Health insurance claim rejected? Reasons, your rights and what to do

A rejected health insurance claim feels final. It isn’t. IRDAI, the insurance regulator, sets rules on how insurers must decide claims and explain refusals, and there is a free route to challenge a decision you think is wrong.

Rules the insurer must follow

Under IRDAI’s May 2024 master circular on health insurance:

• No rejection without a committee. Only the insurer’s Product Management Committee, or a three-member Claims Review Committee, can approve rejecting a claim.
• Reasons, in writing. If a claim is rejected or partly paid, you must get full details, citing the specific policy terms.
• Hospitals send the papers. After you intimate a claim, the insurer or its third party administrator collects the documents from the hospital.
• Timelines. A cashless request must be decided within one hour, and discharge approval within three. IRDAI’s timeline for settling other claims is 15 days.

Common reasons a claim is rejected or cut

• Still in a waiting period. IRDAI caps the wait for a pre-existing disease at 36 months, but a claim inside that window can be refused.
• Excluded illness or item. Every policy lists exclusions, such as cosmetic surgery.
• Non-disclosure. An undisclosed condition can be grounds for rejection, but only within the first 60 months of continuous cover. After that, IRDAI’s moratorium rule bars it, except for proven fraud.
• A break in cover. A renewal paid after the grace period can reset your credits.
• Cost-sharing. Co-pay, a room rent limit or sub-limits lead to partial payment, not rejection.

An illustration. A 2 lakh rupee bill includes 10,000 rupees of items the policy lists as not payable. That leaves 1.9 lakh admissible. With a 10% co-pay, you pay 19,000 more. The insurer pays 1.71 lakh, and your share is 29,000 rupees. That is a partial payment the policy allows, not a wrongful rejection. Know which one you have before you complain.

The grievance ladder

1. The insurer. Write to its grievance officer with your claim number and documents. IRDAI’s timeline for the insurer to act and give its decision is 14 days. Insurers also run a separate channel for senior citizens’ claims and grievances.
2. Bima Bharosa. IRDAI’s portal, bimabharosa.irdai.gov.in, registers and tracks complaints against insurers. You can also call IRDAI’s toll-free grievance line, 155255 or 1800 425 4732. The portal never asks for payment, so ignore anyone who does.
3. The Insurance Ombudsman. If the insurer rejects your complaint, doesn’t reply within one month, or you’re unhappy with its reply, file within one year at cioins.co.in. It’s free, can award up to 50 lakh rupees, and must decide within three months of getting everything it needs. The insurer must comply within 30 days, or pay you 5,000 rupees a day.

Did you know? Ignoring an Ombudsman award costs an insurer 5,000 rupees a day, paid to you, on top of interest. IRDAI’s 2024 health master circular sets that penalty.

The takeaway. Read the letter, check the clause, and complain in writing before anything else. Keep your cover unbroken and disclose every condition, because those two habits prevent most rejections. For how claims are paid in the first place, read cashless vs reimbursement claims. Buying for older family members? See health insurance for parents. Sharing one policy? See family floater vs individual. Thinking of switching after a bad experience? Read health insurance portability.

More to read: the health insurance guide and health insurance basics.