Insurance has become necessity for safe and secure living. The importance of insurance had been realized by many persons during COVID-19 calamity. Since cost of living is increasing day to day and one time hospitalization can wipe off all of your savings. So, it is important and necessary to have an adequate amount of insurance coverage to you and your family. An Insurance will secure you financially and help you to secure best medical treatment and, in this case, you don't have to bother payment of medical services.
A person applies for insurance coverage to claim medical expenses in case of health insurance at the time of hospitalization or suffering from diseases, accident or happening of insured events. It is important to choose right insurance company and opt for right insurance coverage.
It is suggested that before applying or purchasing any health insurance policy, you have to first access the amount of coverage you require to secure your family members and parents. Because of raising cost of medical services , it is suggested that you must have coverage of at least of Rs. 5/ Rs. 10 Lakhs.
Insurance Policy is an Insurance Contract between an insurer and policyholder. It is generally drafted by insurance company and insured has to sign it only. It is a contract in which all agreed terms and conditions are mentioned. It also contains, details of disease covered, excluded, terms and conditions to be followed by the insured and insurance company, the premium paid and the maximum amount of coverage.
The disclosure of all material facts by insured and insurance company are must for an insurance contract. An insured has to declare all material facts related to its pre-existing diseases , its habits , which will affects determination of risk by insurance company. An insurance company access the risk and decide premium on the basis of declaration. In case of non-disclosure of material facts, an insurance company may repudiate your claim at the time of need.
LET'S CONSIDER IMPORTANT POINTS TO BE CONSIDERED WHILE APPLYING FOR HEALTH INSURANCE POLICY;
A health insurance document is a contract between you and the insurance company. Here, the insurer is agreeing to bear a part of your financial burden when you face a medical emergency. Thus, it is important that you choose a health insurance plan and the company wisely.
1. Inclusions and exclusions of the plan
The coverage of the health insurance plan (inclusions) and the conditions against which a claim cannot be made (exclusions) determine the scope of the policy. You must have total clarity about both before purchasing health insurance.
Being unaware of the coverages can lead to an increase in out-of-pocket expenses. And being unaware of the exclusions can lead to claim rejection.
2. Opting for health insurance at the earliest
Buying health insurance early in your life is good. You don't want to go scouting for ideal health policies when you have crossed a certain age. It is likely that you will make fewer claims now as compared to when you are older. Remember that now is the right time to buy health insurance if you have not done so yet.
3. Choosing the right health insurance company
The insurance company plays an important part when it comes to health insurance. The speed of the claim processing varies from insurer to insurer, and thus you must select only the best one. Thanks to the internet, nowadays, it is easy to go online and search for a reliable health insurance company. Go through their customer reviews to know more about the services offered.
Here you can check below mentioned ratios;
a) Claim Settlement Ratio- Claim settlement ratio refers to the proportion or percentage of the number of claims that an insurer pays, out of the total number of claims that it receives during a certain period. So, say a health insurer has a claim settlement ratio of 93%; it implies that it typically pays only around 93 of every 100 claims it receives.
b) Loss Ratio-In the insurance industry, a loss ratio represents the total losses (claims paid and adjustment expenses) incurred by an insurer, expressed as a percentage of the total premiums earned. It's a key metric for assessing an insurer's financial performance and profitability. A loss ratio of 100% or less indicates that the insurer is paying out less than the premiums it has earned, suggesting a potential profit. However, it's important to consider the expense ratio (underwriting expenses as a percentage of premiums) to determine overall profitability.
4. The waiting period
The waiting period is the time when you cannot raise a claim against the health insurance plan. It is usually applicable to pre-existing diseases and maternity benefits. It can stretch from 9 months to a few years, depending upon the insurance company and the plan that you are looking to purchase. Do check the applicable waiting period on your health insurance plan before buying.
As per IRDAI Regulations the maximum waiting period for Pre-existing disease is three years.
MORATORIUM PERIOD: if a policy runs for continuous period of five years without break from the date of inception of renewal, then an insurance company cannot repudiate a claim on the basis of non-disclosure of any material facts except in case of fraud on part of the insured.
