15 Reasons for Disputes in A Health Insurance Claim

Dhruv, after going through a lot of pains and processes, finally gets himself covered under health insurance. He picks several features and benefits and customises the policy that’s just right for him. He’s confident that he has bought a really good plan, with an adequate cover - so that he doesn’t have to worry in case he gets hospitalised in the future.

Now, a few months after he buys the health plan, Dhruv undergoes hospitalisation for a minor surgery. But he’s not really bothered about the expenses because he thinks his health insurance has got him covered. On the day of discharge, as he approaches the hospital billing desk, to settle any minor payments that might not be covered, Dhruv is slapped with a heavy bill. The insurer did not pay a majority of the hospitalisation expenses. And, he had to foot those expenses out of his pocket.

The rulebook has changed a lot since 2024. IRDAI’s May 2024 Master Circular put cashless timelines, waiting-period caps and claim protections in one place. Disputes still happen, though. Data tabled in Parliament shows that around 2.58 lakh complaints were logged on IRDAI’s Bima Bharosa portal in FY 2024-25 across all insurance lines, and 53,102 reached the Insurance Ombudsman. The reasons below explain why.

Insurance often has a negative connotation because of aspects like deductions, incessant paperwork, claim rejection, and delayed claim settlements. Insurers check every claim against the policy wording, the hospital’s records and your disclosures. Most disputes start with a gap between what the buyer assumed was covered and what the contract says. So, to be stress-free when it comes to the claims process and to actually receive your claim amount - you should be aware of the reasons why your claim can be disputed.

In this article, let’s take a look at 15 such reasons - and find out how you can smartly avoid them.

What has changed since 2024

• PED waiting period: capped at 36 months (was 48).
• Moratorium: 60 months (was 96).
• Cashless: 1-hour decision, 3-hour discharge authorisation, and the stated goal of 100% cashless settlement.
• No upper age limit for buying new health cover.
• Individual and family health premiums: GST-free since 22 Sep 2025 (group cover still 18%).
• Senior-citizen premium hikes: capped at 10% a year.
• Multiple policies: you can choose which policy to claim from.

Let’s dive right in!

15 Reasons For Disputes In Health Insurance Claim

• Room Rent Capping

  Room-rent limits are not tied to small policies alone. They appear as a fixed rupee amount per day, as a percentage of the sum insured (1% or 2% is common), or as a room category such as a single private room. A large cover can still carry a tight limit, so check the sub-limits in the policy wording rather than relying on the sum insured. These room rent limits do not just affect the room’s cost but your entire hospital bill. How?

  First, you need to understand how most hospitals in India do their billing. Hospitals in India use a price discrimination strategy in their tariff system. Here the charges for all expenses (except MRP products) incurred in the hospital vary - based on the room you choose.

  For instance, a hospital can charge Rs. 200 for an X-Ray for a patient admitted in a twin sharing room, and Rs. 400 for another patient admitted in a private room. Similarly doctor visit charges can be say Rs. 100 for the general ward, and Rs. 1000 in the super deluxe room. One can look at this as a form of cross-subsidy between people with different income levels, that ensures everyone can afford to pay hospital bills.

  Here is an example of tariff from a hospital:

  If you see the same surgery in the same hospital, it can cost differently.

  For a sense of how much the same surgery can be priced differently, look at the Central Government Health Scheme’s schedule. It sets a base package rate for a semi-private ward. Patients entitled to a general ward are paid 5% less and those entitled to a private ward 5% more. A hospital without NABH accreditation gets 15% less than an accredited one. CGHS limits the swing between ward types to about five percent, but private hospitals billing health-insurance patients often vary by far more and that is how a room-rent cap can end up reducing the whole bill.

  CGHS package rates for selected general and GI surgeries in Tier I cities (Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, Pune, Ahmedabad), effective 13 Oct 2025. Amounts in Rs.

