10 little-known causes for disputes in a health insurance claim.
Whenever I speak to people on their worst insurance experiences or worries, I realize that they are most anxious about Health Insurance. There is always a strong buzz around claim rejections, the cashless process inefficiencies, endless paperwork, and delayed claim settlement.
Here's a list of essential things you should know about a health insurance policy - to ensure you don't have to feel cheated during claims.
1) Specified disease/procedure waiting period
Every health insurance policy has a waiting period for pre-existing diseases - this everyone understands well. But not many are aware that there is a waiting period for a list of specified diseases (apart from pre-existing conditions)
For instance, treatments for appendix surgery, slipped disc, sinusitis, piles have a waiting period of two years. Certain policies also have a four year waiting period for knee replacement surgery. This is even if you do not have these diseases or conditions before buying the policy.
Here's when your claim will be rejected:
- If your policy has not completed two years, then, claims for such diseases or treatments will not be payable during the first 2-4 years, as per the policy conditions.
- If you have upgraded your policy recently - the upgrade amount will not cover these specified diseases for the waiting period.
Here's what you should do:
- Find the exact name of your health insurance product.
- Find the policy wordings of this product on the insurance companies' website.
- Search for "Specified disease/procedure waiting period- Code- Excl02" Understand these terms.
2) Room Rent Limit - Proportionate deduction.
What if you realize that even though you have a 3 Lakhs health insurance cover, you received a claim of only Rs. 25000 against a hospital bill of Rs 50000?
Having a financial limit for room rent charges can be a disaster and cause extreme heartburn.
Many health insurance policies with sum insured less than 5 Lakhs have a room rent limit. In such cases, you have to pay for two deductions:
You pay the difference in the room charges billed and room charges eligible
You also suffer deduction for all the remaining expenses in the proportion of room charges eligible to room charges billed.
Remember, even if the limit looks sufficient today, inflation will catchup. Money that will fetch a private room today may not even cover a general ward in 10 years. Such a limitation can severely curtail your actual cover,
- Let's say you have a policy of Rs. 3 Lakhs, and the room rent limit is 1% - Rs. 3000.
- You are hospitalized for 3 days. You opt for a room that has a room rent of Rs. 6000.
- The total hospital bill is Rs. 50000/-
The insurer will make two deductions:
*a) DEDUCTION 1: Rs. 3000 per day of the additional room rent above your eligibility. 3 Days X Rs. 3000 = Rs. 9000/-
DEDUCTION 1 = Rs. 9000/-
*b) DEDUCTION 2: Proportionate deduction for all associated expenses. Charges like diagnostic tests, surgery costs, etc. apart from pharmacy costs (say Rs. 2000) will also be deducted proportionately by 50% (Room Rent eligible to room rent availed ratio)
Associated costs = Rs. 50000 hospital bill - Rs. 18000 room rent - Rs. 2000 pharmacy = Rs. 30000/- This will be proportionately deducted by 50% DEDUCTION 2 = 50% of Rs. 30000 = Rs. 15000/-
*The insurer will end up paying only Rs. 50000 - Rs. 9000 - Rs. 15000 = Rs. 26000/- only
So despite having Rs. 3 Lakhs policy, your Rs. 50000 claims will be reimbursed only by Rs. 26000 - a 48% deduction!
Here's when your claim will see deductions:
- If you opt for a hospital room with room charges higher than the limit mentioned in your health insurance policy.
- In case you opt for a room higher than the category mentioned in your policy. For instance, you are taking a deluxe room when there is a cap up to a private room.
Here's what you should do:
- Check the face or page 1 of your policy document, where your family members' details are mentioned. The room rent limit would be mentioned here. Else, check the brochure/prospectus of the product on your insurance companies website.
- If your policy has a financial limit, then at the time of renewal - you must port to a policy that does not have such limitations.
3) Changes in the Policy Benefits/Conditions:
IRDAI allows insurers to change their policy benefits, conditions, pricing subject to approval. Insurers can also stop a product/plan completely and migrate you to another plan, which may have different conditions/exclusions.