5. Policy premium and sum insured
You pay premium to purchase a health insurance policy with a certain coverage. The higher and more comprehensive the coverage, the higher the premium amount. Understand the details pertaining to the coverage and the premium amount thoroughly while buying health policies.
6. Day care procedures
Nowadays, certain medical treatments are completed within a day. Thus, it is important to ensure if such treatments are covered under your health insurance plan. These are small medical procedures like cataracts, tonsillectomy, etc.
7. Specific treatments and diseases
Medical insurance plans list some specific illnesses and treatments for which coverage is available after a specified duration. For instance, in many plans, coverage for piles, fistula, hernia, etc., is available only after the first 2 policy years. These ailments are called specific diseases. Reach out to the insurance company if you are unsure about this coverage being offered.
8. Alternative treatments
These are non-allopathic treatments like Ayurveda, Yoga, Unani, Siddha and Homeopathy (AYUSH). Many health plans allow these non-allopathic treatments' coverage up to a specified limit. AYUSH treatments have gained importance during the COVID-19 pandemic, and many people prefer these over standard allopathic medicines.
9. Room rent limit on the health insurance plan
A hospital's room rent may sound like a trivial charge, but it can be exorbitant depending upon the type of hospital. The treatment cost can go high if the patient is admitted to a room that costs more than the allowed limit. The room rent limit in health insurance specifies the maximum room rent coverage allowed under the policy. If the policyholder chooses a hospital room with a higher rent, he would have to proportionately share the load of the entire hospital bill.
PLEASE NOTE: if there is cap on room rent in insurance policy, ten avoid this policy, because cost of treatment depends on room rent in various hospitals.
10. Coverage for new-age treatments
These are advanced medical treatments that are more accurate and can result in better outcomes as compared to traditional treatments. Check if your health insurance policy covers such modern procedures. Some examples of new-age treatments are CyberKnife, robotic surgery, and stem cell therapy.
11. The availability of add-on covers
Add-ons are optional coverages available with health plans for increasing the scope of coverage. You can choose any suitable add-on to customise your health insurance plan. Note that every add-on cover requires an additional premium which is added to the premium of the base policy.
12. Pre/post-hospitalisation coverage
Pre and post-hospitalisation include any tests, treatment, doctor visits, etc., conducted before or after the hospitalisation. Different insurance companies have different terms and conditions regarding pre and post-hospitalisation. Check if your policy offers this coverage.
PLEASE NOTE: It is good if insurance policy covers 60 days pre-hospitalization and 180 days Post-hospitalization expenses.
13. The co-payment clause
As per copay clause, the policyholder is bound to pay a predefined percentage amount of the hospital bill. Such policies cost less but also offer less compensation as you have to pay a considerable part of the hospital bill. Make it a point to study this clause in detail if you decide to opt for it.
14. The abundance of network hospitals
Consider the company's claim settlement approach before buying a policy. Check if the insurer has a wide network of hospitals where you can avail of cashless treatment. This will allow you to spend much less money during medical treatment.
15. The Age criteria
Age is one of the most important criteria for buying health insurance. The premiums differ based on the age of the individuals. In a family floater plan, the age of the family members (eldest) will determine the premium amount to be paid.
16. No Claim Bonus/No Claim Discount
NCB refers to the discount the insurance company provides to you for every claim-free year. The discount amount limit is usually set by the insurance provider. The discount is usually given as an increase in the coverage amount.
17. Coverage for preventive health checkup
Most health insurance policies now cover preventive health checkups. It is important to check if these tests are covered in your policy. Preventive health checkups for cardiovascular diseases, cancer, lifestyle diseases etc. are very high, it's key to ensure your policy pays for all these checkups.
These are not exhaustive list ,which are to be considered while deciding good insurance company. You have to compare with your requirements with various insurance companies.
CIRCUMSTANCES IN WHICH YOUR HEALTH INSURANCE CLAIMS ARE REPUDIATED
There are several reasons why the insurance provider would reject a health insurance claim. Some of the most common reasons for claim rejection are as follows:
1. Incorrect Information on the Claim Form
The basic reason for claim rejection is providing incorrect information on the claim form. To file a health insurance claim, you need to fill out the claim form with all the required details like your age, name, phone number, name of the illness, etc. If the details are not accurate, the insurer will reject your claim due to discrepancies.