  CGHS code	Procedure	General ward (NABH)	Semi-private (NABH)	Private ward (NABH)	Semi-private (Non-NABH)
  AG017	Exploratory laparotomy (open)	26,125	27,500	28,875	23,375
  AG008	Gastrostomy	26,125	27,500	28,875	23,375
  AG010	Vagotomy, pyloroplasty / gastrojejunostomy	40,850	43,000	45,150	36,550
  AG012	Partial/subtotal gastrectomy for ulcer	50,350	53,000	55,650	45,050
  AG028	Splenectomy, for trauma	50,350	53,000	55,650	45,050
  AG029	Splenectomy, for hypersplenism	59,850	63,000	66,150	53,550
  AG037	Cholecystectomy (open)	33,250	35,000	36,750	29,750
  AG038	Cholecystectomy with exploration of CBD	34,485	36,300	38,115	30,855
  AG094	Laparoscopic cholecystectomy	34,485	36,300	38,115	30,855
  AG045	Appendicectomy (open)	19,855	20,900	21,945	17,765
  AG095	Laparoscopic appendectomy	31,350	33,000	34,650	28,050
  AG046	Appendicular abscess, drainage	33,250	35,000	36,750	29,750
  AG024	Inguinal hernia, herniorrhaphy	27,170	28,600	30,030	24,310
  AG025	Inguinal hernia, hernioplasty (excl. mesh)	33,250	35,000	36,750	29,750
  AG050	Ileostomy	33,250	35,000	36,750	29,750
  AG051	Resection & anastomosis of small intestine	49,638	52,250	54,863	44,413
  AG053	Intestinal obstruction surgery (incl. resection, anastomosis, adhesiolysis)	50,350	53,000	55,650	45,050
  AG067	Right hemicolectomy	33,440	35,200	36,960	29,920
  AG069	Total colectomy	41,800	44,000	46,200	37,400
  AG076	Fistula in ano, low fistulectomy	24,035	25,300	26,565	21,505

  
  

  Let’s say you pick a hospital room beyond the limit specified in your policy. To factor this differential pricing adopted by hospitals, insurers apply proportionate deductions on the claim amount, and pay as per the tariff defined corresponding to your eligibility.

  For instance, Kat is covered under a health insurance plan of Rs. 3,00,000. She is eligible for a per-day room rent of Rs. 3000. A few months later, she undergoes one-day hospitalisation for kidney surgery. Let’s say she opts for a room with a rent of Rs. 6000. And, her total hospital bill amounts to Rs. 50,000.

  In this case, the insurer will make two deductions:

• Deduction 1

  Difference in the room rent = Room rent availed - Room rent eligible

  = 6000 - 3000

  = Rs. 3000

• Deduction 2

  Proportionate deduction for associated medical costs. Proportionate deduction = (Room rent eligible / Room rent availed) * 100 Proportionate deduction = (3000 /6000) * 100 = 0.5 * 100 = 50% So, the insurer will make two deductions: Excess room rent claimed over eligibility of Rs. 3000 X 1 day she was admitted. 50% proportionate deduction on all associated medical costs Let’s assume Kat incurs associated medical expenses of Rs. 40,000. So, 50% of Rs. 40,000 = Rs. 20,000

• Total claim payable = Rs. 27,000

  (Hospital bill Rs. 50,000 - Additional room rent charges Rs. 3000 - Proportionate deduction Rs. 20,000)

  Kat has to bear a huge deduction of Rs. 23,000 from her own pocket on a Rs. 50,000 hospital bill, despite holding a Rs. 3 Lakh cover.

  • What should you do?
    • Go through the policy wordings or brochure and check if your policy has a room rent limit.
    • If your plan has a limit, look for one with no room-rent restriction, or upgrade within your current insurer. Porting is possible only at renewal. IRDAI’s policyholder portal says to apply to the new insurer at least 45 days before the renewal date. The new insurer underwrites you afresh and waiting-period credit applies only to the cover you already held.
• Medically Necessary Hospitalisation

  Health insurance will only cover you for those hospitalisation expenses that are ‘medically necessary’. A hospitalisation or treatment is said to be medically necessary if it passes the following 4 tests

  • Is required for the medical management of the illness or injury suffered.
  • Includes the level of care necessary to provide safe, adequate, appropriate medical care in scope, duration, and intensity.
  • Has been recommended by a medical practitioner, who is unrelated to you.
  • Conforms to the professional standards widely accepted in international medical practice or by the medical community in India.

  If the above conditions are not fulfilled, the insurer may reject your claim on the grounds that the hospitalisation is not ‘medically necessary’.

  For instance, if Manvi is suddenly feeling restless and uneasy, and visits the hospital. Now, let’s say all required medical tests and checks are carried out by the medical professionals in the hospital, and there is nothing wrong observed. Doctors ask Manvi to go home, take the day off and rest. However, Manvi's family requests the doctors at the hospital that she be admitted for one day, just for observation and rest. If Manvi is admitted without any medical protocols requiring her admission - the hospital bill or any other expenses will not be covered under health insurance.

• What should you do?
  • Ensure that the hospitalisation or treatment is recommended by your treating doctor in writing, before you take admission.
  • Be aware that if you are getting hospitalised outside medical protocols, the expenses for the treatment may not be covered under health insurance.
  • Ask the doctor to record the clinical reason for admission in the admission note. That note is the first thing a claims reviewer reads.
• No Active Treatment

  If you undergo hospitalisation only for diagnostic or monitoring purposes, it will not be covered by health insurance. So, if you get hospitalised, and there is no ‘active treatment’ carried out, the insurance company won’t pay for the hospitalisation expenses.

