What is Cashless Health Insurance?

What is Cashless Health Insurance? Cashless health insurance is a facility offered by health insurers where the insurance company settles medical bills directly with the hospital. This means the policyholder doesn’t have to pay out of pocket at the time of hospitalisation, except for minor uncovered expenses like consumables or non-medical fees.

Paying hospital bills upfront can drain your savings instantly. Unfortunately, that’s the reality for many insured families, with out-of-pocket medical expenses making up nearly 50% of total healthcare spending in India. That’s exactly why cashless health insurance has become more of a necessity.

At Ditto, we’ve analyzed IRDAI circulars, insurer hospital tie-ups, and real claim experiences shared by customers to break down the true benefits and pitfalls of the cashless facility in health insurance. By the end of this article, you’ll know exactly how it works and what to watch out for.

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How Does Cashless Health Insurance Work?

To avail of cashless benefits, you must avail yourself of treatment at hospitals that are part of the insurer's approved network. Here’s how it works: 

• Direct Bill Settlement: Once admitted, the insurer settles the medical expenses directly with the hospital, covering the approved amount under the policy terms. However, you must pay for specific exclusions under the policy, such as registration or consumables. You will also have to pay the hospital for deductions or co-payments directly.
• Pre-Authorization Process: For planned hospitalizations in your family or for yourself, you must inform the insurer 24 to 48 hours before admission. In the case of emergencies, you must notify the insurer within 24 hours of admission. The earlier, the better. 
• Necessary Documentation: Submit documents, including the policy health card and identification proof, such as your PAN Card or Aadhaar Card, to initiate the cashless process. In case of a family member’s hospitalization, you must bring their health card and both the proposer’s ID proofs and the insured’s ID proofs. The hospital’s insurance desk coordinates with the insurer or third-party administrator (TPA) for claim approval.

Did You Know? Many hospitals ask for a security deposit of around ₹10,000 to ₹50,000 before or during hospitalization. Though the insurers do not mandate this, it’s a hospital practice to safeguard against pre-authorization delays, non-covered consumables, or possible claim rejections. The deposit is later adjusted against your final bill, and any balance is refunded once the insurer settles their share.

How Can I Benefit From a Cashless Health Insurance Policy?

If you want to receive immediate medical treatment without the stress of arranging funds, a cashless facility is an excellent choice. Its benefits include:

• Financial relief because the medical expenses are paid by the insurer.
• Faster claim settlement process as the insurer directly communicates with the hospital. 
• Minimal documentation and a wide choice of hospitals based on the insurer.
• Peace of mind with a focus on health and recovery.

Did You Know? IRDAI’s 2024 Master Circular requires insurers to approve cashless claims within an hour and provide final authorization for discharge from a hospital within three hours.

Inclusions and Exclusions of Cashless Health Insurance

Like any insurance product, cashless health insurance comes with specific inclusions and exclusions that define which treatments and expenses are covered and which are not. Here’s an overview:

Inclusions	Exclusions
Hospitalization expenses (room rent, medical tests, surgeries)	Cosmetic and plastic surgeries (unless medically necessary)
Doctor’s fees during hospitalization	Dental and eye treatments (except due to an accident or if opted as add-on)
Annual health checkups (select plans)	Injuries caused by war, terrorism, radiation
Medicines and diagnostic tests prescribed during hospitalization	Non-medical expenses (personal comfort items) and experimental treatments
Day-care procedures (hospitalization less than 24 hours)	Treatments taken during waiting period, Pregnancy, fertility treatments (may require an add-on)
Ambulance charges (if included in policy)	Injuries from hazardous or extreme sports done as a professional

To sum it up, cashless health insurance covers most essential hospitalization and treatment costs, but it excludes non-medical, experimental, or high-risk expenses. 

Is There a Limit to How Much Can Be Claimed Through Cashless Insurance?

Yes, cashless claims are not unlimited. The amount you can claim depends on your policy terms and certain conditions, such as:

• Overall Policy Sum Insured: You cannot claim beyond the coverage amount defined in your health insurance policy, even if the hospital bill is higher.
• Disease-Specific Limits/Sub-Limits: Some policies impose sub-limits for certain diseases or treatments (e.g., cataract surgery, joint replacement). If your policy has such a cap, you will only be reimbursed up to that amount, even if your sum insured is higher.
• Room Rent / Bed Category: Many insurers link claim eligibility to the room type chosen (shared, single private, deluxe, etc.). If you choose a higher category room than what your policy allows, proportionate deductions may apply to the entire bill (not just the room rent).
• Type of Hospital and Network Tie-Ups: Cashless treatment is available only at network hospitals that have an agreement with your insurer.

Quick Note: Tie-ups between insurers and select hospitals are strategic. Insurers negotiate predefined treatment packages with these partners to control costs, ensure smoother claim settlements, and provide you with hassle-free cashless care.

