Health Insurance Claims – A Perspective


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Health is Wealth. This is a saying which every one of us will agree and vouch for. However, it an unwelcome situation where the hard-earned wealth has to be spent to regain the health which got deteriorated for some reason or the other. It is from this concept that the ideology of Health insurance cropped up. Though the initial variants were focussing on the provision of financial back up only for the primary hospitalization, the present-day health insurance policies go way beyond the same.

The effect of globalization and the entry of multinationals into the Indian Insurance industry coupled with technological advancements have made it possible for insurers to offer very sophisticated and customized products to cater to the various strata of the society. In this context, it has to be mentioned that the hospital industry has also grown manifold and Indian hospitals and treatments are considered to be of very high standards across the globe.

It is teamwork between the Insurance companies and the hospitals which actually ensure that the objectives of health insurance are truly and completely satisfied and the non-cooperation of any of these two parties would hamper the smooth flow of the entire process. Both of them have their individual roles to play and be collectively responsible to the policyholder at the end of the day! The Third Party Administrators have their own role to play in the entire process by acting as a coordinator and ensure effective and efficient processing of a health insurance claim.

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As like any other domain, personal health insurance is often buried in the myths and false propaganda, more so with respect to claims settlement, It is a reality that few genuine claims would have got into issues for various reasons but generalizing it to the whole of health insurance does not seem to be a good idea.

Understanding the entire process may surely help the policyholder to be aware of how the claims process works and what are the simple steps to be followed to have a hassle-free experience.

Though this article will not focus on the basics of insurance or the types of health insurance policies available, it will attempt to address most of the common concerns faced by the health insurance policyholder so as to have their claim settled without any complications.

To start with, let us begin with the scenarios wherein an individual person gets covered under a health insurance policy. The scenarios can be enlisted as below:

(i)The policy would be bought by himself/ herself
(ii)As a part of the entire family as a dependant family member
(iii)As a part of the employee group where the employer offers health insurance coverage as a part of employee benefit
(iv)As a part of the benefit group where the service provider offers health insurance cover as an additional benefit such as bank account holders, credit card holders, etc.
While the policies issued as per definitions (i) and (ii) above are known as Retail/ individual policies while the policies as per definitions (iii) and (iv)above are known as Group policies. Each company may have its own product name for each of these policies but this is the basic classification. There are several differences between the Retail policies and Group policies and each of them has its own special features and unique advantages and should not be considered lesser than the other.
Any health insurance policy issued in recent times is offering a cashless facility. This means the policyholder can avail treatment from the hospital without having to pay for the medical expenses incurred. Coverages are however determined by the respective policy conditions and terms.
It has to be borne in mind that there are several factors that affect the claim processing. The following are the stakeholders who facilitate the processing of a health insurance claim in a fair and smooth manner.
(i)Insured (Policyholder)
(ii)Insurer (Insurance Company)
(iii)Hospital or the health-care provider
(iv)Third Party administrator
(v) Intermediaries such as Insurance Broker or an Agent

Let us discuss briefly where each of the above-mentioned parties has a role to play.

Policyholder: Insurance is a contract between the Policyholder (Insured) and the Insurance Company (Insurer). Both parties have their set duties and responsibilities towards the contract. As most of us are aware, an insurance contract is primarily based on the principle of “Uberrima fides” which means “Utmost Good faith”. This means each of the parties should trust the other party and disclose all the material facts so that the other party takes an informed decision to proceed with the contractual obligations.
For instance, if the insured declares good health at the time of taking policy but some pre-existing disease gets identified during hospitalization, the insurer may even cancel the policy as the trust has been breached by the insured.

Insurance Company: If the terms of the policy are changed by the insurer without prior intimation to the insured, the insurer becomes legally liable to honor such a claim which got affected to that effect. The terms and conditions of the policy have to be made clear to the insured right at the time of policy issuance so that the insured knows what exactly is being offered. The insurer cannot take advantage of the insured’s ignorance and avoid settling an admissible claim.

