Introduction

Did you know - Amazon recently started off a trend with the Amazon Pay Later payment option? (Flipkart soon followed, of course!)

The purpose was to facilitate and encourage online shoppers to continue with their purchase intent even if they didn’t have the immediate finances to pay off the buy. With Amazon, users have until the 5th of the month to pay off their dues or EMI amount. For Flipkart, the date is the 10th of the following month. Needless to say, this boosted the purchase wave significantly.

Now, how and why this inspiration hit them, is a cumbersome question to answer. However, a parallel can be easily drawn between this financial-chess move and the claim settlement options in health insurance plans: Cashless and Reimbursement.

How and why we are drawing the parallel will be explained in detail in the read below. For now, let’s just tell you this -

  1. When you purchase an online product over any of the Pay Later options, it’s like cashless settlement and
  2. When you pay off the amount later, that’s like a Reimbursement settlement.

Let’s explain this further -

Health Insurance Policies in India 2023

Health insurance is a crucial financial move (but not an investment) that is better to have and not use than to not have and find yourself in dire need of it.

  • The pandemic,
  • Shooting up medical inflation,
  • Rising demand for high-end and result-yielding modern treatments,
  • Financial perks of tax savings under Section 80D,
  • Growing health complications (thanks to our disruptive lifestyle) requiring constant medical attention, etc.

-all have led to an increased understanding and acknowledgement of the importance of availing of health insurance plans. Considering the business implications and the altruistic need for the IRDAI to ensure maximum health insurance penetration, potential policyholders have been given a buffet of options that can customise any health insurance policy (such customisation works at 2 levels - health and financial).

While multiple features are left optional for policyholders to choose from during their customisation, there is a perk that is made available for all across the best health insurance plans - the dual approach to the claim settlement process: Cashless and reimbursement in health insurance.

These modes of claim settlement facilitate affordable and convenient accessibility to quality healthcare services and policies from the best health insurance providers.

Claim Settlement in Health Insurance

Sahil is a 30-year-old working in the corporate sector. A sudden cardiac condition led to his hospitalisation. He undergoes a major surgery. However, considering his financially futuristic thought process, his health insurance coverage is already on standby. 

The hospitalisation led to an incurred charge of INR 15 lakhs. Now, here’s the million-dollar question - 

  1. TO BE - Does his health insurer ask him to go through the surgery and extended hospitalisation stay and offer to cover all of it during the discharge, without a penny spent from his pocket (CASHLESS) or 

  2. NOT TO BE - Does his health insurer tell him to handle the invoice payment on his own and then reimburse the amount to his/her account (REIMBURSEMENT)? 

That’s the decision that’s going to be a game changer for existing and potential policyholders.

(I) CASHLESS CLAIM SETTLEMENT IN HEALTH INSURANCE

A. What is Cashless Claim Settlement in Health Insurance?

Cashless claim settlement, as the name suggests, involves the policyholder not spending a dime out of his/her pocket during the invoice payment. The entire cost is instantly borne by the health insurance provider in question. The exceptions to this out-of-pocket perk extend to conditions like -

CASE 1: If the policyholder has a copayment clause in the health insurance plan.

CASE 2: If the plan comprises a room rent and type restriction and the policyholder exceeds this.

CASE 3: If the invoice amount exceeds the provided health insurance coverage.

B. What is the Cashless Claim Settlement Process in Health Insurance?

STEP 1: Approach a partner healthcare facility. 

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STEP 2: Inform the health insurer or the Third Party Administrator (TPA) about the hospitalisation and the treatment procedure that one is to undergo. The period for notifying the insurer/TPA about the imminent claim is - 

  • In case of emergency hospitalisations/treatments is 24 hours, and 

  • In the case of scheduled treatments is 72 hours.

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STEP 3: Get hospitalised and submit your health e-card and health insurance policy number at the hospital desk.

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STEP 4: Fill in the insurance form and submit the same with either the insurance provider or your TPA. 

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STEP 5: During discharge, the generated invoice is sent directly from the hospital desk to the TPA/insurer and the claim is settled between them by your health insurance provider. 

C. What are the advantages of Cashless Claim Settlement in Health Insurance?

A hassle-free claim settlement process: In the case of cashless claim settlement, the entire process is covered in a matter of a few hours/days. The policyholder is very less involved in the entire procedure, making the process simple, time-saving, and hassle-free.

