Introduction: COVID-19 and impact on financial health
In the past few months of 2020, the number of Coronavirus (also known as COVID-19) cases have risen across the world. No one had anticipated that we would have to confine ourselves to our homes for a prolonged period of time. As I write this post in October 2020, India is among the top three countries that are worst hit by the Coronavirus pandemic. We are grappling with the problem of shortage of treatment facilities and beds, while the cases are on the rise. This in turn has contributed to skyrocketing treatment costs for COVID-19.
Financial cost of treatment for COVID-19
While we brace for the impact of this pandemic on our physical and emotional health, we also worry about financial impact of this crisis. An important question that often gets overlooked is,
What are the implications of this disease on financial well-being? or, in other words, Does Health Insurance provide adequate protection against Coronavirus ?
Cost of hospitalisation for COVID-19 treatment in India
Sometimes, persons who probably had adequate insurance under ‘normal’ times, are under-insured for the current pandemic.
Few days back, there was an article in the newspaper in which I read about a 53-year-old man in Hyderabad. This person was admitted to a private hospital in Hyderabad for COVID-19 treatment, where he recovered. His medical expenses totalled nearly ₹20 lakh for 23 days of treatment. He did have health insurance, but the insurance company approved only around ₹7.5 lakhs. In the end, he had to pay the remaining amount of ₹12.5 lakhs from his own pocket, rather, from his life’s savings.
There have been many such cases in the past in different parts of the country. In spite of having health insurance, the COVID-19 treatment costs were so high that patients had to shell out money from their pockets. If a person does not have adequate savings, they may have to sell their assets like gold or property, or borrow money at huge interest rate to pay the hospital bills.
Treatment in Government Hospitals
The government hospitals provide treatment to COVID-19 patients at no cost, or for a nominal amount. But, the number of cases are rising every day. Couple this situation with the limited availability of beds along with shortage of specialized staff. As a result, patients then have to depend on private facilities for treatment. Even though the Ministry of Health and Family Welfare has capped the cost of treatment for COVID-19 in private hospitals, the prices are still very high for most persons.. This is where Health Insurance could come to aid.
One common theme is evident in hospitals, whether public or private : staff at hospitals are working beyond their capacity to handle the influx of patients.
Cost of Treatment in Private Hospitals
The average cost of bed/room rent for COVID-19 treatment in private hospitals are as follows:
| Cost head | Cost per day (Typical) | Cost in Private Hospital (for COVID-19) |
|---|---|---|
| Isolation bed | ₹8,000 – ₹10,000 | ₹24,000 – ₹25,000 |
| ICU without a ventilator | ₹13,000 – ₹15,000 | ₹34,000 – ₹43,000 |
| ICU with a ventilator | ₹15,000 -₹18,000 | ₹44,000 – ₹54,000 |
The costs mentioned above exclude the charges for personal protective equipment (PPE) kits, which further increase the medical bill by a large amount.
In such critical times, it is of vital importance for every one to rely on health insurance cover to reduce the financial burden. In fact, insurance companies have seen a rise of 25% in their sales for health insurance policies this year. It has been more of a “pull” than a “push” for new policy signups.
Coverages under health insurance in India for COVID-19 or Coronavirus
Towards the beginning of the year, there was much ambiguity in terms of coverage for COVID-19 under medical insurance policy. The Insurance Regulatory Development Authority of India (IRDAI) has published a notification to ameliorate the situation. This notification is known as Circular ref. IRDA/HLT/REG/CIR/044/03/2020, dated 04th March 2020. As per this circular,
All existing Mediclaim policies should cover the treatment of CORONAVIRUS/COVID-19.
Therefore, health insurance policy should cover the cost of hospitalisation related to COVID-19 treatment in hospitals. This stands true whether a person has opted for an individual health insurance policy, or a corporate health insurance policy (taken by the employer covering the employees and their dependents). Also, the policy will pay the expenses related to pre and post -hospitalisation (i.e. 30 days pre, and 60 days post hospitalisation expenses)
Medical Insurance policy in India is designed to cover costs related to hospitalisation due to any ailment.
Note : Almost all the existing health policies cover almost all epidemics, which also includes coronavirus.
