Know When the Health Insurance Claim Amount Will Not Be Settled

In these tough times of COVID-19, health insurance coverage is surely the need of the hour. When buying the health insurance plan it becomes important to understand various terms and conditions that the plan has to offer or else during the health insurance claim process, the disallowances might give you hicups.

Knowing the health insurance policy will enable you to avoid a bad experience later. You must be aware of various insurance-related terminologies and the effect it has during the stage of the health insurance claim. Let us understand some of the common reasons for the disallowances listed below:

Room Rent Restrictions: One of the common mistakes that many of the customers make is that when buying the health insurance policy they do not pay heed to the restriction upon the room rent or the category. On the premise of the sum insured or the chosen hospital, the out of the pocket costs could run high just because of the category restriction/ rent in the policy.

Most likely the health insurers will limit the rent of the room to one to two per cent of the sum insured; however, the same limit is not applicable when it comes to the admission in the ICU as per the regulations of IRDAI. Let us just assume that in case you have Rs 3 lakh sum insured, where you will be entitled to the room rent of Rs 3,000 that is assuming the 1% limit and if admitted in the room with everyday room rent of Rs 5,000 that is the average rent of the single room in an urban hospital then most likely you would be paying 40% of the bill from your pocket excluding the expense of drugs, implants, consumables, etc.

It is to be noted that this will be large in a critical scenario wherein the treatment is then taken in tertiary care hospitals. So, do not buy a health insurance plan with the low limit upon the room rent. There are other types of room rent restrictions, which has a slightly less effect on the disallowances. The first sort is equivalent to the 1-2% of the above restrictions and there is no proportionate deduction.

Now, the health insurer might disallow the difference in the rent of the room. Besides, the insurer would also restrict a room category, which would be chosen such as the semi-private room. In case of a high room category, it would either lead the co-pay or the proportionate deduction. When you choose the category of room, which is permitted in the policy then there is no disallowance on account of the room rent.

Co-pay: When it comes to co-pay, it is the cost-sharing provision wherein the percentage of a health insurance claim is borne by the insured. The studies depict that the cost-sharing provisions are influenced by the manner the services of health are consumed upon the premise of two reasons primarily.

The cost-sharing provisions show to control the moral hazard simply by decreasing unnecessary health services consumption.   The customers also tend to sign the unchecked bills in the case when the payment has to be done by the health insurers; however, the same customers will scrutinize the charges in case of the co-pay. Usually, ten per cent co-pay is manageable, however, large co-pay in the policy could also entail huge out of pocket expenses specifically in case of the major claim.

Let us just assume that you have a 20% co-pay in the policy and a claim of Rs 50,000 is made then the sum of Rs 10,000 will be bear by you and the health insurer would only pay Rs 40,000. In case of a Rs 5 lakh claim then out of the pocket costs could be Rs 1, 00,000.

Now this is a sum that most of the mediocre families would find it tough to pay. Therefore, check for the level of co-pay in the policy with, which you are comfortable with. It is possible that with some of the policies, the treatment city, the room choice, and so forth would also trigger the co-pay quantum. Therefore, it is better to understand such provisions before you make the buying decision of a health insurance policy.

• Consumables: Take any average hospital bill, the three to six per cent of the charges are for the consumables such as cotton, dressing, gloves, disposables, and so forth. In the times of COVID-19, these charges have burgeoned up to 15-20 per cent of the bill because of excessive use of the protective gears such as the masks, PPE kits, face shields, gloves, etc. In case the policy does not cover all of these, the customer will have to bear these expenses from their pockets. There are various other reasons for the disallowances that are good to understand, however, entail heavy burden on the customers.
• Procedure Sub-limits: In certain cases, the policies do have specific limits for the common surgical treatments such as a hernia, cataract, etc. that is much lower than a policy limit. So, when the bill is more compared to the procedure limit, then it would be you who need to bear the difference in the expenses.
• Policy Sub-limits: The policy could also have sub-limits for certain benefits that are lower than the sum insured. Check the policy for the sum-limits for any benefits specifically, for instance, a Rs 50,000 limit for the AYUSH treatments. In some of the policies, the pre and post-hospitalization costs are capped at 10% of the inpatient claim.

The Bottom Line

Regardless of whether you buy offline or online health insurance, make sure that you check the policy wordings, thoroughly read upon the terms and conditions of the policy and get all the doubt clarified. Only, after all this sign below the dotted lines.

It is advisable to buy online health insurance and compare the quotes and features available in the market. Remember, a little attention to the health insurance details will take you a long way towards a worry-free life.