant part of those expenses.(Co-payment is a payment defined in the policy, which is supposed to be paid by the policyholder each time a claim occurs).

If a person is above the age of 60, then Star Health and National Insurance offer the following policies.

Clearly there is a big need to ensure that existing laws and regulations are implemented. In fact this will benefit the health insurance industry as well. A lot of consumers do not declare their diabetic status at the time of taking the first policy and where the claims arise only after a gap of many years it becomes difficult for the insurance company to prove that the disease was pre-existing at the time of inception of the policy and the consumer had concealed facts.

A specific product with built-in limitations such as co-payments (such as the one for senior citizens) but where availability is assured would avoid hassles for both the insurance company and consumers.

So what should you do if you have diabetes and do not currently have medical policy coverage and are not being given a policy from any company? If you are otherwise in good health and have no other complications other than diabetes you should get the rejection of your policy proposal in writing from the insurance company.

This will help you file a complaint with the grievance cell of the Irda (complaints@irda.gov.in) or call the central grievance cell at 155255 . You can also complain to the insurance ombudsman in your area (details are available on http://www.irdaindia.org/ins_ombusman.htm). Also, diabetics should prepare a nest egg to deal with medical emergencies.

And if you have a family history of diabetes please take a cover for yourself immediately  before you get the disease and also make sure that your children have their individual policies with sufficient amounts so that they too can benefit from a long history of no claims.

References
1. R. Shobhana et al., “Expenditure on Healthcare Incurred by Diabetic Subjects in a Developing Country—
A Study from Southern India,” Diabetes Research and Clinical Practice 48, no. 1 (2000): 37-42.
2. S. Leeder, Race against Time: The Challenge of Cardiovascular Disease in Developing Economies (New York: Columbia
University, Center for Global Health and Economic Development, 2004).
3. D. Yach, D. Stuckler, and K. Brownell, “Epidemiologic And Economic Consequences of the Global Epidemics
of Obesity and Diabetes,” NatureMedicine 12, no. 3 (2006): 62-66.
4. World Health Organization, Preventing ChronicDiseases: A Vital Investment (Geneva:WHO, 2005).
The writer is CEO, Apna Paisa, a price & features comparison engine for loans, insurance and investments. He can be reached at hrdna@apnapaisa.com.