Have You Considered These Things Before Making a Health Insurance Claim?


Considered These Things Before Making a Health Insurance Claim

The most important part of the insurance utilization process is claim settlement. Claim settlement can be considered as the last stage in the process and is the core stage for which the policy is taken. Health insurance claim settlement arises once the patient is hospitalized due to an accident, disease, or illness. Health insurance claim settlement could be done on a cashless or reimbursement basis. A cashless basis is when the insured doesn’t pay the claim amount from their pocket, as the insurance company would directly settle the amount with the hospital.

In contrast, in the case of reimbursement, the insured would settle the hospital bills first and later claim from the insurer by submitting the required documents. The main intention of taking a health insurance policy is to get compensated in case of a claim, and god forbid, no one wishes to get hospitalized. Most of us might have understood the care to be taken at the time of taking the policy, but we have rarely discussed the things to be considered while making a health insurance claim.

Let’s discuss the important things that are to be considered at the time of making a health insurance claim. These things could make or break your claim settlement process, and therefore, we advise you to pay great caution to the factors below while going for a claim. These things would be applicable for both cashless and reimbursement modes of claim settlement.

Critical Factors in Navigating Health Insurance Claims for Seamless Settlement

Room Rent:

The most important and the least adhered to is the room rent at the time of claim settlement. Room rent plays an important role in your claim settlement process. Room rent is the maximum permitted nursing room expenses one can incur at the time of hospitalization. Room rent is usually expressed as a percentage of the sum insured or a certain amount, whichever is lower. For example, it could be expressed as 2% of the overall sum insured or Rs.5000 per day, whichever is lower. Room rent is given on a per-day basis, i.e., the limits specified would be applicable to room rent payable on a daily basis. Room rent would be paid for the number of days the insured patient undertakes treatment in the hospital.

Room rent condition is to be strictly adhered to at the time of hospitalization as it could severely and adversely affect the claim settlement process. The reason behind this is that the room rent is linked to all other hospitalization expenses. For instance, the doctor’s fees, anesthesia fees, nursing fees, etc., would vary based on the type of room. For example, the doctor’s fees could be higher in Suite rooms when compared to the sharing room. This means if you opt for a shared room at the time of policy purchase but avail of an AC suite room at the time of hospitalization, an insurance company would have to incur additional expenses on you, which would violate the basic principles of insurance. Opting for a higher room than your eligibility would result in a proportionate reduction of claim payment. For example, let us assume that your room rent limit per day is up to Rs.2500, but you decided to avail treatment in a room that costs Rs. 5000 per day, in which case you had overshot your limit by 50%. Now, when it comes to claim settlement, the insurer would reduce your claim payment amount by up to 50% just because of this issue. So you should check your eligibility before getting admitted to the hospital and, if necessary, verify the same with the insurance department at the hospital.

Blacklisted Hospitals:

The other important thing to consider is the type of hospital. Blacklisted hospitals are those hospitals which are blacklisted by the insurance company and are not eligible for claim settlement. There could be various reasons for blacklisting a hospital, and one should check if the hospital they prefer is blacklisted or not. Treatment taken in a blacklisted hospital would not be covered even in reimbursement mode. The list of blacklisted hospitals would be available on the website of every insurance company, or a comprehensive blacklist of all the insurance companies can be downloaded from here. Blacklisted hospitals are not eligible for cashless claim settlement and therefore do not appear on the network hospital list of the insurer. It is important to check if a particular hospital is blacklisted or not directly with the insurer. Sometimes, there could be two hospitals with the same name or similarly sounding, potentially confusing customers to go with the copycat. In such cases, verifying with the insurer directly would help prevent falling for the blacklisted hospitals.

Network Hospitals:

Network hospitals are those that offer cashless claim settlement facilities to the insured customer. Insurance companies usually tie up with hospitals to offer cashless claim settlement facilities, and these hospitals are referred to as network hospitals. Insurers would have a pre-decided package for each treatment in these hospitals, and therefore, the claim would be processed rapidly without much involvement of the insured. The list of network hospitals would be available on the website of the insurer, or a comprehensive list can be availed from here. If you are planning to avail treatment in a network hospital, then you should inform the insurer 48 hours prior to facilitate smooth claim settlement. This condition would not be applicable in case of emergencies where you could get admitted to a network hospital directly without requiring prior permission from the insurer. If the treatment is taken in a network hospital, then the claim would be settled on a cashless basis. It is important to note that if you deny a cashless claim facility in a network hospital, insurance companies may penalize you with co-payment without valid reasons for such rejections.

Co-pay & Excess:

The other important factor to keep in mind at the time of health insurance claim settlement is the co-payment. A co-pay is the amount of hospital bill that has to be borne by the insured, after which the insurance company would make the remaining claim amount payment. Co-pay would come into the picture at the time of claim settlement. Excess the claim amount that has to be borne by the insured, which is different from the co-pay. Excess or deductible is mandatory for every insurance policy, whereas co-pay is not. Co-pay can be considered as the excess amount over and above the existing deductible in the policy. The insurance company would settle the claim by deducting the co-pay and the excess amount. Co-pay and excess are usually included to share the claim responsibility with the insured customer. It is important to understand that a co-pay in a policy would incur certain costs for the insured customer and one should be ready to bear these costs and make arrangements for funds to settle the claim amount.

Individual vs Corporate Health Insurance Policy:

The other important thing that could confuse the insured customer while going for health insurance claim settlement is whether to utilize a corporate health insurance plan or an individual health insurance plan. There are merits and demerits of using each of these, but it is advisable first to utilize the corporate health insurance plan and then go for a personal health insurance plan. This is due to the fact that the employer offers corporate health insurance plans, and their utilization does not have any negative impact on subsequent renewal for the insured, whereas, in personal health insurance plans, you could lose out on the no-claim bonus or even face increased premium due to the previous claim experience. It is advisable to submit both policies and indicate the preference in order so that the insurance desk can coordinate with the insurers and process the claim. If both the plans are from the same insurer, then it would be smooth for the hospital to coordinate the claim settlement process. Suppose the sum insured in a corporate health insurance plan is enough to cover your hospital expenses. In that case, it is advisable to utilize the policy instead of taking out the personal health insurance plan.

For more details on the things to consider before making a health insurance claim, please talk to our health insurance experts at Ethika Insurance.

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Susheel Agarwal

Namaste. I'm Abhinay Nedunuru, a Fellow of the Insurance Institute of India with a passion to make insurance simple and crisp. I write on insurance and investment. I have a passion for teaching and training in particular to insurance. I'm currently doing my PhD from IIM in Management.