In the past many public sector insurance companies implemented a limit for cataract treatment. This was not mentioned in the policy document, but the insurer applied a rubber stamp that mentions this limit.
What you should do?
As per IRDAI regulations, every insurer is obliged to inform of any changes to a policy three months before the changes are affected. You should keep yourself informed about such changes always.
To ensure that you are informed of all such changes, always update your email address and mailing address with your insurance company, and keep track of any email you receive from them.
4) Medically Necessary Hospitalization:
A health insurance policy only pays for a necessary hospitalization. Suppose a hospitalization or a treatment is not found to be medically necessary by the insurance company, in that case, the expenses with respect to this hospitalization will not be paid by the health insurance policy.
For instance, if a doctor recommends excessive diagnostic tests, medicines, or treatments primarily to jack up the bill, an insurer may reject/deduct the bill's inflated part.
If a person is diagnosed as COVID19 positive and advised hospitalization by a doctor despite being asymptomatic. In such cases, an insurer can term this hospitalization as unnecessary and decline the claim.
So what is a medically necessary hospitalization?
- It is required for the medical management of the person ill or injured.
- Includes the necessary level of care to provide safe, appropriate medical care in scope, duration, and intensity.
- Prescribed by a medical doctor (who is not a relative of the patient)
- Must conform to professional standards, medical practice internationally, or in India.
You will agree that the world has all kinds of people. These conditions are created by insurers to avoid the possibility of systematic fraud by collusion between the hospital/doctor and the patient. And, this is a good thing - as it will help them weed out false/ fraudulent claims so they have enough funds to pay for genuine cases.
5) Active treatment:
This point is an overlap of the above point, but it still needs a separate mention. Hospitalization of a patient ONLY for diagnostic or monitoring purposes is not covered under health insurance.
- You suffer from unusual chest pain - rush to the emergency ward of a hospital.
- The doctors evaluate all the markers, and most of these are fine. But there are symptoms like chest pain, sweating, and mildly high blood pressure.
- Now doctors tell you that they don't want to take a chance. They recommend that you should be admitted and monitored for the next 24 hours.
- Apart from monitoring, medication, some drip, there is no treatment carried out on the patient during this time.
- After the hospitalization of 24 hours, you are found to be stable and recommended discharge.
- In such cases, even though the hospitalization was for more than 24 hours, and a doctor recommended it, the insurance plan will NOT PAY for the claims. This is because health insurance covers ONLY active treatment during his/her stay while in the hospitalization.
Similarly, during this pandemic, if a patient is quarantined in a hospital without any treatment. If he is just on oral medicines or an occasional drip, then the hospitalization may not be covered under health insurance.
Here's what you should do
All this might sound Greek to you. Just remember that -
a) As much as possible, it would help if you were vigilant about the treatment offered by your doctor, hospital. You should check each charge as if you are footing the expenses and not the insurance company. Ask questions, stay vigilant, take a second opinion, change your doctor/hospital (if you can), when you find things are fishy.
b) In case you are taking a call to get hospitalized, purely for monitoring purposes - be aware that you are not covered for this expense.
6) Reasonable & Customary Clause:
Many of us have witnessed this. A hospital hikes its overall charges once they know that the patient is covered under health insurance. With the reasonable & customary clause, Insurance companies protect themselves from excessive hospital billing. Insurers measure reasonable charges by comparing the charges levied by a similar grade hospital in the same area.
- If you are in Mumbai, the insurer will compare charges levied for similar treatment by Lilavati Hospital Bandra with an equivalent grade say Asian Heart Hospital - again in Bandra.
- So many people are witnessing huge deductions in COVID19 treatments due to excessive billing. Insurers are paying claims only as per a fixed billing standard they have formulated for COVID19 hospitalization. Patients are bearing the remaining expenses on their own.
Here's what you should do
- Always imagine you are paying from your pocket.
- Unless it is an emergency case, ensure you take an estimate from the hospital before you agree to get admitted and compare them with similar grade hospitals. This will help you get a grip on excessive billing, if any. Once you know there is excessive billing - you will have two choices: either pay the excessive billing from your pocket -or- find another similar quality hospital that charges reasonably.