What costs are covered under the Health Insurance policies?
| Room and boarding charges* | Doctors fees, Nursing expenses |
| Intensive Care Unit, Surgical fees, operating theater, anesthesia and oxygen | Hospital miscellaneous services (such as laboratory, x-ray, diagnostic tests) |
| Physical Therapy | Drugs and medicines consumed on the premises |
| Note regarding coverages | 1. In the event of the insured getting admitted in a category higher than capped mentioned above per day, then the insured will bear the difference of all the medical expenses as in the final hospital bill in the same proportion. 2. Hospitalization means it is mandatory to get admitted for minimum of 24 hours to claim under the policy. |
Exclusions under insurance policies
Almost every health insurance policy excludes the cost of consumables under normal circumstances.
Non-medical charges which are generally excluded includes cost of disposals like tissue paper, bandages,foot covers, slippers, disposable gloves, sheets, syringes, gowns, masks etc. Toiletries and cosmetics are also considered as consumables. None of this is covered under a health insurance policy, even though they are included in the hospital bill.
In case of COVID-19 treatment, PPE kits which are a major cost, are considered by insurers as disposable items. As a result reimbursement for PPE kits may not be covered under some policies.
Typical components of a PPE kit
| goggles with transparent glasses | N-95 masks |
| shoe covers | Face shield |
| a pair of nitrile gloves | a single-use cover all |
Cost of consumables can add up quickly
Since each of these items are separately considered consumables, there is a significant increase in the number of consumables used in the treatment of Covid-19 infection. As a result, the (non-payable) cost of such consumables forms a large portion of the total cost of treatment of COVID-19 infection in a hospital.
However, in Covid-19 treatment, the cost of consumables significantly increases as it is linked to the severity of the infection and the duration of hospitalization stay. Moreover, the highly infectious nature of the novel coronavirus and mandated quarantine period of 14 days has significantly raised the cost of consumables. For instance, in Covid-19 cases, PPE kits, goggles, footwear, sanitizers and disinfectants are additionally required consumables which has lead to increase in the overall treatment costs by 25%.
A COVID-19 patient in Mumbai was admitted in hospital for 19 days and when he received the bill, it was found that 50% of the cost was pertaining to the disposal items like PPE kits, masks and face shields. His insurance company had refused to pay for disposals.
Note : The insurance regulator, IRDA, has given clear directions that the cost of consumables like PPE Kits has to be included in the COVID-19 treatment cost and few insurance companies are paying it on case to case basis.
Are home quarantine costs covered under health insurance policy?
We have see rise of asymptomatic cases in India– i.e. where there is mild infection and does not require hospitalization. It requires only home quarantine treatment. Thus quarantine that would have not required hospitalization for treatment will not be covered under standard health insurance policy. However, if there is a quarantine in a government-approved facility or hospital, where medical treatment is carried out that otherwise required hospitalization, then the same will be covered by a standard health insurance policy, provided medical expenses or fees are charged by the hospital.
Many insurers are considering such treatment on case by case basis, considering the non-availability of beds in that area followed by proper verification of a Covid-19 positive report from government-authorized and reputed diagnostic labs.
Is testing for Coronavirus covered by the insurance policy?
No. Diagnostic expenses are not covered by regular health insurance policies, unless there is a linked hospitalization for treatment. Only if the patient is symptomatic and requires hospitalization, or tests positive and is later hospitalized, will the diagnostic expenses be covered by the policy, otherwise diagnostic costs are excluded.
In case your health insurance policy covers OPD (i.e. Out Patient Treatment), then the diagnostic expenses can be covered provided if you have the necessary prescription for the same.
Please check with your insurer regarding the policy terms and conditions before claiming under the policy.
Hope you found this article useful in terms of providing insights on health insurance policy coverage pertaining to COVID-19. If you have any other questions pertaining to the same, you can write to me at [email protected]
In the next part of the series, we will take a look at about health Insurance Plans in India for COVID-19.
Summing it all up
Many newspapers, magazines and blogs have written about health insurance in India for COVID-19 or Coronavirus. In particular, I found the following articles quite relevant :
a. Will your standard health policy cover Covid-19 ? (livemint.com)
b. Is Coronavirus Covered by Your Existing Health Insurance Policy (maxbupa.com)
c. Health Insurance for COVID-19: All your important queries answered. (financialexpress.com)
Many other articles are either too superficial, or written as sales pitches. A few were drafted without keeping the reader in mind. Therefore, I thought of writing this series, where your questions or concerns could find a voice. And possibly a solution.
This is the first in a four part series on COVID-19 and insurance in India. In the next part of the series, we will talk about Insurance plans for COVID-19.
Feature image: Pxhere
