Why are the majority of Covid health insurance claims getting rejected?

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What’s going on here?

The very purpose of opting for health insurance is to save yourself from the financial burden in case of hospitalization. We saw individuals getting discharged from hospitals with bills running in lakhs during the 1st wave. This prompted many to go in for covers – especially Corona Kavach and Corona Rakshak.

But many who had health covers are ending up with claim rejections or paying a majority portion from their pockets.

Why are the health insurance claims getting rejected?

The Corona Kavach and Corona Rakshak were specific covers introduced last year during the first wave due to the low health insurance penetration in India. Insurance penetration in India stands at 0.94% (insurance premium to GDP%) for the non-life insurance segment against a global average of 3.88%. As these covers were disease-specific covers, they were priced low.

Remember, we are dealing with a pandemic here. So with the second wave, the number of claims has exploded.

As of 14 May,

There were 14.82 lakh customers who had submitted claims to the tune of Rs 22,955 crores.
Each claim amounted to Rs 1.5L on average while the amount being settled amounted to Rs 95k – almost 1/3rd of the claim amount was paid by the insured.

Undoubtedly, the insurers are being inundated with claims which are affecting their balance sheets. So they are taking a foot back in clearing the claims. Check out our earlier newsletter where we covered some of the other issues being faced by insurers.

What are some of the top reasons for which your health insurance claims could get rejected?

Some of them could be

Hospitalisation opted for mild cases
Unauthorised hospitalisation
Claim before the completion of mandatory wait period of 15days
Incomplete documentation
Due to the existence of co-morbidities like BP, Diabetes, etc
Treatment availed at home without intimation to the insurer

There are some grey areas in the reasons for rejection.

How does this affect you and me?

Non-clearance of health insurance can deal a big financial blow, considering the fact that it takes a while for an individual to fully recover even after discharge from the hospital. See how you could ensure that your claims get passed by your insurer. This guide could help you, Covid or no Covid.

But, if your claims get rejected in spite of taking all the precautions, all is not lost. You have further remedies available.

You could give a complaint with all necessary details to the Grievance Redressal Officer of the Insurance company.
If you aren’t happy with the resolution, you could approach the Grievance Redressal Cell of the Consumer Affairs Dept with the Insurance regulator IRDAI.

You ask – We answer

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Gold is considered a hedge against adverse economic conditions. So, it is advisable to have a small portion of your portfolio invested in gold. It could be done easily through gold mutual funds as it is safe and cuts storage costs.

Gains made from the redemption of gold mutual funds are taxed under two different categories based on the holding period.

?If the gold fund is held for under three years, the gains are categorised as short-term capital gains and taxed at your Income Tax slab.

?If the holding period is more than three years, you get indexation benefit, and gains are taxed at 20%. Indexation is a process that allows you to inflate the purchase price of the asset to account for inflation.

? Do you have questions on personal finance & investing? Shoot them in the comments below, we will be happy to answer and feature them in our upcoming issues.