Health claim shortfall: Can your second insurer pay?

Your health insurance policy covers Rs 5 lakh, but your hospital bill comes to Rs 8 lakh. Who will pay the remaining Rs 3 lakh? If you have another health insurance policy, can you approach the second insurer for the balance, even if the first insurer rejected some expenses?

Let’s take a look at how the process works, what IRDAI's rules say, and what you should keep in mind before filing a claim with a second insurer.

Can you split a single health insurance claim between two or more insurers?

A policyholder can choose to claim under one health insurance policy first and approach another insurer for the unpaid balance, subject to the terms of both policies.

“IRDAI has clear guidelines on the above process and calls out the mechanism and documents required in such a scenario. IRDAI also has guidelines where one insurer must facilitate in case the customer is claiming from another insurer for the balance amount,” says Varsha Gujarathi, Chief Customer Officer, Universal Sompo General Insurance.

Such scenarios typically arise when the claim payout is limited due to sum insured restriction/policy capping in one policy, and the balance amount is claimed from another insurer’s policy, she adds.

The policyholder can choose which policy to use first. The insurer selected becomes the primary insurer.

“Under IRDAI's Master Circular on Health Insurance Business (29 May 2024),” the primary insurer must coordinate with the other insurers for the balance, says Rohan Goel, Business Head of Health Insurance at Policybazaar.

However, having multiple policies does not mean you can recover the same medical expense twice.

Under indemnity-based health insurance, the combined payout cannot exceed the admissible medical expenses actually incurred. Each insurer also assesses the claim independently under its own policy terms.

How does claiming the balance from a second insurer work?

Consider a policyholder who has two health insurance policies:

• Policy A: Sum insured of Rs 5 lakh
• Policy B: Sum insured of Rs 10 lakh
• Total hospital bill: Rs 8 lakh

Suppose Policy A considers Rs 7.5 lakh of the bill admissible, disallowing Rs 50,000 for expenses such as non-payable consumables. Since Policy A has a sum insured of Rs 5 lakh, it pays Rs 5 lakh.

The policyholder can then approach Policy B for the unpaid balance. The second insurer will assess the remaining expenses under its own policy terms.

Source: Policybazaar

The important point is that expenses disallowed by the first insurer may still be considered by the second insurer, even if the first policy's sum insured has been exhausted. But the second insurer will pay only what is admissible under its own policy.

For instance, if the second policy also excludes the Rs 50,000 in consumables, the policyholder will have to bear that amount. Under indemnity-based policies, the policyholder cannot claim Rs 5 lakh from Policy A and another Rs 8 lakh from Policy B against an Rs 8 lakh hospital bill.

What are the IRDAI rules when you have multiple health insurance policies?

The rules differ depending on whether your policies are indemnity-based or benefit-based. The distinction matters because the two types of policies pay claims differently.

Source: Policybazaar

According to Goel, the key rules for indemnity-based policies are:

1. The policyholder may choose the policy under which the claim is settled. The chosen insurer must settle within that policy's limits and terms.

2. If the admissible claim exceeds that policy's cover, the primary insurer should obtain details of the other policies and coordinate with those insurers to settle the balance, subject to their terms.

3. Amounts disallowed under one policy can be claimed under another, even if the first policy's sum insured is not exhausted. The second insurer decides independently under its own terms.

4. The policyholder is indemnified only for the treatment cost actually incurred. Insurers can no longer insist on splitting a claim in proportion to each policy's sum insured.

Benefit-based policies work differently because they pay a specified amount when a covered event occurs, rather than reimbursing actual hospital expenses.

For example, if a policyholder has two Rs 10 lakh critical illness policies and meets the conditions for a payout under both, each policy may pay its defined benefit. A hospital daily cash benefit may also be payable alongside an indemnity claim for the same hospitalisation, subject to the policy terms.

How should you claim from two insurers for the same hospitalisation?

Once you know that you may be able to claim the balance under a second policy, the next step is to follow the claims process carefully.

According to Minoo Mantri, EVP - Insurance, Anand Rathi Share and Stock Brokers Limited, policyholders should follow these steps.

• Inform both insurers promptly. Intimate both of the hospitalization within their policy deadlines (usually 24 to 48 hours for emergencies, and 48 hours before planned admission).
• Disclosing the other policy at the start avoids later suspicion of concealment.
• Pick the primary insurer. Consider which policy has the higher sum insured or the more favourable terms, and whether the hospital is network-empanelled with that insurer.
• Settle with the primary insurer first. Get the final settlement or disallowance letter showing the amount paid and the deductions with reasons.
• Claim the balance from the second insurer. Submit the claim form with a copy of the first insurer's settlement letter. The second insurer will typically settle only the balance admissible under its terms.
• Follow up on coordination. The Master Circular requires insurers to coordinate. In practice, put the request in writing and keep the claim reference numbers of both.
• Escalate if needed. Use the insurer's grievance cell, then IRDAI's Bima Bharosa portal, then the Insurance Ombudsman.

What documents do you need to claim from the second insurer?

The second insurer needs to understand the total hospital bill, the amount paid under the first policy and the expenses that remain unpaid.

According to Goel, policyholders should keep the following documents ready:

• Final and itemised hospital bills, with payment receipts

• Discharge summary, investigation reports and prescriptions

• Claim forms for both policies

• First insurer's settlement, partial-settlement or rejection letter, showing amounts paid and disallowed

• Policy details of both insurers

• Any correspondence on the first claim

Under IRDAI's 2024 Master Circular on Health Insurance Business, insurers and third-party administrators (TPAs) are expected to collect required documents directly from the hospital. Policyholders should not be asked to submit documents that the hospital can provide.

Nevertheless, keeping copies of bills, medical records and claim correspondence can help if the second insurer needs clarification. The exact documentation requirements may vary by insurer and claim type.

What mistakes should you avoid when claiming under multiple health policies?

Even when a policyholder has more than one health insurance policy, errors in disclosure, documentation or claim filing can cause delays or disputes.

According to Mantri, watch out for these common mistakes:

• Not disclosing the other policy. Concealment can lead to rejection and can affect renewal.
• Late intimation to the second insurer. Intimation deadlines apply separately to each policy.
• Handing the original bills to the first insurer and keeping no copies. Always keep attested copies, and ask the first insurer to certify them.
• Assuming the second insurer will pay everything the first one rejected. It will not if the item is excluded or non-payable under its own terms.
• Expecting to recover more than the actual bill. That is not permitted under indemnity.
• Ignoring policy filing deadlines. Each policy has its own period (commonly 15 to 30 days after discharge) for submitting reimbursement documents.
• Claiming from the wrong policy first. Choose the primary policy carefully, because it affects which sub-limits and co-pays apply.