When Does a Health Insurance Claim Get Rejected?

Let’s start with a small example. Raj purchased a health insurance plan for himself and duly paid all the premiums to avail of its benefits. Suddenly one day, he bumps into a door and injures his toes. He goes to the hospital and is treated in the outpatient department. He raises a claim under his health insurance plan - but it got rejected because OPD treatments are permanently excluded from his health insurance coverage! As a result, he had to pay for all his medical expenses himself.

So, what you can surmise from the example is that just owning health insurance isn’t enough. You should also be aware of the reasons that can lead to your claim getting rejected by the insurer, so you are not caught off guard at the time of the claim. You surely don’t want to pay your medical bills from your own pocket even after having a health insurance plan!

In this article, we will discuss some common reasons that can lead to the rejection of your claim. Read on!
 

When Does A Health Insurance Claim Get Rejected?

The possible reasons for your claim getting rejected are -

Not Being Aware of the Claim Process

A health insurance claim is basically a request made by you to your insurance company to cover your medical expenses. There are two types of claims processes - cashless & reimbursement - each with its own set of procedures and documents.

1. Cashless Claim

   A health insurance claim is basically a request made by you to your insurance company to cover your medical expenses. There are two types of claims processes - cashless & reimbursement - each with its own set of procedures and documents

2. Reimbursement Claim

   You need to pay the medical bills yourself. Once your treatment is complete, you are required to submit the necessary bills and documents to the insurer. The insurance company reimburses your expenses after they have been verified and approved.

   To make a claim, you need to follow the steps diligently, submit the required documents, and fill up the application forms correctly. In case you miss out on any essential document or incorrectly fill out the form, your claim might get rejected.
    

Not Renewing Your Policy On Time

The validity of a health insurance policy may vary. It can be 1, 2, 3 years etc. - depending on the insurer and the product. So, to ensure that your health insurance coverage remains active and doesn’t lapse, you need to renew your plan on time by paying the due premium. If you are not aware that your policy has expired and you raise a claim, it will get rejected.
 

Making A Claim During The Waiting Period

A waiting period is the time frame during which the insurer will not provide coverage for specific conditions or treatments. You won’t be able to raise a claim during the waiting period

The types of waiting periods are -

1. 30-day Initial Waiting Period:

   A 30-day initial waiting period applies to all treatments, excluding accidents.

2. Waiting Period for a Specific Illness or Treatment

   A 2-4 years waiting period is imposed on conditions like hernias, haemorrhoids, chronic kidney disease, etc.

3. Pre-Existing Disease Waiting Period

   A pre-existing disease (PED) is defined by the IRDAI as any medical condition that has been identified or treated within four years of purchasing health insurance. PEDs usually have a waiting period of 2-4 years.

For example, Samir purchased a health insurance plan in May 2022 - which had a waiting period of 2 years for pre-existing diseases. Samir already had diabetes and was taking medications for the same. Therefore, diabetes was considered a PED. Any claims related to diabetes will only be covered after the completion of the waiting period of 2 years, i.e., after May 2024.
 

Choosing A Hospital Room Beyond Your Eligibility

When you purchase a health insurance policy, you may be subjected to a room rent limit. This limit is basically the maximum amount that your insurer will pay per day for the hospital room in case you’re hospitalised for an ailment, injury, or accident. If you choose a room that costs more than what you are eligible for, your insurer will deduct the difference in the room charge and proportionately deduct associated medical expenses. Your health insurance claim may get rejected or only partially settled because of exceeding the room rent limit specified in your policy.

For instance, Pia owns a health insurance plan with a sum insured of Rs 4 Lakhs and a daily room rent limit of Rs 2000. She undergoes a one-day surgery a few months after purchasing her plan, for which she opts for a room with a rent of Rs 4000. Her total hospital bill comes up to Rs 1 Lakh.

Since she choose a room beyond the limit specified in her plan, the insurer will make two deductions:

Deduction 1: Difference in the room rent = 4000 - 2000 = Rs 2000

Deduction 2: Proportionate deduction for associated medical costs

Proportionate deduction = (Room rent eligible / Room rent availed) * 100

= (2000 /4000) * 100

= 0.5 * 100

= 50%

Let’s say the associated medical costs incurred during the hospitalisation are Rs. 80,000. So 50% of 80,000 = Rs 40,000.

Total claim payable = Hospital bill - Additional room rent charges - Proportionate deduction)

= 1,00,000 - 2000 - 40,000

= 58,000

So, Pia will have to bear a whopping Rs 42,000 out of her Rs 1 Lakh bill despite holding a Rs 4 Lakh cover.
 

Caps On Diseases

Caps in health insurance refer to the maximum limit up to which your insurer settles claims for certain disease and hospital expenses. You cannot claim beyond this specified amount.

For example, say you purchased a health insurance plan with a sum insured of Rs. 5 Lakhs and your plan imposes a cap of Rs. 2 Lakhs on kidney treatments. You incur a total cost of Rs. 2.5 Lakhs on a kidney treatment. You can make a claim of Rs. 2 Lakhs. The remaining amount, i.e., Rs. 50,000 will have to be paid out of your pockets.
 

Exclusions Under The Policy

Exclusions are certain conditions that are not covered by a health insurance policy. There are some standard exclusions set by the IRDAI that won’t be covered under any health insurance plan. And, if your insurance company feels that a particular disease is risky to cover, they might not cover it in your policy (these have to be from the list defined by the IRDAI too).

So, if you raise a claim for such diseases, it will get rejected. Read the policy wording carefully to be aware of the exclusions and avoid facing shocks when you make a claim.
 

Conclusion

A health insurance policy is like an umbrella during the rainy season. It provides you coverage in times of need. We hope the factors discussed above gave you an idea about why your claim can be rejected. Keep them in mind and carefully read through your plan’s T&Cs to avoid any nasty surprises down the road!