2. Raising Claims During the Waiting Period
Every health insurance plan comes with a waiting period during which you are not eligible to raise a claim. They may range from an initial waiting period and maternity waiting period to a pre-existing disease waiting period. If any claims are filed within the waiting period, they will be rejected.
3. Non-Disclosure of Pre-existing Diseases
Another major reason for claim rejection is the non-disclosure of pre-existing diseases at the time of buying the policy. A person buying health insurance is supposed to declare all pre-existing diseases in the proposal form during policy purchase. If the diseases are not disclosed, and the insurer discovers them later, they will have the right to reject your claim.
4. Lapsed Health Insurance
A health insurance policy lapse if the premium is not paid on time. As a result, the insurer is not liable to provide medical coverage to the people covered in a lapsed policy. Thus, any claims filed using a lapsed policy will be rejected by the insurance company.
5. Delay in Claim Intimation
Every insurer has a fixed deadline for claim intimation. It is essential to inform your insurer within the stipulated time to file a claim. If the insured forgets to intimate the claim within the stipulated time, the insurance provider will deny your claim request.
6. Missing Documents During Claim Submission
When filing a reimbursement claim, the policyholder should submit the required documents to the insurer within the stipulated time for claim processing. If the documents submitted are insufficient or missing, it will lead to claim rejection.
7. Exhaustion of Sum Insured in Previous Claims
Another reason for health insurance claim rejection is the exhaustion of the sum insured. Every policy has a sum insured limit for a policy year. Repeated hospitalization, especially for people with severe health issues, can lead to complete exhaustion of the sum insured amount. In such a situation, the insurer has the right to reject your claim.
8. Changes in Policy Terms & Benefits
Insurance companies may sometimes modify the policy terms and conditions, such as the coverage benefits, premiums, etc. Therefore, if your policy has been modified and your coverage has been amended, then your claim may be rejected.
9. Incorrect Diagnosis of Illness
Another important reason for claim rejection is the incorrect diagnosis of a disease. The wrong diagnosis on the claim form may not match the medical records. As a result, the insurance provider may consider the claim duplicitous and reject it.
10. Insurer/Third-Party Assessment was Not Completed
Claims for some medical procedures and treatments can be done only after a pre-authorization has been received from the health insurance company or Third Party Administrator (TPA). In such cases, the insured has to file a pre-authorization request with their health insurance provider or TPA. But if this process is not followed, your claim settlement can be halted, ultimately, leading to rejection.
PLEASE NOTE THAT: As per IRDAI Guidelines an insurance company cannot reject a claim for want of documents and late intimation of the claim. There are various changes have been done by IRDAI in case of health insurance. The IRDAI through IRDAI(PPHI, Operations and Allied Matters of Insurers) Regulations, 2024 and IRDAI Master Circular on IRDAI( Protection of Policyholder's Interest ) Regulations 2024 has instructed all types of health insurers to move from re-imbursement policy to cashless payment policy. IRDAI has also reduce TAT for various insurance services. In case of Cashless Claims, it is mandatory to provide online within a period of one hour from the time of intimation and in case of final payment of discharge approval must be given Whitin a period of 3 hours from the time of discharge intimation received from hospital.
Insurer must settle claim within a period 15 days from the date of intimation of claim ( except in some situation).
The IRDAI has instructed insurer to provide insurance coverage to all age of persons and for all diseases such as genetic , HIV, AIDs, Metal Problems etc.
The main purpose of these benefits are to earn trust of citizens towards insurance and to protect interest of policyholders.
India has set target to insure all Indians till 2047 and for this government has recently increased FDI cap in insurance from 74% to 100%.
These steps of government and the regulator certainly going to boost sentiment of insurance industry and increase penetration from 3.7% to at least 5% this year.
BUT IMPORTANT QUESTION REMAIN THE SAME
Why insurance companies are rejecting insurance claims?
As you are aware that main income of an insurance company is collection of insurance premium and main expense is payment of claims. An insurance company invest major amount of premium received from policyholders to earn interest, rent, dividend etc. incomes.