Hospital or Health-care provider: Every insurer has a list of impaneled hospitals where they insist on their policyholders to get treated. These are also known as “Network hospitals” or “Preferred hospitals”. This is the list of hospitals that are verified by the insurer and have a pre-fixed tariff for most of the hospitalization facilities. Any insured not getting admitted to such a hospital might not be permitted to have a cashless facility, as the case may be. Hospitals on the other hand should not attempt to take advantage of the insurance coverage and charge for additional/ unnecessary treatments. Though this aspect is not in the control of the insured as such, it may hamper the claim settlement process as the insurer would get into an investigation of all the reports before settling the time and may also deduct the costs which they feel are inappropriate.

Third-Party Administrators: These are the entities that are the main coordinators between the hospitals, insureds, and insurers. They handle most of the policy servicing issues and also act as the insurer’s representatives for facilitating quick services related to hospitalization such as providing Pre-authorisation approvals for admission into hospitals, offering cashless approvals from time to time as per the policy terms, and processing the final claim settlement without which the discharge would not happen from a hospital.

An intermediary such as an insurance broker or agent: They are professionals in handling insurance services and guiding the insured. Be it for choosing the apt policy coverages by an individual or an organization, intimating the insurer or their TPA on time about a claim incidence, following up with the insurer for speedy processing of claims, the intermediaries have an edge over the insureds because of their awareness of the processes involved.

Thus, in a nut shell, the insured has to be watchful on all the above parameters and not just fall prey to the aggressive pricing and false commitments so that in the event of a claim, they get proper service from the remaining stakeholders.

The other form of an insurance claim if the cashless facility could not be utilized by the insured is known as a “Reimbursement Claim”. In this case, all the relevant documents such as Discharge summary, medical reports, treatment and medical bills, and so on are to be submitted to the insurer along with the duly filled claim form by the insured. The insurer, upon satisfying himself, shall arrange to settle the claim as per the policy terms and conditions. This will be a lengthier process as compared to a cashless facility that happens alongside the hospitalization period.

fact about health finances

The insured can himself lodge the insurance claim but in situations where his health would not permit, his representatives viz., family or employer can lodge the claim on his behalf. If it were to be a cashless claim, the hospital would take the policy and lodge the claim.

There might be any number of claims lodged in a policy year. However, the Sum Insured is the upper limit beyond which the policy does not offer coverage. If the Sum insured gets exhausted in the very first claim incidence, there cannot be another claim lodged for the policy year, if the sum insured is not immediately reinstated.

It has to be borne in mind that the claim incidence during a policy year is surely going to affect the premiums or the coverage terms for subsequent renewals. While there might not be a direct rise in premiums in individual policies, certain factors like cumulative bonuses will not be offered upon renewal.

Also, certain insurers offer free medical examinations such as a master health check which will not be provided if there were a claim reported under the policy. Under the group policies, the premium gets directly impacted upon renewal. If there is a low claim incidence under the current policy, the renewal premium would get lessened. Similarly, if the policy reports too many admissible claims, the premium for renewal rises steeply. This is one of the reasons why employers provide restrictive coverage to employees so that the losses are kept under control.

Unless there is any fatality involved, the insurers never insist on a Police FIR for processing a health insurance claim. One should keep in mind that this policy is basically to take care of the hospitalization, treatment, and related expenses but not to make good any financial loss.

To summarize, health insurance is a tool to overcome unforeseen hospitalization expenses. Everyone needs to be aware of their policy terms and conditions right from the beginning but not run around in anxiety when the actual hospitalization is required.

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Susheel Agarwal

Susheel is the CEO of Ethika Insurance Broking P Ltd. This company, which has a current value of 10 million dollars, was bootstrapped by him and two of his friends. He attributes his success to his ability to inspire others to seek happiness at work.