August 18, 2021

5 major reasons for health insurance claim rejections

What are some of the reasons because of which you may get a shock while making a health insurance claim?

There are tons of bad reviews for various insurance companies and policies that they rejected their claims or didn’t pay in full. A lot of times these incidents happen because customers are not aware of many rules and best practices of making claims. So we did a podcast with Mahavir Chopra of Beshak.org (listen to the whole podcast + Q&A below) to understand the top 5 reasons for this.

5 major reasons for disputes & claim rejections in health insurance

#1 – Proportionate Deductions

Proportion deduction happens when you choose a hospital room whose rent is higher than the one you are eligible for. In this case, all the other expenses (other than the room rent) also get the deduction in the same proportion and you can lose a lot of money.

For example, if you were eligible for a Rs 5,000 per day room, but if you choose Rs 10,000 room, then the proportionate deduction will be applied for your entire bill, not just the room rent part. So if the entire bill is for 10 lacs, you will be just paid 50% or 5 lacs in claims.

A lot of old policies or PSU policies still have a room rent limit. Even corporate policies have a fixed amount limit on their policies, so it’s always suggested to check this before you choose the hospital room.

#2 – Not disclosing pre-existing illness

A big reason for many claims dispute is when your claim is rejected or partially paid because you didn’t mention some past illness, surgery, issue which you had but never disclosed it.

A lot of people feel that only some recent surgery or a big illness has to be disclosed while buying health insurance. But the truth is that even the smallest of details has to be shared. That small surgery 20 yrs. back, that 2 months of medication for hypertension which one went through the long back, some illness which got cured long back – everything matters, simply because this all data is used by the insurance company to gauge the risk factor.

You never know how all these medical issues are linked to each other.. Don’t skip it, else that will be used against you. And the premium does not necessarily increase by mentioning every detail!

#3 – Reasonable and Customary Charges

Don’t think that insurers will always settle any amount of bill which the hospital charges. There is a clause of “reasonable and customary charges” in health insurance, where the insurer will only pay if the hospital charge is reasonable and has an acceptable logic. That means that it should be close to what others hospitals of the same nature on average charge in a given location.

So if surgery is costing 2 lacs on average, the company will not pay if you go to a hospital that charges 10 lacs for it. It’s your responsibility to make sure that you also put some thinking and effort into making sure that you are not overcharged just for the sake of it. Insurance is not a license to overspend or enjoy hospitalization at lavish hospitals.

A little deviation from the average cost is fine, but too much deviation will not be accepted and you may be getting a rude shock later. So better spend as if you are paying from your pocket.

#4 – No coverage for “Consumables”

Imagine you went to a restaurant for your dinner and in the bill, the restaurant also charges you for the AC, the food plate, the 2 hr rent for the chair you used apart from the food.

You will freak out! .. RIGHT!

You will say, but you always thought that it’s part of the whole deal and it’s all needed to provide you with the dinner.

That’s exactly is what consumable expenses are. These are various small things that will be required for the medication/surgery etc. which shall be all part of the room rent or the surgery cost and shall not be charged separately (but hospitals still charge many of these separately).
Insurance companies don’t pay for these consumables separately as they consider them as inclusive of the hospital package. Examples of these things are…

  • Masks
  • Gloves
  • Cleaning kits
  • Spectacles
  • Hearing aids
  • Adhesive bandage
  • Crepe bandage
  • Cotton roll
  • X-ray Film
  • Surgical drill
  • Hair removal cream

Note that the consumables cost can form around 2% – 10% of the overall bill in general, but in COVID times, we have seen that the consumables themselves was forming around 15-25% of the hospital bills and they were not paid by the insurer.

There are some extra riders for consumables that one can buy while buying the health insurance policies (it will cost extra)

#5 – Unnecessary Hospitalization Case

Insurance companies won’t pay for unnecessary hospitalizations.

Unless there is an active line of treatment at the hospital which is really needed, it will not be considered a valid claim. Let me give you an example that Mahavir Chopra shares in our conversation. Let’s say that a 50 yr old person has chest pain and the family rushes to the hospital. The doctor checks up everything and tells you that you may want to just get admitted for 1 day so that they can monitor things to be on the safer side.

Now, this is not treatment. This is simply monitoring of things and it’s really not required as such. It may be required in your world as you want to be safe and because it came as a doctor’s suggestion, but from an insurance angle, this is not treatment. Most of you will also agree that hospitals do this simply to charge of a day and play out the fear factor.

I am not denying the need for it. But the insurance companies will consider this is an invalid thing.

Another good example is a covid case. Just because one got Covid and his oxygen level is 90, does not mean that they rush to the hospital because things can still be treated at home. If one wants to play safe and wants to get admitted just to play safe, that’s his/her personal choice, but it’s not payable (unless things go really bad and then there is a doctor recommended that hospitalization is unavoidable)

#Bonus Tip – Dont forget the PRR 

At the time of making claims, many times people forget small things but always remember the PRR principle.

PRR means

  • Prescription
  • Receipt
  • Report

Always ask the doctor to give a prescription for each test, surgery, medication … Dont forget it

Always ask the doctor to give a receipt, make sure its dated (pre-printed or stamped, but not handwritten)

Always obtain the report wherever applicable (mostly in tests)

A lot of times you will have to send these for getting a reimbursement (even in cashless, you may have to send documents to claim the pre & post-hospitalization reimbursements), and if you miss any of these then you will not be paid the money.

