All You Need to Know About Claim Settlement Process of Health Insurance

September 28, 2021 Mutual Fund

People usually tend to ignore the claim settlement process while purchasing a health insurance policy. They fail to understand that claim settlement is one of the most important aspects of a health insurance policy. The process of health insurance claim settlement should be by far easy and quick because you do not want to worry about your insurance claim in case of any medical emergency. This article will elucidate what the health insurance claim settlement is and how it works under different situations.

Health Insurance Claim:

A health insurance claim is a request raised by a policyholder to the insurance company in order to obtain the benefits covered under the policy when any medical emergency occurs. There are two types of claim settlement processes that an insurer can follow:

1. Cashless Claim Settlement Process:

Under the cashless claim settlement process, an insurance company settles the amount directly with the hospital. It is a completely hassle-free process for a policyholder. The significant advantage to the policyholder is that they do not have to pay any amount from their pocket, except a deductible, if any. In addition, as the claim is settled directly, a policyholder does not have to keep track of the hospital bills and reimbursement.

How does it work?

• A policyholder can visit any of the network hospitals of the insurance company and provide the details of his/her health insurance policy. Most hospitals have insurance claim settlement departments/desks where a policyholder can show the physical copy of the policy or an e-card allotted by an insurance company. If you want to opt for a cashless claim settlement process, you will have to furnish the proof of your policy.

• The hospital verifies the policy details and sends the pre-authorisation form to the insurer.

• The insurance company verifies the details of the policy and processes the claim settlement as per the terms and conditions of the policy.

• The claim gets settled directly between the hospital and the insurance company.

There can be two types of situations when a policyholder has to go for the claim:

• Planned Hospitalisation:

  There are situations when the policyholder is aware of the surgery/medical treatment they have to undergo. Such planned treatments require prior preparation. A policyholder requires to inform the insurer beforehand about the treatment and the network hospital.

  You may inform the insurance company by:

  • – Calling on their toll-free number or customer service number

  • – Sending an email to the customer service

  • – Sending a post on the registered address of the insurance company

  You also need to submit a cashless settlement form, duly filled by the hospital, to the insurer. This form can be sent by email, fax, or post.

  After you have done your part, the insurance company coordinates with the hospital and informs you once the claim is accepted. A policyholder has to show the policy or e-card at the time of admission to the hospital.

• Emergency Hospitalisation:

  A medical emergency can arrive suddenly in life without any prior intimation. It generally happens in case of an accident or for illnesses that required immediate treatment.

  In such unavoidable circumstances, a policyholder or their family members should immediately inform the insurance company by calling on the toll-free number. It is possible that the family members' fail to inform the insurer beforehand, but the insurer needs to be informed immediately after admitting the patient to the hospital. In addition, family members need to ensure a cashless claim settlement form is duly filled by the hospital and sent to the insurer within 24 hours of hospitalisation.

2. Reimbursement Claim Settlement Process:

Under Reimbursement Claim Settlement Process, a policyholder has to pay all the hospital bills and any other medical expenses upfront. This process is not as smooth and hassle-free as the cashless claim settlement process. Policyholders are supposed to claim for reimbursement later by showing the original hospital bills. Although the process can be tricky for the insured, they can choose their preferred hospital, which might not be a part of the insurer’s network hospitals.

How does it work?

• The reimbursement claim settlement process starts after the policyholder is discharged from the hospital and all bills are paid by them.

• The policyholder has to file a claim with the insurance company by submitting the reimbursement form along with original hospital bills and other necessary documents, such as medical reports, cash memos for medicines, discharge card, discharge summary, FIR in case of an accident, etc.

• If any document is missing, the insurer may put your claim on hold until all the required documents are submitted.

• An insurer may do the field verification through a third-party administrator if required.

• The insurance company processes the claim, once the claim is found to be genuine.

• If the claim is rejected at any stage, the policyholder is informed about it by a call or an email.

• The policyholder receives the claim amount in his/her registered bank account, if the claim settlement is successful.

So, these are the types of health insurance claim settlement processes. Your claim settlement doesn’t need to be processed by your insurer. Most insurance companies nowadays have their in-house claim settlement departments. Whereas others settle the claims with third-party administrators. Let’s see in detail how these two methods work:

1. Third-Party Administrator (TPA):

• Many insurance companies have tie-ups with Third-Party Administrators (TPAs) authorised by the Insurance Regulatory and Development Authority of India (IRDAI).

• A TPA works as an intermediary who expedites the health insurance claim settlement process.

• Although the Third-Party Administrator's process health insurance claims by handling all the documents, they do not hold the right to accept or reject the claims.

• The sole right of acceptance or rejection of the claims remains with the insurer.

• Once the claim is processed, a policyholder is required to contact the Third-Party Administrator for any updates or document submission.

• First, a policyholder has to provide the details to the TPA, who will then send them to the insurance company — a final decision-maker. The process becomes time-consuming as an intermediary handles the settlement process.

• There are more than 25 licensed Third-Party Administrators in India that mainly work for public sector health insurance companies.

• The TPAs usually have a larger network of hospitals, which are helpful for cashless claim settlement processes.

2. In-house claim settlement department:

• Many insurance Companies nowadays set up their own claim settlement departments, called in-house claim settlement department.

• As there is no intermediary involved and the decision-maker handles the process, the claim settlement process is seamless and quick.

• A policyholder has one-point contact that makes the claim settlement process convenient to the policyholder.

To Conclude:

The Health Insurance Claim Settlement Process is a vital aspect of a health insurance policy. A policyholder needs to check and understand the terms of claim settlement and how the process works, before buying the policy. Whenever possible, it is advisable to opt for a cashless claim settlement process as you do not have to pay any amount upfront by yourself and wait for the claim to get accepted.

This article first appeared on PersonalFN here