If an insurance company is not paying claims , then it is reducing its cash outflow as claim payment and keep its money received from policyholders as premium invested and earn more income.
Health insurance claim rejections have become a major concern for policyholders in India. A recent survey by LocalCircles has highlighted that nearly five in ten policyholders who filed claims in the last three years experienced partial or complete claim rejections.
The Insurance Regulatory and Development Authority of India (IRDAI) reported that 11% of health insurance claims were denied in FY24, totalling ₹26,000 crore in repudiated claims.
There are various reasons for rejection of claim as we considered above. But insurance companies sometime reject claims on Flimsy Grounds also.
In such circumstances, the Supreme Court observed that when the appellant had produced the photocopy of certificate of registration and the registration particulars as provided by the RTO, solely on the ground that the original certificate of registration (which has been stolen) is not produced, non-settlement of claim can be said to be deficiency in service. Therefore, the appellant has been wrongly denied the insurance claim.
The Supreme Court was of the opinion that in many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds. It observed,
"The insurance company has become too technical while settling the claim and has acted arbitrarily. The appellant has been asked to furnish the documents which were beyond the control of the appellant to procure and furnish. Once, there was a valid insurance on payment of huge sum by way of premium and the Truck was stolen, the insurance company ought not to have become too technical and ought not to have refused to settle the claim on non-submission of the duplicate certified copy of certificate of registration, which the appellant could not produce due to the circumstances beyond his control."[Gurmel Singh v. National Insurance Co. Ltd., 2022 SCC OnLine SC 666, decided on 20.05.2022].
IN CASE OF Mrs. Shubh Lata Vs, HDFC ERGO
The State Consumer Disputes Redressal Commission, Punjab recently flagged concern that insurance companies were rejecting claims of customers on baseless grounds.
The Commission President Justice Daya Chaudhary and Member Simarjot Kaur stressed that the Insurance Regulatory and Development Authority of India (IRDAI) must curtail the "hands of insurance companies" who were using unfair means in processing the claims and harassing the customers.
The IRDAI should issue strict directions to insurance companies so that the rights of the insured are safeguarded and the claims of the insured or their nominees are scrutinised in a transparent manner, the Commission said.
"We deem it appropriate to observe that most of the insurance claims are rejected by the Insurance Companies on baseless grounds. The same act had been done by the Insurance Company in the present case, therefore, we feel that there is urgent need to enforce the strict provisions, which may safeguard the genuine rights of the insured and complete transparency in the processing of claims," it observed.
There are various flimsy grounds on the basis of which insurance companies are rejecting genuine claims.
HOW TO REDUCE CHANCES OF CLAIM REJECTION
Here are six effective tips to minimise your chances of health insurance claim rejection and strengthen your position in case of a dispute.
1. Understand your health insurance policy thoroughly;
2. Before purchasing health insurance, it is vital to read and comprehend the fine print. Insurers often define specific terms and conditions that can significantly influence your claim outcome.
a) Know what is covered: Familiarise yourself with the inclusions and exclusions, such as pre-existing disease coverage, maternity benefits, daycare procedures, and specific disease waiting periods.
b) Understand waiting periods: Most policies have a waiting period for certain illnesses or procedures, during which claims will not be honoured. Knowing these durations helps you plan your medical interventions accordingly.
c) Review sub-limits and caps: Some policies include caps on room rent, specific treatments, or disease-related expenses. Any treatment exceeding the set limits may lead to a partial or full claim rejection.
d) Check the network hospitals: Cashless claims are typically processed faster within the insurer's network. Using non-network hospitals may lead to higher documentation scrutiny and out-of-pocket expenses.
e) Having a clear understanding of these elements can save you from unpleasant surprises at the time of filing a claim.
2. Provide accurate and complete information at the time of policy purchase;
Your health insurance claim may be rejected if the information provided while purchasing the policy is inaccurate or incomplete.
a) Disclose pre-existing conditions: Hiding existing medical conditions, past surgeries, or ongoing treatments can result in claim denial for non-disclosure or misrepresentation.
b) Declare lifestyle habits: Smoking, alcohol consumption, or occupational hazards must be declared truthfully, as they influence your risk assessment.
c) Mention family medical history: If applicable, disclosing hereditary health issues can help the insurer assess your health risk profile better and build trust.
d) Remember, health insurance is a contract built on the principle of utmost good faith. Providing honest and detailed disclosures ensures a smoother claim process.
