'Claim denied': Mistakes in health insurance that can give you heartache

Being aware of policy's exclusions and waiting periods is equally vital

Four factors are responsible for the majority of claim rejections in health insurance, according to Policybazaar. A recent study done by this insurance platform showed that about 25 per cent of claims were denied due to policyholders not disclosing pre-existing ailments. Another 25 per cent got rejected because policyholders were not aware of what the policy covered and what it excluded. Another 18 per cent got rejected because the claim was filed before the waiting period had ended, while another 16 per cent got rejected due to failure to reply to the insurer’s query. This analysis was based on 2 lakh claims filed between April and September 2023, of which 30,000 had been rejected.

Policy owners need to avoid errors on their part to prevent claims from being denied.

Non-disclosure of pre-existing diseases
 

Non-disclosure refers to a customer’s failure to accurately disclose critical information while purchasing a policy. While filling out the proposal form, the customer, or his agent, may not (at times deliberately) provide details of the customer’s medical history accurately.
 

“An insurance contract operates on the principle of utmost good faith, requiring both the insured and the insurer to be honest and transparent. When an applicant withholds or misrepresents information, it breaches this principle,” says Priya Gilbile, chief operating officer, ManipalCigna Health Insurance. According to Gilbile, this can lead to several consequences like policy denial, withdrawal, premium adjustment, claim rejection, and in cases of intentional fraud, even legal action, both civil and criminal.

Advice: Often, agents fill up the proposal form and then encourage customers to sign on the dotted line. This should be avoided. “Buyers should either fill up the proposal form themselves or review it thoroughly if it was filled by someone else,” says Amit Chhabra, chief business officer, health insurance, Policybazaar.com.
 

Upon receiving the policy document, the buyer should check to ensure that all medical disclosures are accurately recorded in the policy.
 

Claims outside coverage area
 

Customers often make claims outside their policy’s coverage area. A key reason is that they don’t understand their policy’s terms and conditions. “Policy documents, while comprehensive, are often dense and filled with fine print, which makes it challenging to comprehend them. Health insurance policies also tend to have many features,” says Indraneel Chatterjee, co-founder, RenewBuy.  Some policies do not offer coverage for outpatient department (OPD) treatment, maternity, robotic surgery, and so on.
 

“Customers tend to base their decisions on price alone and end up buying policies with limitations in coverage. This creates difficulties at the time of claim,” says Chatterjee.

Advice: According to Dhirendra Mahyavanshi, co-founder and chief executive officer (CEO), Turtlemint, “Buyers should thoroughly understand the coverage details, exclusions, and limitations of their policies. And they should choose a policy that aligns with their specific health needs.”  
 

Waiting period not over
 

Health insurance policies generally come with three types of waiting periods, which customers should be aware of. One, there is an initial 30-90-day waiting period for most conditions, excluding accidents. Two, there could be another waiting period of up to two years for certain slow-developing conditions like hernia, knee replacement, and cataract. And three, there could be a waiting period for pre-existing diseases that could range from one to four years.
 

Advice: Customers often make a claim when one of these waiting periods is not over. “Being aware of whether you have crossed these waiting periods is crucial,” says Chhabra.
 

Unjustified hospitalisation
 

Sometimes, patients get admitted to a hospital even when the treatment could have been administered through the OPD route. For instance, a patient with a policy that does not have OPD coverage may get admitted overnight so that they don’t have to pay out of pocket for a procedure like an MRI scan.
 

“Such instances are more prevalent in smaller towns and occur in collusion with smaller hospitals. They fall under the category of fraudulent claims,” says Chabbra. Mahyavanshi says such hospitalisations impose an unnecessary financial burden on insurers. 
 

Gilbile suggests sticking to network hospitals listed on the insurer’s website and providing complete information about the treatment that is taking place.
 

Incorrectly filed claims
 

Sometimes, customers provide incorrect details or fail to provide the documents requested by the insurer.
 

Advice: If you have bought your policy through a large broker, get help from one of their insurance advisors in filing the claim. 

Precautions to observe when filing health insurance claim

 

- Inform the insurance company as soon as possible following diagnosis or hospitalisation; delay in notification can lead to claim refusal

- For cashless treatment, get admitted in a hospital within the insurer’s network; if you get admitted to one outside the network, you might need to pay out of your pocket and then get reimbursed

- Submit all required documents such as hospital bills, doctor’s notes, diagnostic reports, discharge summary, and prescriptions

- Regularly check with the insurance company to see the status of your claim

- Once the claim is processed, review the explanation of benefits (EoB) statement to understand what has been paid and what has not, and why