PEDs & PED Waiting Period In Health Insurance

Your friend is selling his laptop, and you would like to buy it. Before doing so, you ask him about the purpose he used it for, how often the laptop was repaired, and the problems he encountered in the past. By knowing these details, you can figure out whether the investment is worthwhile.

Similarly, when buying health insurance, your insurer will want to know about all of your past medical treatments or surgeries as well any existing health conditions. If you have any pre-existing diseases, your insurance company will need to figure out how much money they can afford to pay for hospitalisation if such a need arises in the future.

What are pre-existing conditions? What will happen if you purchase health insurance without stating them? How will the insurance company deal with it?

Let’s discuss in detail.

What Are Pre-Existing Diseases?

According to IRDAI, a pre-existing illness is defined as a medical condition, illness, disease, or injury, that has been diagnosed and treated within 48 months prior to the purchase of a medical insurance policy.

What Is A Pre-Existing Waiting Period?

Let’s start with an example. Rohit is diagnosed with liver cirrhosis. A year from now, he will have to spend over 15 lakhs for surgery and treatment. So. he immediately buys a health insurance plan from an insurer's website for a three-year period without disclosing his diagnosis. Upon receiving the policy, he consulted a different doctor in his city and generated a new report to show his insurer with which he hopes to get his medical bills covered.

As a way of preventing such false acts, insurance companies have devised a strategy called the ‘waiting period’.

You need to wait a certain amount of time from the start of the policy before you can start using its benefits. This period is called the Waiting Period, during which you will not be compensated for a claim related to pre-existing conditions, maternity, and other specific conditions mentioned in the policy. All health insurance plans impose a waiting period of 24-48 months (2-4 years) for pre-existing diseases.

During the waiting period, your health insurance will not pay for any treatment taken, and you will have to foot the bill yourself.

So, in Rohit’s case, his treatment will not be covered by his health insurance plan because of the waiting period.

What Kind Of Diseases Are Considered Pre-Existing Diseases?

Here are two scenarios showing how insurers impose waiting periods based on medical history and conditions:

• Scenario 1

  Raj is a multiple-sclerosis patient and has been receiving medical treatment for the past few years. He decides to buy health insurance for himself. When he fills out the proposal form, he must disclose all the details regarding his condition in the declaration part, including his first diagnosis, medications, treatment duration, etc. Accordingly, the insurer shall request Raj to take a pre-policy medical exam, and, based on the results, they will apply a waiting period to his policy for multiple sclerosis and related conditions.

  Waiting Period - Let us assume that his insurance plan has a two-year waiting period for pre-existing diseases. In the first two years after his policy is issued, the insurer will not cover any treatment Raj receives for multiple sclerosis or related conditions.

• Scenario 2

  Monica was ten years old when she contracted chickenpox, and she even recovered from it within a month. Since then, she obviously has never had chickenpox. Now Monica is 27 years old and would like to get a health insurance plan.

  Waiting Period - Under this circumstance, the insurer will not set a waiting period. This is due to the fact that her medical condition has not been diagnosed or treated in the past 48 months, so there is no basis for classifying it as a PED.

What Happens If You Provide Incorrect/False Declarations?

All pre-existing conditions should be honestly disclosed to your insurance company. If you have lied or provided incorrect information on the insurance form or hidden your medical condition, the insurer has complete discretion to make any decision.

You may have to face the following consequences if your policy contains false information:

The Insurer May Reject Your Claim Or Terminate Your Policy

Let's say Dilip has recently been diagnosed with colon cancer and is admitted to the hospital. As soon as he filed a claim, his insurer reviewed his previous medical records and discovered that he had diabetes. When the insurer found out that he had hidden this crucial information from his policy, they denied the claim request.

It is clear from the above scenario that the insurer has all rights to reject a claim even if the hidden illness is unrelated to the newly diagnosed condition. You may additionally lose your policy even if you have paid your premiums on time for all these years.

Buying A New Policy Can Be Challenging

From the previous point, it is clear that when the insurer discovers that you have a pre-existing disease, they may cancel the policy. At that point, you may not be able to purchase another policy since it will be more expensive than you had anticipated. Sometimes, due to the extent of the disease, insurers may not give you a policy at all.

What Are The Additional Conditions Besides The Waiting Period?

When you submit a health insurance proposal form, the insurer shall verify the provided details. The insurer will decide on the next step based on the extent of your medical condition and the declaration statements.

Sometimes, additional conditions shall be placed on your policy if you have -

• A pre-existing condition like diabetes, etc.
• Health conditions (obesity, etc.)
• Unhealthy habits (alcohol consumption, excessive smoking, etc.).

These are the conditions that may be added to your policy -

Permanent Exclusions

Some pre-existing diseases are likely to have lasting effects on health for many years. And certain conditions tend to recur within a few years.

Recently, the IRDAI has instituted permanent exclusions for a list of diseases that insurers previously denied coverage for. These include -

• Stroke
• Cancer
• Epilepsy
• Pancreas Ailments
• Heart Ailment
• Liver Disease
• Hepatitis B
• Bowel Disease
• Kidney Disease
• HIV
• Alzheimer's

Higher Premiums

Based on the details provided in a declaration, insurers may apply loading the premiums. Loading is done if the insurer finds you to be a risky individual. Typically, loading can range from 10%-50%.

Refusal Of Policy Request

Suppose someone is diagnosed with a heart disease that’s at its final stage. In such a case, the insurer may find it challenging to decide the coverage and may reject the application.

Co-Payment

If you have a chronic medical condition, the insurer can put forth certain limitations, such as additional co-payments for each claim. Co-payment is the percentage of the claim that you need to pay from your pocket, irrespective of the claim amount.

Summing Up!

A Waiting Period is a certain period of time after the date of policy issuance wherein you cannot avail the benefits of your health insurance. For Pre-Existing Diseases, the waiting period ranges from 2 to 4 years. Insurance companies use this concept to prevent people from buying policies immediately after they develop a condition or disease. To avoid any kind of trouble in the future, it is always imperative that you disclose any existing health conditions in your health insurance proposal.