  Say, 89 year old Mr. Khan is admitted to the hospital for chest pain. After several tests conducted over a span of several days, there is an unfortunate detection of lung cancer. However, given the age, the doctors at the hospital do not suggest Mr. Khan to undergo any treatment, as his body may not be able to bear the impact of chemotherapy or similar treatment.

  Doctors recommend that Mr. Khan rest at home, with some basic medication. In this scenario, the hospital may raise a large bill for the medical tests and admission carried out at the hospital. However, the insurer in all probability will reject any claim for this hospitalisation, given that there was no active treatment carried out while the insured person was hospitalised - only admission and medical tests.

  • What should you do?
    • Always know what you’re getting admitted for, and whether the treatment can be carried out at home. For instance, treatment that requires only observation and oral medication.
    • If you are worried about a medical condition and are hospitalised just for monitoring purposes, you should be aware that you may have to pay for the admission yourself.
• Overcharging By The Hospitals

  IRDAI regulates insurers, not hospitals, so a hospital can bill above what your insurer considers reasonable and customary. The gap becomes your cost. Regulators are working on this gap. In January 2025, IRDAI directed insurers to work towards common empanelment of hospitals and negotiated package rates on the lines of PM-JAY. In August 2026, IRDAI’s Insurance Advisory Committee sub-committee on health insurance discussed incentives for hospitals and insurers to join the National Health Claims Exchange (NHCX) and suggested insurers publish standard treatment guidelines and package rates. The press release does not make these binding or set dates. Until they are, get a written estimate before any planned admission. Insurers can protect themselves from unreasonable hospital billing with the help of the Reasonable and Customary Clause.

  Basically, insurers look at the normal or acceptable range of payment for a specific treatment that all the similar-grade hospitals in a given area are charging. They then decide the reasonable and customary charges for that treatment.

  So, if you get admitted to a hospital that charges more than what other hospitals in that same geographical area are charging, the insurer will only reimburse for charges that are reasonable and customary.

  Say Mr. Fonseca undergoes gall bladder surgery at a premium hospital in South Delhi. The hospital decides to charge Rs. 1 Lakh for the treatment. Now, similar grade premium hospitals in South Delhi are known to charge only Rs. 60,000 for a gallbladder surgery with the same complexity. In this case, insurers may apply the Reasonable and Customary Charges clause, and pay out Rs. 60,000 instead of Rs. 1 Lakh charged by the hospital and claimed by you.

• What should you do?

  In case of a planned treatment, get an estimate from the hospital beforehand - and compare the costs with a similar grade hospital in the area. If you find out that the hospital is overcharging, you can -

  • Search for an alternate hospital that charges reasonably and get treated there.
  • If you get treated in that hospital then be aware that you will need to pay the excessive billing from your pocket.
• Specific Disease Waiting Period

  IRDAI caps the waiting period for pre-existing diseases (PED) at 36 months. Before the 2024 changes, policies could run it up to 48 months. If your older policy still says 48 months, ask the insurer to confirm in writing what applies at renewal. What you might not be aware of, however, is that insurers also apply a waiting period for specific diseases or treatments. This waiting period is applied even if you don’t have those diseases while buying the policy.

  For instance, some insurers may apply a 2-year waiting period for treatments for slipped discs, piles, sinusitis, etc. And, up to 36 months for certain procedures such as joint replacement, depending on the insurer. Check the list in your own policy.

• When can your claim get rejected?
  • If your health insurance policy has not completed the waiting period specified, then, the insurer will not pay the claim for such diseases/treatments.
  • In case you upgrade your health plan, the upgrade amount will not cover these specified diseases/treatments for the waiting period.
• What should you do?
  • Go to the insurer’s website and download the policy wordings of the health insurance product you’re planning to buy.
  • Look for the waiting-period section of the policy wording and the Customer Information Sheet (CIS), which the Master Circular requires insurers to provide in plain language. The standard exclusion codes (such as Excl02 for specified diseases) may still appear in older wordings.
• Changes In Policy Conditions

  Insurance companies can change policy benefits, conditions, and pricing subject to the IRDAI’s approval. They can also stop your health insurance plan & migrate you to another plan which has different conditions.

  Insurers must inform you in writing of changes to policy terms. Read every renewal notice, because a changed sub-limit or co-payment is one of the easier ways to end up with a surprise deduction.

• When can your claim get rejected?

