Why Do Health Insurance Claims Get Rejected? Key Reasons You Should Know

When Person X needed health insurance the most, he found himself jostled in a nightmare. His claim for a critical illness treatment was denied by his insurer because he hadn’t disclosed a pre-existing medical condition (PED) while purchasing the policy. It was an expensive lesson that many like Z learned the hard way.

Health insurance is like a safety net that supports you in the face of unforeseen medical expenses. However, claim rejections can leave you stranded with medical bills that could derail your finances. But many of such rejections can be avoided if you understand the key reasons that lead up to claim denials and take the necessary steps to address them.

Let’s unpack some of the most prominent reasons that lead to claim rejections and what can you do to protect yourself.

Common Reasons Behind Claim Rejections:

1) Waiting Period In Policies: Most health insurance policies come with a waiting period for certain conditions such as pre-existing diseases or any specific treatment. For example, a policy may not cover surgeries or certain chronic illnesses for the first two or three years of coverage. If you were to claim during this time, your request would be denied.

2) Non-coverage or Policy Exclusions: Almost every health insurance plan comes with certain exclusions or no coverage for specific medical procedures. For example, treatments related to drug abuse, cosmetic surgeries, or any experimental therapies may not be covered in your plan.

3) Fraudulent Claims or Incomplete Disclosures: Overbilling by some of the network hospitals, misleading guidance by a few casual channel partners, and non-disclosures by policyholders are some reasons that insurers cite for rejection claims which they term ‘fraudulent’. Insurers often flag discrepancies during investigations.

4) Non-network Hospitals: Some insurers may deny claims if you go for treatment at hospitals that are excluded from their coverage, these are referred to as non-network hospitals. For instance, a local hospital near your area may not be on the network hospital list, and any treatment bill at such a hospital could be denied. Check your insurer’s list of excluded hospitals before admission.

5) Unnecessary Hospitalisation: Sometimes you find your claim rejected if the insurer deems your hospitalisation for any specific illness unnecessary. This can be hospitalisation because of mild fevers or ailments manageable at home.

6) Insurer Delays and Investigations: Sometimes, insurers delay cashless treatment approvals citing reasons for further verifications. If they suspect foul play or insufficient documentation, your claim could be either delayed or denied completely.

7) Expired or Lapsed Policy: If your policy has already expired or lapsed due to reasons such as a missed premium payment, your claim will be rejected even for any urgent claim made out of emergency hospitalisation.

8) Missed Claim Deadlines: Most insurers require you to file claims or notify them of hospitalisation within a standard or specific timeframe. Failure to meet the given deadline can lead to claim rejection.

How Can You Expedite Claim Settlement?

- Inform your insurer about the hospitalisation within 24 hours in case of emergency admissions. In case of planned surgery, make sure to inform the insurer before 48 hours of hospitalisation.

- Policyholders should ensure that they submit or upload all medical bills in due time, typically within 30 days of discharge from the hospital. However, it is very important that you read the fine print regarding the timeline of claim intimation as the same may vary among individuals.

- Opt for a cashless claim where the insurance provider settles the bill directly with the hospital. Cashless settlements are usually faster than reimbursement claims where the insured pays for the expenses first and gets them reimbursed later, making the process lengthy.

- Choose a network hospital. These hospitals offer easy cashless treatment, quality care, and seamless claim settlement processes. Moreover, before hospitalisation make sure the hospital comes in the purview of the network-hospital list of your insurer.

- Lastly, it is significant to track the progress of your claim with the insurance provider’s grievance redressal system.

Health insurance claim rejections can be frustrating and financially draining, however, with a little due diligence you can reduce the chances of denial. Whether it is understanding the fine print of your policy coverage, disclosing necessary PEDs, or adhering to the claim submission deadlines - being proactive will save you from unnecessary stress.