New Rules for Health Insurance: Waiting Period, Reduced Moratorium, and Current IRDAI Norms

The Insurance Regulatory and Development Authority of India (IRDAI) has made favorable changes to product rules, which gives health insurance policyholders reason to celebrate. All new policies will be subject to these changes, which will also be included into current ones when they are renewed. Updates to health insurance rules were made by IRDAI in April 2024, with a focus on shorter waiting times and better conditions for policyholders to resolve claims.

Both the waiting time for pre-existing diseases and the waiting period for ailments have been lowered from eight to five years. Furthermore, there is no longer a maximum age restriction to purchasing health coverage.

Claim moratorium period

The embargo lasted for eight years, ending on March 31, 2024. They will now be entitled to it after six years. Given that eight years is a long time and that five years is sufficient for pre-existing diseases to manifest, this move is seen as a major relief.

The amount of time after which an insurer cannot reject your claim for any reason other than fraud is known as the moratorium period. The duration has been shortened from eight years to five years. The insurer cannot dispute your claim on the basis of non-disclosure or misrepresentation after five years of continuous coverage (including portability and migration between plans).

According to IRDAI, an insurance company cannot deny a customer’s claim on the basis of misrepresentation or non-disclosure after 60 consecutive months of coverage. Only in cases where fraud is shown may the insurance company deny the claim.

After five years, the company cannot deny a claim.

Let’s use an example to better grasp this. The insurance company cannot deny a policyholder’s claim because they have concealed health information if the policyholder has paid the premiums for their health insurance for five years in a row.

Insurance companies often deny claims because the policyholder did not disclose pre-existing diseases such as asthma, diabetes, or hypertension, even if the hospitalization was necessary for another reason. In addition to rejecting the claim, insurance firms terminate the coverage on the grounds of non-disclosure.

Reduced waiting time for conditions that already existed

Pre-existing condition exclusions from coverage were formerly allowed by insurers for a maximum of four years. The waiting time is now limited to a maximum of three years. This only affects new policyholders; however, current policyholders will benefit from it as well, as their waiting time will be shortened upon renewal to conform to the new 3-year maximum.

This implies that, instead of the prior threshold of four payments, your insurer will now cover hospitalization claims connected to a disease like diabetes if you have paid at least three premiums.

Similarly, after 60 months of continuous coverage, insurers will no longer be entitled to reject claims on the grounds that the insured failed to disclose pre-existing conditions, unless there is clear evidence of fraud. To put it another way, unless the insurer can prove fraud, your claim cannot be denied if you have paid five yearly premiums and have concealed your health condition or given false information.

There is almost always a waiting time for pre-existing conditions in health insurance plans. It indicates that the coverage for that specific illness does not begin until the waiting time has passed. Up until now, regulations had required a four-year waiting period. It is now only set for three years.

It should be mentioned that a lot of insurers provide policies with shorter waiting periods than four or three years. Customers will benefit from IRDAI’s action, nevertheless, since the new regulation now sets a lower ceiling.

Maximum age is currently not an issue.

Up until recently, insurance companies were required to provide a person up to the age of 65 with regular health care. The maximum age requirement to purchase a health coverage has been eliminated by regulatory changes.