  • A financial influencer/motivator: Considering that the policyholder does not spend a penny from his/her pocket, the cashless claim settlement process is an extremely lucrative option. Such a perk is completely aligned with one’s motivation for availing of a health insurance policy.

D. What are the disadvantages of Cashless Claim Settlement in Health Insurance?

  • Only network hospitals offer cashless options: Cashless claims are a substantial financial perk. However, these are only offered in the case of network hospitals. The problem is, during medical emergencies, you can’t go seeking a partner hospital. This severely limits access to such financial perks.

(II) REIMBURSEMENT CLAIM SETTLEMENT IN HEALTH INSURANCE

A. What is Reimbursement Claim Settlement in Health Insurance?

Reimbursement claim settlement involves policyholders paying off the hospital invoice amount primarily out of their pocket. After a stipulated period, the health insurance provider reimburses the paid amount to the policyholder in their account.

While cashless and reimbursement are both offered to health insurance policyholders, under certain circumstances, reimbursement remains the sole option. Here’s a look at some such cases -

CASE 1: In case the treatment in discussion is not covered (certain Pre-Existing Conditions, Genetic Disorders, Chronic Ailments, and Permanent Exclusions) under the health insurance plan. However, the follow-up procedure is covered by the policy.

CASE 2: In case the healthcare facility involved is a non-network one.

CASE 3: If the claim is registered beyond the stipulated timeframe (24 hours in case of emergency treatments and 72 hours in the case of scheduled treatments).

B. What is the Reimbursement Claim Settlement Process in Health Insurance?

STEP 1: Inform the TPA or the health insurer about the treatment process that you are about to undergo. It is best to inform them before hospitalisation, else make sure that you inform the insurer within 24 hours of hospitalisation.

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STEP 2: Get hospitalised and start with the treatment process and recovery procedure. 

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STEP 3: Keep track of and collect each bill and invoice generated for you in the healthcare facility (partner or non-partner). 

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STEP 4: Get discharged from the hospital and fill out the insurance form with your health insurance provider. 

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STEP 5: Let your TPA/insurer reach out to you with requests for you to submit the relevant documents. 

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STEP 6: Sit back and wait for the insurer/TPA to cross-verify the submitted documents with the hospital desk in question. 

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STEP 7: The claimed amount is then discharged to your account number. 

C. What are the advantages of Reimbursement Claim Settlement in Health Insurance?

  • Network hospitals are not a concern: In this case, the health insurer reimburses the claimed amount directly to the policyholder, with very less involvement of the healthcare facility where one got treated from. Thus,  approaching a network hospital or a non-network one doesn’t have any impact on access to this perk.

D. What are the disadvantages of Reimbursement Claim Settlement in Health Insurance?

  • Extensive time consumed for the claim settlement process: The reimbursement claim settlement channel is a very lengthy process requiring multiple document submissions, claim approval, and cross-verification of each document. Additionally, since the payment has already been cleared with the hospital desk, the insurance providers aren’t exactly on a tight deadline to reimburse the amount.
  • Financial burden though temporary is substantial: While it’s true that with a top-notch health insurance provider, the claimed amount that has been paid by the policyholder from his/her pocket, is reimbursed soon enough, there is still a financial inconvenience.

Imagine being at your worst nightmare in terms of medical situations, and then having to think about how to arrange the immediate funds required for the hospitalisation, surgery, room rent, etc., despite having a health insurance plan in place. This sudden financial distress that would lead to the policyholder dipping into his/her savings, is exactly what you had in mind to avoid and hence availed of a policy.

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Conclusion

Reimbursement and cashless modes of claim settlement in health insurance are never a choice, considering how everyone knows that the latter is always the best option under any circumstances. However, health hazards can’t be predicted and will come knocking at your door.

And all of a sudden, you might have to look into a non-partner hospital because the health care specialists that you require for your customised medical requirements are unavailable across all network hospitals. Now, you can’t bank on a lesser quality healthcare service just because you want to get into a network hospital, can you? Under such circumstances, reimbursement becomes your sole option.

Also, another crucial consideration that you need to focus on is choosing a health insurance provider that has fewer restrictions in terms of

  • Comprehensive coverage,
  • No room rent restrictions,
  • No copayment,
  • No disease-wise sub-limits
  • Has numerous partner hospitals with diverse medical specialities, and
  • A great claim settlement team

- all of which are reflected by their high Claim Settlement Ratio and Incurred Claim Ratio.