Reasons Your Cashless Health Insurance Might Be Denied 

While the cashless facility seems convenient, your claim might be denied due to the following reasons: 

• Non-disclosure of pre-existing diseases or health issues at policy purchase.
• Treatment is within the waiting period and not yet covered.
• Claim amount exceeds the available sum insured for the policy year.
• The hospital is not part of the insurer’s cashless network.
• Incorrect, incomplete, or missing documentation submitted with the claim.
• Policy is expired or lapsed due to non-renewal.
• Treatment is not covered or specifically excluded as per the policy terms.
• False information or discrepancies found during claim verification.
• Delayed intimation or late submission of pre-authorization or claim request.

What Should I Do if My Cashless Claim Is Rejected?

Opt for a reimbursement claim by paying hospital bills upfront and submitting documents for claim processing later. If that is also rejected, collect rejection letters and understand the reason, be it procedural or based on policy terms and conditions. 

Even when you choose a non-network hospital, you’ll need to file a reimbursement claim after paying the bills upfront. In such cases, the insurer will settle your claim based on the “reasonable and customary charges” clause. This means if the hospital charges are higher than the usual market rate for the same treatment, you may have to bear the difference.

Read this article to learn more about claim rejections and their remedies.

Cashless Health Insurance Plans That Make Ditto’s Cut

Almost every insurer in India provides you with cashless health insurance facilities. However, we always recommend checking the insurer's network hospital list before picking a comprehensive health plan. 

Here's a quick look at some popular insurers in India with a wide hospital network as of 2025:

Before we discuss the list, here’s how we decide what plans to feature. At Ditto, every health plan goes through our six-point evaluation framework. It doesn’t mean these are the only good plans, but that they stand out after being scored across all six pillars. You can learn more about how we evaluate health insurance plans here.

Insurer	Network Hospitals
HDFC Ergo	13,000+
Aditya Birla	12,000+
Bajaj Allainz	12,000+
Care	11,400+
Niva Bupa	10,000+
ICICI Lombard	10,200+
Star Health	14,000+
Manipal Cigna	8,500+
Reliance General	10,000+

Remember, your insurer’s cashless hospital network isn’t always fixed, as they can add, remove, or blacklist hospitals due to billing disputes or service issues. For instance, Niva Bupa recently suspended the cashless facility across all Max hospitals in India, w.e.f. August 16, 2025. 

While IRDAI regulates insurers, hospitals have no direct regulators, which causes conflicts. A recent case saw Bajaj Allianz’s cashless services suspended by the Association of Healthcare Providers of India (AHPI) across 15,200 member hospitals over delayed claims and outdated rates, before being reinstated. This highlights the need for hospital regulations. 

To improve transparency, IRDAI and the government launched the National Health Claims Exchange (NHCX) to digitally link hospitals, insurers, and TPAs, aiming for faster claims and fewer disputes.

On the positive side, many insurers are adopting the “cashless everywhere” model, allowing cashless claims even at non-network hospitals (with at least 15 beds under the Clinical Establishments Act).

Ditto’s Take: It’s a good practice to keep track of your insurer’s cashless hospital list from time to time. Most insurers provide updated lists on their websites or apps. 

You can also speak to our IRDAI-certified advisors for any assistance related to claims settlement. 

Ditto’s Take on Cashless Health Insurance

Preparedness is key to making cashless health insurance work smoothly. According to Gaurav Bhat, our senior advisor, here’s how you can make the most out of this facility:

• The Rule of 5: Keep a list of 5 network hospitals within a 5–10 km radius. Include at least one maternity hospital (for newborn care), one pediatric facility (children), and one multi-specialty hospital (elderly people). Update the list if you relocate or your insurer revises its hospital tie-ups.
• Emergency Readiness: Note the ambulance numbers of your nearest network hospitals. Save them in your phone and share with family members for quick access.
• Location Matters: Choose hospitals close to home, work, or frequently visited areas to minimize travel delays during emergencies.
• Quality and Tie-Ups: Ensure hospitals have specific agreements with your insurer for faster approvals and priority cashless admission.

Why Choose Ditto for Health Insurance

At Ditto, we have assisted over 700,000 customers with choosing the right health insurance policy according to their needs and goals. Why customers like Varun love us:

✅No-Spam & No Salesmen

✅Rated 4.9/5 on Google Reviews by 15,000+ happy customers

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✅Dedicated Claim Support Team

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Final Thoughts

Cashless health insurance has transformed the way policyholders manage healthcare expenses by removing the immediate financial burden during hospitalization. However, to make the most of it, you must stay informed about inclusions, exclusions, network hospitals, and evolving regulatory changes. Remember, even if cashless is denied, reimbursement claims are an option, so preserve all your documents accordingly. 

If you still need help choosing the right policy, chat with us on WhatsApp or book a call at a convenient time. No spam — just honest insurance advice.

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