Health insurance claim rejections: Check coverage, exclusions first

Make full disclosure of existing conditions, lifestyle habits, and past treatments

Complaints relating to health insurance claims are rising sharply. According to data presented by the minister of state for finance, Pankaj Choudhury, complaints registered on the Bima Bharosa portal in the first 11 months of FY26 exceeded the total for the whole of FY25 by 14.5 per cent. A total of 64,365 complaints were received in FY25, while 73,729 were registered by February 2026.

 

Why claims get rejected 

Claim rejection often stems from a poor understanding of policy terms. “Many policyholders do not understand that non-medical expenses, cosmetic treatments, and certain other procedures are not covered by health insurance policies,” says Arun Ramamurthy, co-founder, Staywell.Health.

 

Non-disclosure of pre-existing diseases or past treatments can also result in denial of claims. “People who do not declare conditions such as diabetes, high blood pressure, or thyroid disorders may face rejection,” says Ramamurthy.

 

Waiting periods are another common reason. If the applicable waiting period is not over, the insurer may reject the claim.

 

Claims may also not be paid if the treatment does not meet the medical necessity criterion of the insurer. A lapsed policy at the time of hospitalisation can also lead to rejection. Fraud or discrepancies in documents can trigger denial as well.

 

Why claims are partially paid out 

Partial claim settlements usually arise because the policy comes with certain restrictions. Room rent caps can trigger proportionate deductions across the entire bill. “If the policyholder chooses a room category above the permitted limit, that can reduce the payout by 20-40 per cent,” says Saurabh VijayVergia, founder and chief executive officer (CEO), CoverSure.

 

Co-pay clauses can also reduce the amount paid by the insurer. Sub-limits on specific treatments may further lower the payout.

 

Policies often exclude consumables and non-medical expenses, which can account for 10-15 per cent of the bill.

 

Insurers may also cut the claim amount by citing reasonable and customary cost adjustments. “Differences in package rates with hospitals often result in partial settlement,” says Ramamurthy.

 

What to check while buying or renewing 

Instead of selecting the cheapest policy available or making the purchase just based on the sum insured, buyers should try to understand what the policy covers, the gaps in coverage, and the conditions that may reduce payouts. “Choose a policy that meets your real needs,” says VijayVergia.

 

A suitable policy should preferably have no room rent cap, minimal or no sub-limits, and low or no co-pay. “Buyers should also check whether it offers restoration benefits, has short waiting periods for pre-existing diseases, and provides access to a strong hospital network,” says Ramamurthy.

 

Disclosures play a crucial role 

Many claim disputes occur because policyholders did not disclose all relevant information while buying the policy. “People often skip mentioning existing conditions and past treatments in the proposal form,” says VijayVergia. Some fail to mention common conditions such as blood pressure, diabetes, or thyroid disorders. Information regarding lifestyle habits, such as smoking or alcohol consumption, is often held back. Such omissions can create problems at claim time.

 

Buyers should also disclose existing policies in the proposal form.

 

Precautions during cashless treatment 

In cashless treatment, policyholders should pay close attention to how items are characterised in the bill. “If items are classified separately in a way that makes them appear excluded, the insurer may reject them unless the policyholder seeks clarification in time,” says Kapil Mehta, co-founder, SecureNow Insurance Broker.

 

Avoiding disputes in reimbursement claims 

If a major hospital is not part of your insurer’s network, it may be because the insurer has concerns about its charges. Policyholders should assess whether its charges appear reasonable. “One way to judge is to ask yourself whether the amount would seem reasonable if you were paying it yourself,” says Mehta.

 

Policyholders should prefer network hospitals whenever possible. “If they opt for a non-network hospital, they should be prepared for reimbursement instead of cashless treatment,” says Shilpa Arora, co-founder and chief operating officer, Insurance Samadhan.

 

In reimbursement cases, or when getting admitted to a non-network hospital, the policyholder should inform the insurance company or third-party administrator (TPA) about the hospitalisation.

 

“In reimbursement cases, the policyholder should submit a proper claim file within 30 days of discharge,” says Arora. She adds that the claim form should be filled out accurately and without errors or missing details, along with original documents. A claim request should also be raised online for faster processing and settlement.

 

If claim is fully or partially rejected 

After rejecting a claim or making a partial settlement, the insurer is supposed to issue a detailed settlement letter explaining what has not been paid and why. “The insurer should list even small rejected items separately and state the reasons for not settling them,” says Mehta.

 

In case of full rejection, it should issue a rejection letter stating the reasons for denial.

 

Before escalating the matter, the policyholder should first approach the grievance redressal officer of the insurer for clarification and reconsideration. “If that does not resolve the matter, the policyholder should escalate the complaint to the regulator via the Bima Bharosa portal,” says Mehta. If that also fails, the next port of call is the insurance ombudsman.

 

Courts and consumer courts remain an option, but the process is usually lengthy. “If the claim amount exceeds ₹50 lakh and falls outside the ombudsman’s jurisdiction, the policyholder should approach a consumer court,” says Arora.

 

Documents you should have available

• At admission: Policy copy or health card, identity proof, doctor’s prescription, admission notes and advice
• At discharge: Itemised hospital bills, discharge summary with diagnosis details, diagnostic reports, test results, pharmacy bills with prescriptions, payment receipts, implant details, KYC documents  Complete, signed, error-free original documents and accurately filled and signed claim form