Assume, you were admitted to the hospital due to an accident and at the time of admission you have submitted your health insurance card at the hospital. But, you were shocked to see a rejection mail from the insurance company regarding your claim. Now the entire burden of claim payment has fallen on you as it would not be possible for a cashless claim.
Such a situation might be scary to even think of and one can only hope not to come to those situations even after taking a health insurance policy. Nevertheless, there are certain reasons that could result in a health insurance claim rejection by the insurance company. These reasons could easily be avoided by the policyholder just by understanding the basic terms and conditions of a health insurance policy.
According to a survey, 75% of the claim rejections are happening due to the limited understanding of the insurance policy. Let us discuss a few reasons that could lead to health insurance claim rejection and how to avoid your health insurance claim from getting rejected.
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Navigating Health Insurance: Understanding Rejection Reasons and Avoiding Claim Denials
Declaring Wrong/Partial Information- Proposal Form & Claim form:
The basic mistake people commit is that they do not declare complete information in a proposal form or the claim form. You should understand that the declarations made in a proposal form act as the basis for acceptance or rejection of your proposal and if you make incorrect, wrong or partial declarations, it would lead to rejection of an insurance claim. The same would be applied to a health insurance claim form, it should be filled with all the correct details so that the claim could be processed without any risk of rejection.
Delayed Intimation:
The other reason for claim rejection could be delayed intimation of the claim to the insurance company. In case of hospitalization due to an emergency, you are required to intimate the insurance company regarding the hospitalization within 24 hours. In case of planned hospitalization, you should inform the insurance company at least 24-48 hours in advance.
If these timelines are not followed, then the risk of claim rejection increases with each passing day. The insurer would expect proper reasons for delay in intimation of a claim and if the reason is not satisfactory, the claim would be rejected. Once the claim is intimated, policyholders can check the health insurance claim status on the website or get regular updates through email and SMS.
Claim Under Exemption/Exclusion
When a claim is filed by the policyholder, the insurer would verify the acceptability of the claim under the existing terms and conditions of the policy. If it is found that the claims fall under an exemption or an exclusions, then the insurer would reject your health insurance claim. It is advisable to read the terms and conditions, and exclusions of the health insurance policy before taking it in order to avoid claim rejections.
Similarly, a claim could be rejected if the overall claim amount falls within the deductible limit. Deductible refers to the amount that has to be borne by the insured policyholder for each and every claim. The insurer would start the claim payout only after the policyholder has settled the deductible amount to the hospital. So, for a petty claim where the claim amount is within the deductible limit, the insurer would reject the insurance claim. Therefore, one should refrain from claiming small amounts.
Waiting Periods
The other reason for health insurance claim rejection is when the claim is made before the expiry of the waiting period. If you make a claim before the waiting period, it would be rejected by the insurance company as it comes under an exclusion. Waiting period refers to the time policyholder needs to wait before availing the benefits under a health insurance plan. There are various types of waiting periods such as 30 day/ Initial waiting period, Specific disease waiting period up to 2 years, Pre-existing waiting period up to 4 years, Maternity waiting period up to 2 years etc.
Lapsed Policy
Lapsed policy is not eligible for availing benefits and if you were to make a claim under a lapsed policy, the insurance company would reject the claim as the policy is not in force. Therefore, it is important to maintain the policy live to avail the claim benefits. Once a health insurance policy is lapsed, all the benefits accumulated under the policy would also be gone thereby forcing us to make a fresh start. So, if you were to make a claim after the policy lapsed, it would be eventually rejected by the insurance company unless you can prove that the hospitalization happened before policy lapsation.
Exhaustion of Sum Insured
The other reason for health insurance claim rejection could be the exhaustion of the sum insured under the policy. Health insurance sum insured is different from that of other general insurance plans as in health insurance the sum insured would decrease with every claim made during the policy period. The issue would be highly persistent for floater health insurance policies, where the same sum insured would be used by all the family members. If more than one family member gets hospitalized during the policy period, it could be possible that the sum insured becomes insufficient thereby leading to rejection of claim by the insurance company.
Lack of Proper Documentation
Whenever a claim is raised by the policyholder, it should be assisted with proper documentation that supports the claim. A list of documents required for a health insurance claim should be submitted to the insurance company in order to process the claim. Any inconsistency in submitting these documents could lead to rejection of claim as the claim is assessed and processed based on the original documents.
In case of cashless hospitalization, almost all the documents would be submitted by the hospital directly to the insurance company. However, in case of reimbursement mode, policyholders are expected to submit all the required documents for claim settlement.
Duplicate Claim
The other common reason for a health insurance claim rejection could be the duplicate claim under a single policy or multiple policies. If you try to raise multiple claims for a single hospitalization, then only one claim would be considered and all other claims would be rejected by the insurance company.
Similarly, if you try to claim from multiple insurance companies for a single hospitalization, then you would also face rejection from insurance companies. For example, you may try to avail cashless hospitalization from your personal health insurance policy and later claim reimbursement from your employer sponsored health insurance for the same hospitalization. In such cases, the second claim would be rejected by the insurance company as one event cannot be settled twice.
Non-disclosure of PED
The other major reason for a health insurance claim rejection could be the non-disclosure of pre-existing diseases at the time of taking the policy. It is important to understand that pre-existing diseases are covered only after a certain period of time under the health insurance policy and non-disclosure of PED could lead to rejection of claim and even cancellation of policy.
Pre-existing diseases (PED) or conditions are those known conditions for which the applicant has taken treatment and that existed prior to taking the health insurance plan and are to be declared at the time of taking the policy.
FAQs:
What is an insurance claim?
An insurance claim is a request made to the insurance company by the policyholder or the insured to settle the hospitalization amount incurred by the insured.
What happens if a claim is filed wrongly?
When a claim is filed wrongly, it could lead to rejection by the insurance company. Wrongly filed may refer to filing the claim with inappropriate details or selecting the wrong disease or illness instead of actual condition.
What happens if I do not revert to the insurer on time regarding claim queries?
If you don’t reply to the insurance company within the given time regarding the claim queries raised by the insurance company, the insurance company would close your claim without settlement stating no response from your end.
What is unjustified hospitalization?
Unjustified hospitalization refers to the hospitalization made by the insured for the conditions or illnesses that would not usually require hospitalization and all such claims may be rejected by the insurance company.
Will the insurer provide a reason for claim rejection?
Yes. Every claim rejection would come with a reason for rejection which can be challenged by the policyholder or the insured customer.
