8 Top Reasons Why Health Insurance Claims Get Rejected and How to Prevent Them

This article enumerates the 8 top reasons behind health insurance claim rejections. Beyond merely identifying these potential stumbling blocks, in this article, we aim to equip you with the knowledge necessary to pre-emptively safeguard your insurance claims.

1. Providing Incorrect and/or Incomplete Information:

Filling out the health insurance application form is a critical step that demands meticulous attention. While some applicants may delegate this responsibility to their insurance agents, this practice carries significant risk. Agents, however well-intentioned, may not have a comprehensive understanding of all the applicant's details, leading to careless mistakes. Moreover, many applicants succumb to the temptation of providing incorrect information due to genuine mistakes or attempting to conceal certain aspects.

Errors like misspelling one's name or withholding crucial details like age, smoking habits, or annual income can be detrimental. Such inaccuracies, whether intentional or not, serve as red flags during the claims process, potentially resulting in rejection. It is crucial for applicants to recognise the importance of truthful disclosure on the application form. Any error/mistake not only jeopardises the chances of a successful claim but may also give the insurer grounds for terminating the health insurance policy. To avoid such pitfalls, applicants must personally undertake the responsibility of completing the application form, ensuring that every detail is transparent and accurate.

2. Concealing Medical History:

An often underestimated factor leading to health insurance claim rejections is concealing medical history or not disclosing pre-existing conditions during policy application. Some individuals may fear that disclosing such information could result in policy rejection or increased premiums. However, the repercussions of failing to disclose accurate medical details can be far more severe.

When purchasing a health insurance policy, honesty about one's medical history is crucial. Concealing pre-existing diseases or failing to disclose certain lifestyle factors, such as smoking habits, can prove detrimental in the event of a claim. Insurance companies rely on the accuracy of this information to assess risk and determine appropriate coverage. If a policyholder withholds crucial medical details, any claims related to undisclosed conditions are likely to face rejection.

While keeping certain aspects of one's health or lifestyle private may be tempting, transparency is paramount in the insurance process. A slightly higher premium based on accurate information is a small price to pay compared to the financial strain of uncovered medical expenses resulting from undisclosed conditions. To ensure a seamless claims experience, policyholders must resist being secretive about their medical history and lifestyle habits during the application or renewal process.

3. Wrong Diagnosis/Treatment:

At times, the diagnosis or treatment stated in the claim form might not align with the medical records or fall within the policy coverage. In such instances, the insurer might perceive these claims as deceptive and deny them.

To safeguard against inaccuracies in diagnosis or treatment, it is advisable to seek pre-authorisation from your insurer for any non-routine or costly treatments before undergoing them. Treatments not pre-authorised by the insurer may result in a denial of reimbursement.

4. Not Renewing the Policy on Time:

A prevalent but often overlooked reason for health insurance claim rejections stems from policyholders failing to renew their coverage in a timely manner. Forgetting to renew the policy and assuming that renewal can be done after the policy lapses contribute to this issue. However, the consequences of allowing a policy to lapse can be severe when a claim arises during the non-renewal period.

Insurance companies require continuous coverage to honour claims. If a policyholder fails to renew their health insurance and encounters a need for medical coverage during this gap, the insurer has grounds to reject the claim. Adopting preventive measures, such as setting up an auto-debit mandate, is highly advisable to avoid such complications. This ensures that the health insurance policy undergoes automatic renewal by debiting the premium from the policyholder's registered bank account.

By proactively addressing the renewal process, policyholders not only sidestep the risk of claim rejection but also maintain continuous coverage, providing financial security during unforeseen health crises. Timely renewal is not just a formality but a critical aspect of responsible health insurance management that can save policyholders from the distress of denied claims.

5. Claiming More Than the Eligible Sum Insured:

Choosing health insurance coverage solely based on premium costs rather than personal health needs can result in inadequate coverage. When a medical emergency arises, policyholders may find themselves in a precarious situation if their claimed expenses surpass the sum insured.