How was your health insurance claim experience?

I hope this was helpful and please share your inputs and claim experiences in the comments section. Were you paid the full amount or some major deductions were made?


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1 year ago

Some data points for everyone’s benefit. We made few claims with Star Health, the process was smooth and reasonable. Made couple of claims with United India Insurance which is managed by Vidal TPA. A horrible customer care service. I advice people not to buy any health insurance where Vidal is the TPA.

Preethy Reddy
Preethy Reddy
2 years ago

Hi Jago Team, we need financial assistance. please tell us how to contact your team.

K.S.U. Bhaskar
K.S.U. Bhaskar
2 years ago

My Wife underwent 2 surgeries for nerve twisting on the wrists of both hands. Both the times I paid the bills and applied for reimbursement from Arogyadaan of Andhra bank. I was paid good except small amounts of cuts here and there. I and my wife underwent Catact operations for One eye each. It was a cash less treatment. Except my self was asked to pay Rs. 1000 for consumables rest every thing was cash less. Thanks to Arogyadaan

Vishal Mishra
Vishal Mishra
2 years ago

I have very bad experience with Aditya Birla Health Insurance. Still fighting for my claim. I was hospitalized for 15 days in ICU in the starting of May due to covid. Doctor gave me Steriod for the treatment of Covid and due to that my sugar got shootup. One verifier came from the Aditya in the starting of my hospitalisation and asked many questions to my family including the status of my Diabetes and my family told him that I had Diabetes since last 4 to 5 months only, but that verifier noted in the form that it is from the last 4 to 5 years. Hence Company rejected my whole Insurance which was around 3.5 lakhs. I was ported into Aditya Birla policy three years back from National Insurance. And even in my First Aditya Birla policy it is clearly mentioned that 48 months waiting period waived off. But still they rejected my claim.

S chakraborty
S chakraborty
2 years ago

1. Very Good information for the claimants. People must have to be careful.

2 Do advanced countries follow the same procedure of insurance payment ?

3. Hospitals in India do not follow a standard procedure and insurance companies design their own ways of consideration of claims . For example it is presumed by Insurance companies that consumable cost are included in room rent , Hospital don’t include in room rent and charge separately. It is a kind of game Hospitals and insurance companies play that the consumers should keep in mind while claiming.

4. The consumers also resort to false claims , which tgey must refrain from. Insurance companies used to incur huge false pay out earlier. But now it is not the case as insurance companies are extra careful and the yearly charge have increased enormously.
Now all cost have gone up but compensation is low. In a way customers as a whole with fake claims are also responsible for low compensations, most probably

5. False claims of advanced countries are lower than India ?

6. Whatever, the caution given by the article is useful for the claimants. One has to know. Insurance companies do not cut if all conditions have been met as written and accepted by customers while purchasing the insurance.

Thanks to the author for the valuable information

2 years ago

We are senior citizen couple. My experience in last 15 years medical insurance with GIC. (1) First time for me ( at Thane), family doctor advised to go to hospital for chest pain. Cashless , kept in ICU for 6 days. all tests , discharged after two days in ordinary room. Last two days suspected Malaria !! Later found it was saline bottle kept at more height during shifting !! Got full claim except for 30 pairs of hand gloves used in ICU ( what for ? I was not pregnant /delivery). (2)For me – Second time – Frozen shoulder ( Pune ). Orthopedic / Trauma specialist suggested ARM TWISTING UNDER GENERAL SYNESTHESIA & did it followed by many physiotherapy sessions. No use. Got cured automatically after two years. Got almost full claim.(3) Third Time – My Prostrate gland operation ( Pune) – Not a fancy hospital but good Urologist. Successful surgery. Good recovery. No problems since. Full payment by insurance. (4) Fourth time – my wife- Could not take food & became weak , low hemoglobin etc. Well known hospital in Pune. 15 days in hospital, could not determine problem, kept changing diagnosis , suspected chest infection, given strongest antibiotic , all the machines in hospital were used. Declared her fit and discharged. only 60 % claim paid by insurance. She collapsed within about 15 days of home stay. Rushed to same hospital , they revived her and send to Associate hospital as no ICU beds available. Same story i associate hospital, bombardment of antibiotics + diagnostic tests.Still food intake low and weakness continued. weakness continued . Just day before discharge I insisted ( actually created a fight) for ENDOSCOPY OF THROAT ( doctor did not advise , only because I insisted ). Within 10 minutes the Endoscopy doctor came out and told me that she had severe throat burns because of acid re flux. That is why she could not take food hence weakness and collapse ! Right medicine was given and she was OK within 3days & fully recovered in one month. Got only 50 % of claim. She is healthy since then for past 2 years. The Endoscopy Report DOES NOT mention Recommending doctor’s name !!- MORAL of THE STORY – There are good hospitals and bad hospitals . There are good Insurancecompanies & bad too. But God is great.

2 years ago


Ronak Matta
Ronak Matta
2 years ago

I have good experience with Navi Health Insurance but the issue was of Consuamble

S P Agrawal
S P Agrawal
2 years ago

Very good suggestion by you for hospitalisation and many more precautionary advice. Normally people don’t know or ignore it. Thanks