Why health insurance claims get denied/rejected and how to appeal against them? (Part 1/2)

Having his or her health insurance claim denied is every person’s worst nightmare. People purchase health plans in order to secure them financially against any medical emergency or otherwise. But, at times, people get a rude shock during claim process when their insurance company either rejects their claim or denies full compensation. This not only causes financial hardship for the insured, but also creates but also leaves that person feeling betrayed.

In order to address the issue of claim denial, one first has to understand what leads to it. In this 2 part blog, Student Cover tries to explain why health insurance companies reject the claims and what remedy does one have against such rejection. In part 1, we explain why health insurance claims get rejected. Click Here to go to part 2 of this series.

Why Health insurance claims get denied/rejected?

Health insurance claims made by the insured get denied or rejected by companies due to several factors; some of them are as follows:

1. FALSIFICATION / INACCURATE INFORMATION – When one purchases health insurance plan, he or she enters into a contract with the health insurance company wherein the latter promises to cover the person’s medical expenses in return for a premium. However, like every contract, one is bound to furnish accurate and truthful information while entering into an agreement. Any misinformation or inaccurate information on part of one party (insured) allows the other party (the company) to refuse to fulfill its part of the contract obligation (to cover medical cost).

Therefore, one must ensure that all information from age, gender, previous ailment, pre-existing condition etc. that is asked for in the claim form is provided to the company in complete and truthful manner.

2. INSUFFICIENT DOCUMENTATION – It is the most common reason for rejection or denial of insurance claim. Health insurance companies require the insured to provide all relevant documents pertaining to his or her treatment in order to compensate for medical expenditure. These may be the lab reports, itemized hospital bill, payment receipt etc. Hence, one must keep all medical records including before and after the treatment made during treatment in order to ensure that one’s claim gets processed without hassle.

3. TERMS AND CONDITIONS NOT MET – While a health insurance company is bound by contract to cover for the client’s medical expenditure, there are certain terms and conditions laid down by it. For example, certain treatments require the insured person to inform the health insurance provider in advance if it is not an emergency. Not doing that could lead to denial of compensation by the company.
Similarly, for some plans to cover the treatment cost, it requires the patient to get admitted at least for a period of 24 hours in the hospital(especially under Indian Insurance plans). One must read the plan document carefully and go through all terms and conditions before undergoing treatment.

4. EXCLUSIONS – All health plans have a list of conditions or treatments which are not covered by the plan. They might be specific diseases such as cancer of any kind, AIDS etc. or the conditions that led to the need for treatment such as self-inflicted injury etc. Some exclusions are temporary or time based such as those for pre-existing diseases such as kidney or gall stones which get covered only after certain waiting period is over.

5. CLAIM PERIOD LAPSED – There is a specific time period within which a health insurance claim needs to be filed by the insured to get the claim benefits. This period may be from 2 to 6 months depending on the health insurance plan. If an insured person files a claim after the claim period has lapsed, the health insurance company may refuse to process his or her claim and may deny the benefits. Therefore, it is essential to file health insurance claim as soon as possible so as to get it processed in time.

6. EXPIRY OF POLICY PERIOD – A health plan provides cover only for treatment undergone during the policy period. It is not bound to cover the expenditure of the client which occurred before the purchase of the plan or after the policy period had lapsed. However, if the person is undergoing treatment before the end of the policy period and it continues after the expiry, the health insurance company compensates for the treatment provided the person has timely renewed his or her policy after its expiry and paid the premium.

7. BEYOND COVERAGE AREA – While some health plans have global coverage, the coverage of others extends only within the political boundary of a country or state. In such cases, if the insured person has undertaken treatment in an area where the coverage of the plan does not extend, the health insurance company may not reimburse the expenditure on medical treatment.

Let’s Wrap Up!

Health insurance companies are bound to provide benefits promised by them to the client. However, there are certain rules and conditions that have to be met for them to be able to process and accept the health insurance claims made by the client. A health insurance company may deny a client’s claim if it contains false or insufficient information, lacks proper documentation, the particular ailment, disease or injury is excluded from the covered list or the claim was made too late.

Click Here to go to part 2 of this blog series!

Disclaimer: The content of the blog is based on personal research of the write. Readers’ discretion is advised. Neither Student Cover nor the write will be held responsible for any wrongful interpretation of the content of this blog.