What is a reasonable and customary clause in health insurance? Can an insurer use this clause to reduce the claim? My policy doesn’t impose room rent limits, so I chose a suite at the hospital. However, the insurer deducted a significant portion of the claim, citing a package deal with the hospital for a single room. Is their decision justified? What options do I have to address this issue?
—Name withheld on request
Reasonable and customary charges refer to standard charges, which are common for a particular line of treatment in the geographical area for similar types of hospital. If the clause is applicable in the policy, an insurer can limit the extent of reimbursement to the extent of what they consider as reasonable. The primary objective of this clause is to prevent overcharging by the hospital in connivance with the policyholder.
Considering that medical cases tend to vary substantially, it is extremely difficult to ascertain reasonable charges. So, insurers rarely enforce this clause.
If your policy has no room rent capping, then the insurer cannot force you to opt for a lower category room. The ‘reasonable and customary’ clause cannot be applied to lower the policy benefits. Often, insurers negotiate package rates with hospitals for single and shared room, as those are the most frequently chosen options.
However, that cannot be a reason to deduct claims. You should file a grievance with the insurer to reassess the claim. If they fail to address the grievance, you could write to the regulator and file a case with the insurance ombudsman.
Such deductions and rejections are not common across all insurers. While choosing an insurer, you must look at their number of complaints relative to the size of their business. This will help you ascertain the service quality of the insurers.
Is it advisable to purchase a critical illness policy if I already have a health insurance policy for ₹50 lakh covering myself and my family?
—Name withheld on request
Critical illness policies and family health insurance, operate differently and serve two different purposes. A standard critical illness policy pays a lump sum on diagnosis of a specified illness. The coverage is limited only to the specific list of illnesses. Once the amount is paid, the policy lapses.
A standard family health insurance reimburses hospitalization costs up to the sum assured.
Coverage is open for all kinds of illnesses except those listed in the exclusions. The policy is renewable life-long and the sum assured is fully reinstated at renewal.
The objective of critical illness policy is to provide financial support to cover increased expenses and lower income. Often critical illnesses are associated with increased out of pocket expenses such as second consults, modification in living methods, assisted care at home, and increased out-of-pocket non-medical expenses. At the same time, a critical illness can curtail the person’s ability to earn. A lump sum thus helps to cover this financial gap. A family health insurance helps to cover only the hospitalization costs and does not mitigate any other financial expenses. So, it is recommended to buy a critical illness plan in addition to family health insurance.
Abhishek Bondia is principal officer and managing director at SecureNow.
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Published: 28 Mar 2024, 08:05 PM IST