Understanding Health Insurance Claims: Common Pitfalls and How to Avoid Them

The Reality of Health Insurance Claims

Health insurance is often perceived as a protective financial measure, yet many policyholders encounter unexpected challenges due to overlooked details. Recent statistics reveal that while a large portion of claims are resolved, a notable number still face complications. The Insurance Regulatory and Development Authority of India (IRDAI) reports that in the fiscal year 2023–24, 82% of health insurance claims were settled by volume, but only 71.3% were paid by value, highlighting frequent deductions and partial payments. Alarmingly, nearly 13% of claims were outright rejected, and over 9% were repudiated, indicating that approximately one in eight claims is denied. Concurrently, consumer dissatisfaction is on the rise, with health insurance complaints reaching 73,729 in FY 2025–26 (up to February), marking a 14.5% increase from the previous year. A survey conducted by LocalCircles further reveals that 40% of claimants experienced full or partial rejections without sufficient explanations.

Understanding Claim Rejections

The Fine Print Problem

Experts in the industry assert that most claim denials are not random; they are often predictable and preventable. Nochiketa Dixit, Managing Director at EDME Insurance Brokers Ltd, emphasizes that health insurance claims are typically rejected for clear, avoidable reasons. He identifies four common triggers for claim rejections:

• Failure to disclose pre-existing conditions
• Seeking treatment during the waiting period
• Undergoing procedures not included in the policy
• Submitting claims with incomplete documentation

Dixit notes that these are significant issues, and insurers are justified in denying claims based on these grounds. Chetan Vasudeva, Senior Vice President at Elephant.in, agrees, linking rejections to gaps in consumer knowledge and compliance. He points out that misrepresentation or concealment during the policy purchase, particularly regarding pre-existing conditions, is a leading cause of claim denials.

Common Mistakes by Policyholders

Where Policyholders Slip

The challenges often begin at the policy purchase stage. Many consumers do not fully disclose their medical histories, either to reduce premiums or due to a lack of understanding. Additionally, they may not grasp the exclusions, sub-limits, or waiting periods, which can later lead to claim denials. The claims process itself is also critical; providing incomplete or inaccurate information during claim filing can result in denials. Common mistakes include missing hospital bills, prescriptions, discharge summaries, or delays in document submission. Operational issues, such as seeking treatment at non-network hospitals while expecting cashless claims, can also hinder approvals.

Preventing Claim Denials

The Prevention Playbook

The good news is that many of these issues can be avoided with careful attention. Dixit stresses the importance of being transparent about health history when purchasing a policy. He advises policyholders to thoroughly understand waiting periods, noting that most pre-existing conditions require a waiting period of 2 to 4 years. For planned hospitalizations, obtaining prior approval from the insurer is essential. Proper documentation is crucial; keeping all medical records, including bills, prescriptions, test results, and discharge summaries, organized is vital. Perhaps the most overlooked yet simplest step is to read the policy document at the time of purchase. Dixit suggests understanding what is covered, what is excluded, and how the claims process operates. Vasudeva echoes this sentiment, urging consumers to review policy terms carefully to avoid surprises during settlement and to ensure that all required documents are submitted accurately and on time.

Shared Responsibility in Claims

A Shared Responsibility

The increasing number of complaints and disputes over claims indicates a growing mistrust in the system. However, industry experts argue that the responsibility does not lie solely with insurers. Dixit points out that a rejected claim is often the result of a policy purchased without a full understanding of its coverage. Thus, the gap between expectations and reality in health insurance is not just about denial rates; it also involves awareness. Bridging this gap may be the most effective way to ensure that when the safety net is needed, it functions as intended.