3. Maintain transparency during claim filing;
When filing a health insurance claim, be meticulous in sharing complete and correct information.
a) Attach all supporting documents: This includes the hospital discharge summary, doctor's prescription, pathology reports, diagnostic test results, and original bills. Each document must be relevant and correctly dated.
b) Cross-check your claim form: Avoid typographical errors, missing fields, or mismatches between documents and the form.
c) Submit medical justifications: If a procedure is not common or if it deviates from regular treatment norms, include a detailed explanation from your treating doctor.
d) Maintaining transparency throughout the claim filing process improves credibility and reduces the chances of unnecessary scrutiny.
4. Submit claim documents within the stipulated timeframe;
Health insurance providers specify deadlines for submitting claim documents - particularly for reimbursement claims. Missing these timelines could lead to outright rejection or lengthy delays.
a) Cashless claims: Intimation must usually be made 48-72 hours prior to a planned hospitalisation and within 24 hours of an emergency admission.
b) Reimbursement claims: Most insurers require you to submit documents within 7 to 30 days after discharge, depending on their internal guidelines.
c) It's advisable to keep a checklist of required documents and consult your insurer or third-party administrator (TPA) to ensure nothing is missed.
5. Maintain proper records and communication;
Well-organised documentation not only aids during claim processing but also serves as strong evidence in case of disputes or rejections.
a) Store all original bills and receipts: Whether for pharmacy purchases or OPD consultations, preserving receipts is crucial.
b) Track email or SMS communication: Keep a record of all interactions with the insurer or hospital, including claim submission acknowledgements and correspondence.
c) Photocopy everything: Before submitting original documents, ensure you have a photocopy or scanned version for reference.
d) This discipline in recordkeeping empowers you to challenge wrongful rejections effectively and defend your claim with confidence.
6. Seek clarification from the insurer when in doubt;
If you are uncertain about your health insurance policy's scope or encounter complications during the claim process, do not hesitate to contact the insurer.
a) Use customer care or helplines: Most insurance companies offer toll-free numbers and email support. Clarify terms, required documents, or reasons for rejection directly from authorised representatives.
b) Visit branch offices if needed: For more complex queries or disputes, an in-person visit can expedite resolution.
c) Escalate grievances: If your claim is unfairly rejected, use the internal grievance redressal system. If unresolved, you can approach the Insurance Ombudsman for impartial adjudication.
d) Promptly addressing doubts and proactively communicating with your insurer can prevent procedural errors that might result in claim rejection.
CONCLUSION
Facing a health insurance claim rejection can be disheartening, but most rejections stem from avoidable oversights or misinformation. By adopting a proactive approach-starting with a thorough understanding of your policy, maintaining transparency, adhering to timelines, and keeping comprehensive records-you can drastically reduce the chances of claim denial.
Insurance companies also take informed and calculated decision to repudiate health claims of its policyholders. An insurer should always keep in its mind that trust of a policyholder is the most important for its survivable. A genuine claim cannot be rejected on flimsy ground or on conditions that are impossible to be fulfilled. As per IRDAI guidelines a claim cannot be rejected on the basis of non-receipt of documents or late intimation of the claims.
Insurance is a financial safety net meant to support you during difficult times. Following the right practices ensures that your health insurance works as intended when you need it the most. An insured feels dishearten ,when his claim was rejected by an insurance company. Insurance company must educate its policyholders so that they understand terms and conditions of insurance. Insurance company must trained its agents and intermediaries so that they can serve policyholders.
For development of insurance industry and to achieve set goals " INSURANCE FOR ALL TILL 2027" Government and Regulator should work together to create a good environment in India. Since penetration of insurance in India is only 3.7% in FY 2023-24 reduced from 4% in FY 2023-24, insurers have a waste field to play and by improving their services and claim settlement then can achieve their target and help government to fulfil set target.
DISCLAIMER: The article presented here is only for sharing information with readers. The views expressed here are personal views of the author. In case of necessity do consult with professionals.
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