Insurance companies approve claims up to the eligible amount specified in the policy. If the claimed amount exceeds the sum insured, the excess medical expenses become the responsibility of the policyholder to cover out of pocket. To avoid this financial strain, it is crucial for individuals to carefully assess their family size, health history, and potential future medical expenses when making decisions about coverage.

Considering these factors ensures that policyholders opt for adequate health insurance coverage. By aligning coverage with anticipated medical needs, individuals can shield themselves from the risk of claiming more than their sum insured. This proactive approach not only safeguards financial well-being during medical emergencies but also aligns with the fundamental purpose of health insurance - to provide comprehensive coverage tailored to individual health circumstances.

6. Claiming During the Waiting Period:

A critical factor contributing to health insurance claim rejections revolves around the waiting period stipulated in most insurance policies. Typically set at 30 days, this waiting period specifically applies to hospitalisation arising from certain illnesses and diseases. Policyholders need to understand the nuances of waiting periods to avoid claim rejection.

While hospitalisation due to accidents is covered from the policy's commencement, the waiting period is crucial for specific scenarios. In the case of critical illness cover, the claim benefit is only extended if the insured survives for a minimum of 30 days after the diagnosis. Additionally, pre-existing diseases or illnesses existing before policy purchase often necessitate a waiting period of 2-4 years.

Claiming for hospitalisation or conditions falling within the waiting period can lead to outright rejection. To avoid this, potential policyholders must get comprehensive information about waiting periods before purchasing a policy and subsequently making a claim. This diligence ensures that claims are made at the appropriate time, aligning with the policy's stipulations, and maximising the likelihood of successful claim approval.

7. Ignoring the Policy Terms and Conditions:

Another most common yet critical reason for health insurance claim rejections stems from policyholders neglecting to read and comprehend the terms and conditions of their insurance policies. Despite constant advice from financial experts emphasising the importance of thorough document review, many individuals overlook this crucial step. The policy document serves as a comprehensive guide, containing vital information such as product features, terms and conditions, inclusions and exclusions, and exemptions.

Of particular importance are the policy exclusions-situations explicitly not covered by the policy. Each health insurance policy has a unique list of exclusions, and ignorance of these can lead to claim rejection. Insurance companies clearly specify situations that fall outside the scope of coverage, and any claims related to these exclusions are typically not accepted.

Failure to read and understand the list of exclusions often results in regret when a claim is denied. To avoid such disappointments and disputes, it is advisable to thoroughly read and comprehend all policy documents before making a decision. Furthermore, if some terms or conditions are unclear, policyholders should seek clarification from the insurer to ensure a comprehensive understanding of their health insurance coverage. Being well-informed about policy intricacies is not just a suggestion but a fundamental step toward preventing claim rejection and fostering a positive insurance experience.

8. Not Informing the Insurer on Time:

Failure to inform the insurance company within the stipulated timeframe is a significant yet often overlooked factor leading to health insurance claim rejections. While major accidents may make it challenging for the policyholder or their family members to file claim immediately, insurance companies typically provide a reasonable window for claim reporting. However, not adhering to the insurer's timeline can result in claim rejection.

In the aftermath of a major accident or hospitalisation, policyholders must be aware of their insurer's terms and conditions regarding claim reporting. Typically, it is necessary to notify the health insurer within 24 to 48 hours of hospitalisation, though this timeframe may vary depending on the specific terms outlined by the insurer. In situations where the policyholder is unable to report the incident promptly, it becomes crucial for the designated nominee or any authorised individual to fulfil this responsibility.

Delays in informing the insurer can be detrimental, jeopardising the chances of a successful claim. To avoid claim rejection on these grounds, policyholders and their representatives must prioritise timely communication with the insurer, ensuring that all necessary information is conveyed promptly. This proactive approach not only aligns with the insurer's protocols but also facilitates a smoother and more efficient claims process.

In summary:

Optimising the benefits of a health insurance policy requires thorough research, a careful understanding of the policy details, and a selection of add-on options tailored to your needs. Hasty decisions made during the purchase and claims processes may result in the denial of your health insurance claim.

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KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

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