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COVID-19 Treatment: How Much Health Cover Would You Need?

Sarita Povaiah


Ever since the COVID-19 outbreak in India, insurance companies here are seeing a significant uptick in the purchase of Health Insurance policies. This is especially notable considering that Health Insurance coverage is otherwise abysmally low in India (only around 45% of people are covered). While affordability is a crucial factor, even the relatively well-to-do sections of society with funds to spare weren’t exactly champing at the bit to purchase Health Insurance under normal circumstances.

Some insurance companies have rolled out policies specifically covering the diagnosis and treatment costs of COVID-19, while the Insurance Regulatory and Development Authority of India (IRDAI) mandated all insurers to offer a standard basic health policy called Arogya Sanjeevani policy starting 1st April, 2020, offering a maximum sum insured of Rs. 5 lakhs. Further, the insurance regulator has said that all Health Insurance policies will have to cover the cost of COVID-19 treatment.

Indian Health Insurance companies have started receiving claims ever since the Government of India allowed private-sector hospitals to treat COVID-19 patients. While a cap of Rs. 4,500 was recommended by the government when allowing private labs to test patients for the virus, no such limit exists currently for treatment in private hospitals.

The cost of treatment for COVID-19 would vary considerably depending on the severity of the infection. Although only a small percentage of affected individuals would require critical care, antivirals, ventilators, personal protective equipment and kits, as well as separate isolation wards bump up the overall cost of COVID-19 treatment.

Some insurance experts caution that some hospitals have already upwardly revised their cost of treatment for COVID-19 patients as every incoming patient will need to be tested and require hospital staff to take protective measures, which could nudge the cost northward for all lines of treatment.

Data compiled by the General Insurance Council shows that 34 claims were made as of 30th March, 2020, with a claim size of around Rs. 58.05 lakhs. The industry has settled around a third of those claims to the tune of Rs. 14.2 lakhs, which makes the average claim around Rs. 1.42 lakhs. There is a large variation in claims – from as little as Rs. 50,000 to as much as Rs. 4.5 lakhs.

The cost of treatment would be lower for patients admitted to a secondary care hospital rather than a plush private hospital in the metro cities. Experts advise that Rs. 5 lakh cover for someone living in a metro is quite low, especially for a family floater plan. Further, Rs. 5 lakhs would not be sufficient 10 or 15 years down the line if you factor in medical inflation.

While the pandemic is a great reason to buy Health Insurance if you’ve been pussyfooting around it thus far, it would be good to consider a health plan that would cover you and your loved ones not just during this COVID-19 outbreak but also for medical emergencies in the future.

Look for a policy that specifically mentions the type of room (private) rather than a policy that comes with a financial cap on the room rent. The Arogya Sanjeevani policy, for instance, caps room rent at 2% or a maximum of Rs. 5,000 per day while ICU costs are capped at Rs. 10,000 (5%) daily. Along with the room-rent cap, mandatory 5% co-payment on the total claim amount in the Arogya Sanjeevani policy could mean you having to pay more out of pocket. Do note that health policies that have no restriction on the type of room also have relatively higher premiums.

If you cannot afford a more expensive Health Insurance policy, it’s better to arm yourself with the Arogya Sanjeevani policy. Some health cover is better than none at all given India’s rather deplorable public-health system and burgeoning medical costs.

However, if you can afford it, don’t compromise on your Health Insurance needs by settling for a lower sum insured. Instead, consider a more expensive health policy that will help you not only during this pandemic, but also comfortably cushion you against medical emergencies over the next couple of decades at least.

Finally, remember to automate your premium payments so that your policy never lapses and you’re covered at all times. A Credit Card can help.

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