How to decode the fine print in your health insurance claim letter

This is another reason for deductions that can significantly affect a claim. An insurer may take the view that hospitalization was not medically justified for the entire period because active treatment was not being provided.

"Many people do not realize that health insurance is meant to cover treatment of illness. If the claim records show that you were admitted primarily for diagnostic tests or observation, with no active treatment being provided, your claim could be affected," said Bansal.

The mere fact that diagnostic tests or observation were involved does not automatically make a claim inadmissible. "The medical necessity of hospitalization and the policy terms would need to be considered," he added.

Experimental or investigational treatment

An insurer may reject or restrict a claim if the treatment is considered experimental or investigational under the policy. This could involve a drug, procedure or technology whose safety or effectiveness has not been sufficiently established, or which is not accepted as standard medical practice for the condition.

A drug approved for one disease may be used for a completely different condition for which its efficacy has not been established. Depending on the policy wording and circumstances, the insurer may classify the treatment as investigational.

"If an insurer rejects a claim on this ground, the policyholder should look for the exact exclusion clause and the medical basis on which the insurer has classified the treatment as experimental or investigational," said Bansal.

Consumables and room-rent caps

Consumables are single-use medical items – gloves, syringes, gauze, surgical tape, IV sets – that are discarded after use. Depending on the policy, such expenses may be treated as non-payable unless the policy specifically covers them or the policyholder has opted for a consumables-related add-on. The standardized list issued by the Insurance Regulatory and Development Authority of India (Irdai) covers a wide range of non-medical expenses and consumable items. Policyholders should check the exact policy wording rather than assume that every item on a hospital bill is automatically non-payable.

Insurance consultant Mitesh Dave shared a case in which the insurer issued multiple settlement letters in a single day, changing the amount of deductions each time. "You have to go through the list thoroughly to identify items that should not have been classified as consumables," said Dave.

Health policies often specify the category of room to which a policyholder is entitled – a twin-sharing room or a single private room. If a policyholder chooses a room above the eligible category, the insurer may apply proportionate deductions, depending on the policy terms. This can affect not just the difference in room rent but also associated expenses such as nursing, doctor and procedure charges. Policyholders should check their room-rent eligibility before admission, particularly for high-value hospitalizations.

'Liability cannot be ascertained'

This phrase means the insurer says it does not have enough information to determine whether, or to what extent, it is liable to pay the claim. If a patient is hospitalized for chest pain but the medical records only mention cardiac evaluation without clearly establishing the final diagnosis or treatment, the insurer may say that liability cannot be ascertained because the available documentation is insufficient. The policyholder can ask the insurer to specify what documents are needed to ascertain liability and seek reconsideration once these are submitted.

Khushalani also cited instances where hospitals charged patients for items such as an IV dispensing stand kept near the bed and vital-monitoring equipment. During the second wave of Covid-19, he encountered a case where an autorickshaw fare for bringing food to patients was included in the hospital bill. "Policyholders should ask the hospital for an explanation of any unfamiliar charge and check whether it is medically necessary, contractually agreed, or actually payable under the policy," he said.

Claim settlement letters can contain technical terms that are difficult for policyholders to interpret. Consumers should understand the basis of each deduction, obtain the itemized hospital bill and challenge deductions that cannot be adequately explained or linked to the policy terms.