Topic 2: How to claim under Multiple Health Insurance Policies?

In today’s scenario where medical costs are rising at a rapid pace, it is prudent to have a health insurance plan. Ranveer, who is an IT professional, recently got a simple surgery like gallbladder removal done in a good private hospital in Delhi, which cost him 70,000. The surgery expenses were taken care of by his health policy, but with skyrocketing medical expenditures, health insurance has become a necessity. It is imperative to have an adequate health cover which can cater to the finances needed in case of hospitalization or getting the surgery done. Though post this surgery Ranveer analyzed that if one health plan does not suffice to the financial requirements of the medical treatments due to inadequate coverage, restrictions on limits and sub-limits, long waiting periods, exhaustive exclusions then it becomes imperative to hold multiple health insurance plans of different kinds as per the requirement.

Reasons why people choose to buy Multiple Health Plans
  • Insufficient existing health insurance coverage
  • Paying higher premiums for the existing health insurance plan
  • Bad claim experience with the insurance company
  • To create a robust financial back up to avoid out of pocket expenses
  • Risk/fear of claim rejection by the insurer
  • Need based health insurance plans to take care of different health contingencies
Types of Health Insurance Plans

Health plans are categorized as plans “Based on indemnity” or “Based on fixed benefits”.

Under indemnity based health plans, the claim is settled on the basis of actual expenses incurred and the actual cost of treatment. One cannot claim more than the claim amount. But plans like critical illness plans or personal accident plans which are fixed benefit plans will offer you fixed amount or benefits irrespective of the actual cost of the treatment.

Insurance works on certain principles out of which, there is one such principle known as “Principle of Contribution” or we may call it “Contribution Clause” which states that “ if a policyholder buys insurance plans from different health insurance providers to cover a specified health event. In the event of a claim, then the insurer reserves the right to seek the proportionate amount of claim from the other insurers as well basis this principle”.

However, As per IRDAI Health Insurance Regulation, 2013, the insurance company may not exercise the Principle of contribution always, and the right of exercising the contribution clause is restricted for the insurer on the case to case basis.

Let us understand various permutations and combinations of holding multiple health insurance plans and how the claim payout will vary if Ranveer holds multiple kinds of health insurance policies.

Case 1: If Ranveer possesses two fixed benefit “Critical Illness” plans from different insurer’s
Ranveer has two CI plans of Sum Assured 2 Lakh and 1 Lakh each. As per the regulator’s guidelines, the insurer may not exercise the “Contribution Clause” in this scenario where the benefits are fixed under the health plan.

How to Claim: let us assume Ranveer is diagnosed with a critical illness which is covered under his fixed-benefit health insurance plan. In such a scenario, he may claim the benefits from both the insurer’s irrespective of the treatment cost and once the claim is made the policy terminates after that.

Case 2: If Ranveer possesses one indemnity based Health Plan and one Fixed Benefit Personal Accident plan Now Ranveer has indemnity based health plan of health cover 4 Lakh and Personal accident plan of Rs 3 Lakh. In case, Ranveer meets with an accident and is hospitalized accounting to  Rs 2 Lakh as the final amount of expenses.

How to Claim: Ranveer may claim entire 3 lakh out of his fixed benefit personal accident plan and can claim up to 2 lakh from his indemnity plan as we discussed above that indemnity plans pay up to the extent of treatment cost only.

Case 3: If Ranveer has two health plans and both are indemnity based Ranveer possesses two indemnity based health plans from different health insurance providers of Rs. 5 Lakh from insurer X and 6 Lakh from insurer Y. This case may little tricky, let us assume Ranveer has been hospitalized due to the covered events in his health plans and

If, the total claim amount turns out to be 2 Lakh (which is less than the health cover limits of both the plans):

How to Claim: In such scenario, Ranveer is the ultimate decider to choose which insurance company he should claim from as any of his insurers will pay him the claim amount (assuming he completes the claim formality and furnish the requisite documents timely).

If, the total claim amount turns out to be 8 Lakh (which is more than the health cover limits of both the plans):

How to Claim: In such a scenario, Ranveer still can choose to get his claims to settle to the extent of the sum assured either from X or Y. Ideally,  8 lakhs to be shared on a pro rata basis among both the insurers. In such scenarios, the insurer can exercise the contribution clause to settle the claim. If Ranveer opts to get the claim settled with insurer X, then he may get the claim up to the maximum amount of 5 lakh (sum assured) and remaining 3 lakh (which is less than the sum assured 6 lakh) can be claimed from insurer Y. However, insurer x retains the right to implement contribution clause and recover the prorated balance amount from insurer Y.

Claims Procedure
It is utmost important to inform the insurance companies( in case of multiple insurance policies)  in the event of claim timely.

In case of Reimbursement
To get a claim through reimbursement, it is important to gather all essential documents from the hospital and submit the mandated documents to the your insurer. Some important documents include:
  • Claim Form which is completely and correctly filled and signed
  • Medical Certificate confirming the diagnosis of the ailment or disease
  • Discharge Summary
  • Medical investigation reports
  • Other supporting documents related to illness.
(The requirement of documents may vary from insurer to insurer)
In the case of Cashless Treatment
The insurance company which you have chosen for claim settlement will settle the claim directly with the network of the hospital as per the procedure up to the limit of indemnity. After that, the insurance company can exercise the “contribution clause” as per the insurance company’s discretion. The policyholder may also follow the claims procedure to claim the balance amount from another health insurance policy.

Aspects to consider while filing multiple claims at a time
  • Claims efficiency of the insurers
  • Turn around time of the insurer for settling the claim
  • List of impaneled network hospitals for cashless treatment
  • Claim settlement procedure of the insurer
  • Efficiency and efficacy of the partnered TPA of the insurer
  • Previous claim experience with the insurance companies
  • Check on No claim Bonus status
  • Check and read the co-payment clause, sub-limits and other related clauses in your respective policies
  • If you have a Group Health Insurance Policy, take a claim from it first. It saves your NCB of the personnel policy.
So, in a nutshell, the intent of filing a claim should be genuine and not to earn profits by having multiple insurance policies. Insurance is taken to mitigate your risk and not to earn profit out of it. Consult your insurers in advance in case of planned hospitalization and intimate them timely in case of sudden hospitalization to settle your claim.

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