Top 7 reasons for your group health insurance claims rejection

Investing in Group Health Insurance (GHI) is an important step towards securing our financial well-being during unexpected medical expenses. Even though most group health insurance companies are working to enhance their claim settlement ratios, some claims are still declined. Having your insurance claim rejected is not a situation you would want to be in. The stress of hospitalization, whether for yourself or a family member, is already challenging. A rejected claim only makes it worse. 

This article looks at why group health insurance claims get rejected and gives tips on how to prevent them. 

Common reasons for group health insurance claim rejections

1. Raising claims at blacklisted hospitals

Certain hospitals are marked as blacklisted by insurance providers due to various reasons such as charging excessive fees, overbilling patients during cashless claims, or failing to meet standards set by IRDA. These hospitals are considered ineligible for coverage, leading to the rejection of claims if admitted.

While some insurers may permit only reimbursement claims and not cashless ones for treatment at blacklisted hospitals, others may disallow both. However, in emergency hospitalizations or accident cases, these blacklisted hospitals may be treated as exceptions by the insurance company. 

At Pazcare, we showcase the list of Blacklisted Hospitals within our app, ensuring easy access for everyone and eliminating the need to search various websites online.

2. No treatment even after being admitted for >24 hours.

Occasionally, a patient may face claim rejection even after being hospitalized for over 24 hours. For instance, let's say Nikhil stays in the hospital for over a day, but he only gets scans and tests done, without undergoing any treatment. While his duration of stay exceeded 24 hours, the group health insurance company will not cover his expenses because of an absence of any treatment. Thus, despite the duration of admission, his claim will not be approved.

3. Ignoring exclusions in the policy

Many group health insurance plans explicitly mention the medical conditions or healthcare expenses that are not covered under their policy. These are referred to as ‘Exclusions’, meaning claims cannot be filed for them. If you raise a claim for any of these exclusions, it is bound to be rejected.  

In the majority of Group Health Insurance policies, the most frequent "Exclusions" typically consist of Dental treatments, Outpatient Department (OPD) expenses, Physiotherapy sessions, as well as certain medical procedures aimed at lifestyle alterations such as Plastic Surgery, Cosmetic surgeries, and Botox treatments.

NOTE: Occasionally, there are cases where individuals may encounter accidents that necessitate plastic surgery. These instances are considered exceptions and are typically covered by the group health insurance provider.

4. Exhaustion of sum insured in previous claims

Each policy has an annual sum insured limit. Multiple hospitalizations in a single year can deplete the sum insured. In such cases, the insurer may have the right to reject your claim.

5. Incorrect diagnosis of illness

In some instances, the diagnosis or treatment on the claim form may not match the medical records. In such cases, the insurance company might think the claims made are not truthful and may reject them.

6. Ignoring changes in policy TnC

Insurance companies occasionally alter policy terms, including coverage benefits and premiums. It's crucial to stay informed about policy updates. If your coverage has been modified and you're not aware of the changes, your claim may be rejected.

7. Missing documents in claim submission

When submitting reimbursement claims, it's essential to provide all required documents such as medical bills, prescriptions, invoices, and supporting paperwork. If any documents are missing, the group health insurance company will notify you and send multiple reminders prompting you to submit them. However, if the employee fails to respond to these reminders or neglects to submit all the necessary documents, the claim will be rejected.

Learn how to file a GHI claim properly in our step-by-step claim filing guide.

Common misconceptions about GHI / Reasons why GHI claim will NOT be rejected

1. Waiting Period

A common misconception regarding Group Health Insurance is that it includes Waiting Periods during which you are not eligible to raise claims. However, this concept solely pertains to Retail/Individual Health Insurance. Group Health Insurance, on the other hand, does not have Waiting Periods, allowing you to file claims from day 1 of joining the organization.

2. Pre-existing diseases

In typical Retail Health Insurance policies, it's necessary to disclose any pre-existing conditions such as diabetes or asthma to the insurer. Additionally, some insurers impose a waiting period for pre-existing conditions. If you file a claim for a pre-existing condition without prior disclosure or during the waiting period, your claim may be rejected.

However, Group Health Insurance policies operate differently. There's no requirement to disclose pre-existing conditions to the insurer, and there are no waiting periods. Claims for pre-existing conditions can be made at any time without restriction.

Understand pre-existing conditions coverage in our pre-existing disease guide.

3. Insurer/TPA assessment not done

When acquiring retail or individual health insurance policies, insurers typically conduct assessments before issuing the policy. These assessments evaluate your current health status and identify any existing conditions. Claims cannot be raised until these assessments are completed, as doing so may result in claim rejection. In contrast, with Group Health Insurance, insurers do not perform such assessments, allowing you to raise claims at any time.

How to prevent group health insurance claim rejection?

While it’s important to understand why group health insurance claims are rejected, knowing practical steps to avoid rejection is equally crucial. Here are some preventive measures for common issues:

1. Blacklisted hospitals
Always check the list of network hospitals in your group health insurance portal before admission. Choosing a blacklisted hospital may lead to claim denial, except in emergencies.

2. Missing documents
Ensure all necessary documents including medical bills, prescriptions, invoices, and test reports are submitted along with your claim. Keep digital or physical copies handy to avoid delays or rejections.

3. No treatment despite hospital stay
Claims may be rejected if no treatment is performed during hospitalization. Ensure that actual treatment or procedures are carried out to qualify for coverage.

4. Exhaustion of sum insured
Keep track of your annual sum insured. Multiple hospitalizations or large claims may deplete your coverage, leading to claim rejection for subsequent treatments.

Conclusion

Group Health Insurance acts as a safety net during medical emergencies, offering financial and mental security. It can be stressful to face a claim rejection during such critical times. However, if you know the common reasons for claim rejection and follow the tips given, it can help ease the stress and prevent your claim from getting rejected.