Caution advised regarding deductions in group health insurance claims

The possibility of deductions while receiving claims under group health insurance plans is increasing, making it necessary for policyholders to remain vigilant. According to Abhishek Bondiya, co-founder of SecureN Insurance Brokers, there has been a significant increase in disputes regarding health insurance claims in recent years.

Out of the 3,178 general insurance cases that came to the Lokpal (Ombudsman) during the year 2024-25, 2,855 cases, i.e., approximately 90 per cent of cases, were related to partial or total rejection of claims. A large portion of these disputes is linked to health insurance. Policyholders are primarily divided into two groups: those covered under a group plan by an employer and those who purchase retail plans individually. Here, the discussion pertains to group plans.

Group plans are generally in a strong position because most plans cover pre-existing diseases from day one and there is no need for medical examinations of employees. Disputes in these plans are usually not about whether a claim is eligible or not, but rather about the deductions made in the claim amount. Most group policies are taken through brokers, who negotiate with the insurance company against deductions. Therefore, the cases reaching the Ombudsman are only a small part of the actual problems.

According to a report by The Economic Times, the issue of room rent limits emerges among the most common disputes. In the past, health insurance plans had a daily room rent limit of 1% of the sum insured. The choice of room has a major impact on the total cost of treatment, as hospitals increase treatment costs based on the room type. For example, doctor's fees in a suite can be much higher compared to a shared room.

Insurance companies had started offering concessions in room rent to differentiate product features. Initially, they offered single standard AC rooms without any specific limit and subsequently provided the 'no room rent capping' facility. Now, in many group plans, there is no limit on room rent for all employees or only for senior officials. When employees choose a suite using this facility, insurance companies do not consider it appropriate, leading to disputes. In the cashless process, hospitals set rates only for a single standard AC room, so the claim gets stuck, and ultimately insurance companies insist on paying only the amount equivalent to a single AC room, which leads to cases reaching the Ombudsman.