7) Being careless about the Proposal Form:
When you buy a policy, the insurance company agrees to take the risk of your future expenses. They undertake this risk based on the information you provide them when purchasing the policy.
If this information is incorrect or incomplete, then the whole arrangement between you and the insurer is shaken - and that could result in unnecessary chaos - rejection in claims, even cancellation of the insurance policy.
Salim bought a policy for his parents. He filled the proposal form himself, entered all the medical information he was aware of. He did not check with his parents to find out if there is anything that is missing.
Now a few years later - Salim's father was hospitalized for a stroke. The hospital bill was around Rs. 4 Lakhs. When the same was put up for claim with the insurer, the insurer realized that Salim's father had thyroid, which was not mentioned in the proposal form. The insurer declined the entire claim on the grounds of misrepresentation of information. The fact that stroke had nothing to do with thyroid did not matter.
Details not matching KYC records: Ensure the name in the policy and the age matches the details mentioned in your KYC documents like Aadhar, PAN Card, Passport, etc.
Here's what you should do
- DONT BE IN A HURRY. BE CAREFUL:
The distributor/agent who is selling you a policy is wired to be in a hurry - to ensure your policy gets issued. That's how they get closure for a business transaction. Remember it is a lot more than a transaction for you. Hence you should not be in a hurry and go through the process in haste or ignorance.
- All the information you provide to an insurer on the proposal form, over telephonic conversations, separate documents, declarations should be to the best of your knowledge.
- You should take pains, do your homework, and provide all the information you can. Especially if you are buying a policy for someone else - like say, your parents.
- Always fill the proposal form yourself. Do not allow the agent to fill the form. Do not leave any blanks - ensure you strike out, mention "NAs."
- In case you have already bought a policy and have missed any information - you should communicate in writing with your insurer providing them all the details you missed out.
8) Details not added or delayed by the employer:
In the case of a company health insurance policy, employers or their HR team can miss adding your name or family's name.
Here's what you should do?
You should diligently follow up for the eCard or TPA Card from your employer for each family member - this will ensure you know you are added to the policy. Ensure you check the card details carefully for the name, age, coverage, etc.
9) Incorrect information was provided to the doctor on admission.
Ensure the medical history of the patient is provided diligently to the hospital and doctor during admission. Any miss or carelessness in informing about medical conditions or since when they are diagnosed can jeopardize your claim for no reason.
Doctors prepare a case paper recording the patient's past medical history, medication, allergies. This information also records the year since these diseases have been diagnosed. Ensure this information is provided carefully after looking at the records. Don't be in a rush.
10) Lack of adequate claim documentation:
There are some basic pitfalls when documenting your health insurance claim. Ensure you keep yourself aware of these. Here are a few.
Missing trail of documents:
All expenses you are claiming for hospitalization, pre, and post-hospitalization, etc. should have the following:
- Doctor's prescription
- Diagnostic report (wherever applicable)
- Proof of payment to support.
Any expenses which do not have all these documents will be likely deducted. Ensure that you maintain a secure folder with you always when visiting doctors, hospitals. You should carefully store all the papers you receive in the folder.
Insurers do not pay for handwritten invoices or receipts which are not pre-numbered. Ensure you get only printed invoices. Ensure all receipts provided by the hospital/doctor are prenumbered
- Know your policy exclusions, limits well - especially 2 years specified disease, room rent limit.
- Be alert about the communication you receive from your insurer.
- Hospitalization is covered only if it is medically necessary, involves active treatment in a hospital.
- Don't be in a hurry - when filling the proposal form, admitting a patient, giving details to a doctor.
Mahavir is the Founder at Beshak.org. Since 2005, Mahavir has been building tech-based startups that compare and advise insurance products to individual buyers. In his last role, he was the Chief Business Officer at Coverfox. Mahavir is a recognized professional in the personal insurance field. He has contributed to leading business publications, including The Economic Times, Business Standard, Mint, DNA, and Moneycontrol