It may be useful to have two health insurance policies for situations that may require an amount exceeding the sum insured under one of them. The Insurance Regulatory and Development Authority of India (IRDAI) has provisions for using two health insurance policies to cover the expenses of a single hospitalisation bill if one policy is not enough or the primary insurer rejects a part of the expenses.
The policy under which the policyholder claims settlement is the primary policy. If the sum insured under the concerned policy does not cover the required amount, another insurer may cover the remaining bill, subject to its terms.
However, policyholders should not assume that they can claim the total amount separately from both insurers. Under indemnity-based policies, the combined payout cannot exceed the total hospitalisation bill. The second insurer would cover only the eligible portion of the remaining bill. Also, the second insurer may cover the portion that was excluded by the first insurer as inadmissible, subject to the terms of the policy, even if the sum insured under the first policy has not been exhausted.
Two claims
IRDAI has clarified the conditions for using two health insurance policies to settle claims, according to which the second policy would cover only the unpaid amount once the first insurer has settled the claim up to its coverage limit.
“In case the available coverage under the said policy is less than the admissible claim amount, the primary Insurer shall seek the details of other available policies of the policyholder and shall coordinate with other Insurers to ensure settlement of the balance amount as per the policy conditions, without causing any hassles to the policyholder,” IRDAI explains in the ‘Master Circular on Health Insurance Business’.
The need for the second policy arises when the first insurer has a limit on the sum insured and the policyholder needs to claim the remaining bill amount from the other insurer.
The primary insurer then receives the details of the second insurer and coordinates with it for the settlement of the claim. For example, a person incurs a hospitalisation bill of Rs 10 lakh, and the sum insured under the first policy is Rs 5 lakh. Of the total bill, Rs 50,000 is considered inadmissible under the first policy’s terms, so the admissible amount is Rs 9.5 lakh. Since this exceeds the sum insured, the first insurer pays its full limit of Rs 5 lakh. The remaining Rs 5 lakh (Rs 4.5 lakh of admissible expenses plus the Rs 50,000 disallowed by the first insurer) can then be claimed from the second insurer, which will assess the claim as per its own terms. If the second insurer admits the Rs 50,000, it pays the full Rs 5 lakh. If it also excludes that amount, it pays Rs 4.5 lakh, and the policyholder has to bear the Rs 50,000 themselves.
Mistakes to avoid
The major mistake that must be avoided to prevent delays and rejections is failing to inform both insurers about the hospitalisation in a timely manner. It is important to be aware of the notification deadlines specified in the policies.
The policyholder must inform the second insurer within the notification window, even while approaching the primary insurer. This avoids suspicion of concealment and the eventual rejection of the claim.
It is important to be very careful while choosing the primary policy so that one can ensure the settlement of larger claims. The policyholder must also check the terms of both policies so that it is easier to determine which policy aligns better with their requirements and offers more favourable conditions.
Keep attested copies of the documents, including hospital bills and prescriptions, so that if the primary insurer takes the original documents, the policyholder may still have copies to comply with the second insurer’s procedures.
