How does the insurer use Pre-existing Disease And Medical History?

As experts in the insurance industry with some honest perspective into the best health insurance plans and insurers, we often face queries like

Well, it is for this specific situation that we have always recommended that you opt for a health insurance policy during your younger and healthier days.

However, in case you have missed the window and are now looking for a policy after being diagnosed with a serious ailment, there will be some complications and compromises that you will be facing. Subsequently, you might be stuck between paying steeped premiums for your preferred plan or compromising on your health insurance policy choice.

But, on the flip side, what exactly happens when you submit your medical history and pre-existing disease list to your insurer? How do they calculate your premiums?

Here’s a quick read on everything you need to know about it.

Best Health Insurance Plans for Policyholders with Pre-existing Disease and Medical History?

What is  Pre-existing Disease in Health Insurance?

For health insurance providers, a pre-existing disease is specifically those ailments that you have tested positive for and/or have been treated for within the last 48 months of applying for the policy.

What is Medical History in Health Insurance?

As per health insurers, any ailments that have affected you in the past (and you have been diagnosed with/taken medications for/undergone procedures, surgeries, hospitalisations for) are your medical history. This includes your pre-existing conditions and any other ailments dated before that.

How Does Pre-existing Diseases and Medical History Affect Health Insurance?

Say, you call up one of our expert advisors and tell them that you are looking for a health insurance plan. Among their queries regarding the kind of coverage you seek, the number of members you wish to cover, etc. they will also ask you -

“Sir/Ma’am, do you take any medications?” and “Were you ever hospitalised for any treatments/procedures?”

This question is specifically targeted to gauge the kind of ailments that you currently have or have had in the past. This transparency goes a long way. Here’s how such ailments can affect your health insurance policies -

1. A waiting period on the pre-existing conditions

For any pre-existing condition that you have, your health insurance policy will demand that you wait out a certain time (usually 2-4 years) for the health insurance coverage (for the pre-existing ailment) to kick in.

During this phase of the waiting period, if you are hospitalised due to any pre-existing condition or an auxiliary ailment, you will be paying the charges out of your pocket.

These waiting periods vary from one insurer to the other, and from one health insurance plan to the other.

2. Options to choose from niche health insurance plans

Not all health insurance policies are available for those with pre-existing conditions. On the other hand, some health insurance plans seem to be crafted exclusively for those with an extensive medical history of conditions like high blood pressure, asthma, etc.

Complete disclosure of your pre-existing medical conditions and health history will help the insurer (or us) to offer you suitable plans in which the premiums are comparatively lower and the waiting periods aren't too extensive.

A case in point is the HDFC Energy Silver plan which is perfect for those individuals with Diabetes and high BP since the plan covers these conditions from Day 1 (no waiting periods).

3. A prominent spike in premiums

Usually, if you have a high BMI (which is considered a premonition to various health complications), or a pre-existing medical condition and yet your health insurer extends you a policy, it’s with a spiked premium. They add a certain loading charge on your base premium that would help them minimize their risks of financial vulnerability over frequent and substantial payouts.

4. Permanent exclusions on pre-existing conditions (in some cases)

Some health insurance providers put in a permanent exclusion on your pre-existing medical conditions and any other auxiliary ailments arising out of the condition. This means, your provider will cover all listed ailments, apart from the ones listed as your pre-existing conditions.

Let’s take a plan in discussion to explain this better: Care Freedom Plan.

This plan is one of the few policies in the market that extends its benefits to Cancer patients too. However, the patient has to have been in remission for 2 or more years and cancer is permanently excluded from its coverage profile. So, a policyholder (who has been in remission for 2 or more years) will be covered for everything apart from cancer and its auxiliary diseases.

5. Mandatory copayments

Since a potential policyholder with pre-existing conditions presents certain risks of frequent hospitalisations that insurers will be liable to cover, providers often demand certain mandatory copayments. This ensures that the payout risk is distributed between the insurer and the insured.

However, copayments often tend to weigh on a policyholder’s wallet. So we recommend not to go ahead with plans that carry copayments as a mandatory feature unless you have no other options.

6. Disease-wise sub-limits

In the case of certain pre-existing medical conditions, even though the health insurer extends a policy, they put a cap on the maximum coverage amount for its treatment.

So, say Amitesh has a heart condition and is having a difficult time finding a health insurance plan. Ultimately, he lands upon a policy that seems decent. But now, a few years down the line, when he undergoes heart surgery that incurs a charge of ₹4 lakhs, his insurer only pays ₹2 lakhs since there was a cap on his pre-existing cardiac issue and Amitesh ends up paying for the rest ₹2 lakhs.

Overall, it’s quite evident that when you apply for a health insurance plan, the insurer certainly scrutinises your payouts with a laser focus. The primary points of their concern are the probability and frequency of hospitalization arising out of such ailments, which would inadvertently increase the chance of higher payouts.

However, since a majority of the population is now affected by lifestyle ailments like blood pressure, thyroid, diabetes, etc. the health insurance providers can’t exactly bypass this potential client pool. Thus, you might as well expect certain compromises in terms of changed policies, disease-wise sub-limits, mandatory copayments, and hiked premiums. Thus, you will need to prioritize the compromises you make and decide accordingly which plan is worth having.

How Does the Health Insurance Provider Factor in Your Medical Condition?

STEP 1: You apply for a health insurance plan

STEP 2: You disclose your pre-existing conditions and medical history

STEP 3: Your insurer requests all relevant medical records that back up your disclosure.

STEP 4: The underwriting team of your health insurer scrutinises all the prescriptions and hospital procedure details.

STEP 5: The underwriters analyse the prognosis of your ailment in terms of long-term medications and surgeries

STEP 6: Underwriters base their data on their actuarial science and risk pooling

STEP 7: The health insurance provider extends a counteroffer against your application that may include situations like -

1. Same policy with hiked premiums
2. Same policy with exclusions on your pre-existing ailments
3. A different policy with any or all of the previous terms and conditions mentioned above.

Conclusion

While it’s true that individuals with pre-existing conditions and medical history can successfully avail of a health insurance policy, there are some hurdles that one needs to consider. This includes increased chances of PED waiting periods, extra premiums, permanent exclusion, or plans with restrictive features like copayments, disease-wise sub-limits, and more. And hence, we always recommend that you opt for a health insurance plan during your young and healthy days. However, if you have delayed the purchase, make sure to be ABSOLUTELY transparent about any ailments (past and present), or else you run a risk of claims being rejected, or worse because your insurer will surely find out about any medical secrets that you have kept from them.