Health Insurance Claim Rules: Your pockets should not be empty as soon as you are admitted to the hospital! Understand these 7 hidden conditions before buying health insurance

The rapidly increasing medical inflation in India is today touching the level of 14 to 15 percent. In case of any serious illness, sudden surgery or accident, one week’s bill of private hospitals wipes out years of savings of an ordinary middle class family. This is the reason why people from major cities like Lucknow, Kanpur, Varanasi, Noida and Prayagraj of Uttar Pradesh to small towns across the country are now giving priority to health insurance. But today the biggest irony is that lakhs of people buy policies online only after seeing the sum insured (like ₹ 5 lakh or ₹ 10 lakh) and cheap premium. When someone in the family falls ill and a claim is submitted at the TPA desk of the hospital, the insurance company’s clauses come out and it is revealed that out of the bill of ₹5 lakh, only ₹3 lakh was passed, while ₹2 lakh had to be paid from one’s own pocket. In many cases, the claim is completely rejected citing technical flaws. Despite the Insurance Regulatory and Development Authority of India (IRDAI) making consumer-friendly rules, if a customer does not understand the ‘policy wording’ and 7 basic clauses of the policy, then huge financial losses are certain in difficult times.

Most of the disputes in health insurance are related to ‘waiting period’. When you buy a policy, not every illness is covered from day one. There are mainly three types of waiting periods in insurance policies:

• Initial 30-Day Waiting Period: There is no claim for any common illness (like dengue, malaria, viral fever or heart disease) within the first 30 days of policy inception. During this period, only treatment caused due to accidental emergency is covered from day one.

• Waiting period for specific diseases: For non-emergency diseases like Cataract, Hernia, Kidney Stone, Piles and Knee Joint Replacement, companies have a fixed waiting period of 1 to 2 years.

• Pre-Existing Diseases (PED): If you have diabetes, high blood pressure, thyroid or asthma at the time of taking the policy, it is considered a pre-existing condition. According to the amended rules of IRDAI, now no insurance company can impose a waiting period of more than a maximum of 3 years (earlier it was 4 years) on pre-existing diseases. While buying a policy, always check whether the company is offering the option of minimum waiting period (1 or 2 years) on PED.

Room rent limit is the most dangerous and hidden rule of any health insurance policy. Many companies add a condition to their plans that the room rent per day will be only 1 percent of the total sum insured (and 2 percent for ICU).

If you have a policy of ₹5 lakh, your room rent will be fixed at only ₹5,000 per day. Now if you choose a hospital room for ₹ 8,000 per day, not only is the additional rent of ₹ 3,000 deducted, but the rule of ‘Proportionate Deduction’ also applies. Under this, the insurance company assumes that you have taken a premium room, hence the doctor visit fees, surgery charges, nursing charges and OT expenses also increase in the same proportion. The result is that the insurance company deducts 30 to 40 percent from your total hospital bill.

Advice: Always choose a policy which has ‘No Room Rent Capping’ i.e. no restriction on room rent or at least ‘Single Private AC Room’ is clearly allowed.

Co-payment simply means that you will have to bear a certain percentage of the total treatment bill from your pocket and the remaining amount will be paid by the insurance company. For example, if your policy has a co-payment clause of 20% and the final hospital bill comes to ₹2,00,000, you will have to pay ₹40,000 yourself and the insurance company will pass the claim only for ₹1,60,000.

Companies often add co-payment conditions to policies for senior citizens above 60 years of age, or based on geographical zone (Zone A vs Zone B – eg Delhi/Mumbai vs Lucknow/Kanpur). In the greed of low premium, many youth also take co-payment plan, which proves costly later. While taking the policy, ensure that the base policy has a ‘Zero Co-payment’ clause. Similarly, ‘Deductible’ is the base amount, after crossing which the insurance claim starts; Deductible clauses should be avoided in general personal policies.

