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Insured people are seeing a drop in out-of-pocket expenses for Covid treatment in recent months, but they still have to shell out about 30 per cent of the claim amount.

Data with the Insurance Regulatory and Development Authority of India (IRDAI) reveals that, on an average, about 71.4 per cent of the claimed amount for Covid-19 treatment is settled by insurers while the remaining 29 per cent has to be paid out of pocket by the policy-holder.

The data reveals that of the average claim amount of ₹1.33 lakh, as much as ₹95,512 is settled through insurance.

Also read: Insurers settle Covid claims worth over ₹15,000 cr

Earlier, the out-of-pocket expenses were higher and could be to the tune of about 40-45 per cent.

Insurers say that there are various factors which lead to out-of-pocket expenses for customers during Covid treatment. However, it has come down significantly due to lower costs of consumables and standardised treatment protocols.

“Disallowances are around four main buckets. The first one is when the product runs out sum insured,” said Rajagopal Rudraraju, Senior Vice-President and National Head – Accident and Health Claims at Tata AIG General Insurance.

Reasons for out-of-pocket expenses

According to him, one of the biggest reasons for out-of-pocket expenses by customers is that the amount of treatment exceeds the sum insured. “The insurer cannot do anything in such a case. In normal claims, this issue of sum insured running out comes up less frequently but is more common in Covid-related health claims,” he noted.

The cost of consumables such as PPE kits and gloves has also come down but depending on the insurance cover, can add to the out of pocket expenses. “During the peak of the pandemic last year, it was up to 13 per cent to 15 per cent of the bill. Now, it is eight per cent to seven per cent of the bill,” he said.

In regular health insurance claims, the cost of consumables is usually two to three per cent of the bill.

The third reason for out-of-pocket expenses tend to be the sub-limits in the policy, such as those for co-pay. There are also technical reasons regarding medications that lead to such disallowances.

“Treatment costs for Covid have gone down and so have the out-of-pocket expenses for most policy-holders who have to go in for hospitalisation. There is much more standardisation of procedures and costs,” noted another insurer who did not wish to be named on the issue.

Parag Ved, President and Head, Consumer Lines at Tata AIG General Insurance noted that the sum insured for health covers has also increased to about ₹5 lakh on average. While, to some extent, this is due to higher treatment costs of Covid, there has also been a higher medical inflation in the last three to four years.