On hospitalization, 10 to 15 percent of the final bill consists of things which are called ‘Consumables’ (Non-Medical Items) in the technical language of insurance. This includes gloves, syringes, surgical tape, PPE kit, cotton, thermometer, diapers, administrative filing charges and discharge summary charges.

As per IRDAI’s standard list, normal health insurance policies do not pay for these non-medical expenses. In a bill of ₹3 lakh, around ₹30,000 to ₹45,000 may be spent on consumables alone. To avoid this, while taking the policy, add the rider of ‘Consumables Cover’ (Consumables Rider / Claim Shield) at a nominal additional premium. This small rider gets the entire bill for all these everyday medical items of the hospital passed by the insurance company.

Treatment of any disease begins several days before hospitalization and continues for a long time even after discharge. The expenses for doctor consultation, MRI, CT scan, blood test and sonography incurred before admission to the hospital are called ‘pre-hospitalization’. At the same time, the expenses of medicines, dressings, physiotherapy and follow-up checkups that last for 2 to 3 months after discharge from the hospital come under the purview of ‘post-hospitalization’.

A good policy is considered to be one which has at least:

• Pre-hospitalization: Minimum 60 days (minimum 30 days standard).

• Post-hospitalization: Minimum coverage ranges from 90 days to 180 days.

  
  

  Often people do not maintain these OPD and test bills after being discharged from the hospital. If you submit all the original bills and prescriptions to the insurance company within 30 days after discharge, the entire amount is reimbursed to your bank account.

If two members of the family fall ill in the same financial year or one member undergoes prolonged treatment, will the insurance company provide backup once the sum insured of the policy is exhausted? This facility is called ‘Restoration’ or ‘Refill Benefit’.

Be sure to check two main conditions of restoration in the policy:

1. Will this work for re-emergence of the ‘Same Illness’ or will the money be restored only for ‘Different Illness’? Modern policies also offer the option of 100% unlimited restoration for the same illness.

2. Is the restoration triggered when the Sum Insured is completely reduced to zero or also when it is partially reduced?

Also check for ‘No Claim Bonus’ (NCB). If you do not take any claim in a year, good companies increase your sum insured by 10% to 50% without charging any additional premium. In some policies, the Sum Insured increases from 100% to 500% (with Super NCB Rider) over 5 years, which is the strongest weapon to fight inflation.

IRDAI has implemented the revolutionary system of ‘Cashless Everywhere’ across the country, under which the insured can get cashless treatment in any hospital which is not included in the official network of the insurance company. But for this facility also there are some pre-conditions which are mandatory to know.

If the surgery or treatment is already planned, the insurance company or TPA has to be informed at least 48 hours before hospitalization. If there is an emergency admission, it is necessary to intimate the insurance company within 24 to 48 hours of admission. Also, while taking the policy, check whether the leading multi-specialty hospitals in your city, district or vicinity are on the active cashless panel of that insurance company. If the hospital is in the blacklisted (Excluded Hospitals) category, then the claim will not be available there under any circumstances.

To make policy selection easier, understand the key differences through this table:

Apart from the policy terms, the biggest hurdle at the time of claim is the consumer’s own mistakes. The biggest legal basis that insurance companies have for rejecting claims is ‘Non-Disclosure of Material Facts’. If you have BP, sugar, thyroid, or consume cigarettes/alcohol, then disclose it 100% truthfully in the proposal form. Even if the company demands ₹ 1,000 more premium from you or gets a medical checkup done, your claim will never be rejected in future.

Additionally, remember the ‘Moratorium Period’ rule of IRDAI. Under the new rules, if a policyholder has paid premiums continuously for 5 years (60 months) without any break, then after completion of 5 years the insurance company cannot reject the claim on the grounds of any chronic disease or non-disclosure (except outright fraud). Provide the correct policy number to your TPA desk as soon as you are admitted to the hospital, retain the doctor’s first OPD slip and all pathology reports. Only correct information and timely analysis of these 7 conditions will ensure that your health insurance truly stands as a strong shield in difficult times of illness.