  To make sure you are aware of all such changes, you should -

  • Always update your email and postal addresses with the insurer.
  • Keep track of any emails you get from them.
• Filling The Proposal Form Wrong

  When you buy a health insurance policy, the insurer prices your policy on the basis of what you declare and plans are renewable for life. They issue you the policy on the basis of the information you give in the proposal form.

  So, if you provide incorrect details or intentionally hide anything - and the insurer finds out about it later, that could result in unnecessary chaos. Within the first five years, an insurer can contest a claim or policy on grounds of non-disclosure or misrepresentation. After 60 months of continuous cover (the moratorium period), IRDAI says no claim can be contested on those grounds except for established fraud. The moratorium was 96 months before 2024.

• When can your claim get rejected?
  • Fill out the proposal form yourself - even if you’re buying the policy through an agent or a financial advisor.
  • Do your homework well and give accurate details to the insurer about every disease, surgery, or any major injury that you’ve had in the past.
  • Provide all details honestly on the proposal form. Do not intentionally try to hide anything.
  • If you missed informing the insurer about anything, inform them in writing - as soon as you realise this.
• Details Not Added By The Employer

  In case you’re covered under your company’s health insurance policy, your employer or the HR team may miss adding your family's details on the insurance portal. This can create a lot of difficulties at the time of claim. Group policies are still taxed at 18% GST. The September 2025 exemption covers only individual and family policies. Employer cover ends when the job does. A personal policy bought while you are healthy protects you in the gap. Many group plans start PED cover from day one, but terms vary by employer and insurer.

• When can your claim get rejected?
  • Follow up with your employer until you receive the TPA card for each family member. Once you get them, you can be sure that they are added to the policy.
  • Verify if all details mentioned on the card such as name, age, contact details, coverage, etc. are correct.



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• Providing Incorrect Details To The Doctor

  At the time of hospitalisation, the doctor will ask for the patient’s past medical history, medication, allergies, etc. Make sure all these details are provided diligently to the doctor. Because a slight miss or negligence in giving the details can jeopardise the health insurance claim.

  A case paper recording is prepared by the doctors where details related to the patient's past medical history medication, allergies, etc. are included. Additionally, the year since these diseases have been diagnosed is included in the case paper recording too. The hospital will then share these case papers with the insurance company. So, make sure all information is provided carefully after looking at the records.

  Say Mr. Raj is admitted to the hospital to get treated for gastroenteritis. While he was providing the details about his medical history, he forgot to inform the doctor that he has diabetes and that he takes medicines for the same.

  According to the details provided by Mr. Raj, the doctor generates the case papers and prescribes endoscopy. He asks Mr. Raj to undergo some medical tests prior to the procedure. In the reports, it is noticed that Mr. Raj has had diabetes for the past few years. All the hospital documents including the reports and case papers are shared with the insurance company by the hospital. Now, since Mr. Raj has not declared about his being diabetic to the doctor and the insurer, his claim might get rejected.

• Missing Trail Of Documents

  When you’re applying for a health insurance claim, you’ll have to submit several documents to support each expense you are claiming for. These documents will include -

  1. Doctor's prescription
  2. Diagnostic report (wherever applicable)
  3. Invoice
  4. Proof of payment/Receipt

  Even if one of the above documents is missing for a specific expense, the insurer will deduct that expense and then pay the claim amount.

• When can your claim get rejected?
  • Keep all your bills, receipts, and other documents in a single folder - to avoid any hassles later on.
  • Ask for itemised bills with receipt numbers, and keep the original or a clear copy of each document on your insurer’s checklist. Incomplete paperwork is a frequent cause of deductions.

  Cashless: Insurers must decide on a pre-authorisation request within one hour and give final authorisation within three hours of the hospital’s discharge request. These timelines became effective on 1 August 2024. IRDAI-reported data for 1 Aug 2024 to 31 May 2025 shows about 96.7% of final cashless authorisations came within three hours. Reimbursement: the Master Circular on Protection of Policyholders’ Interests (5 Sep 2024) says non-cashless health claims should be settled within 15 days of submission, while the earlier regulatory framework sets a 30-day limit from the last necessary document, and 45 days where an investigation is needed

• Cashless Request Denied Or Hospital Not In Your Network

  A cashless request can be declined even when the treatment is covered, for example when the hospital isn’t empanelled or the pre-authorisation form is incomplete. If cashless is refused, you can still pay and file a reimbursement claim. Ask the hospital’s insurance desk for the written reason, and confirm your insurer’s current cashless policy for non-network hospitals before relying on it. Industry bodies have promoted ‘Cashless Everywhere,’ but availability depends on the insurer and the hospital.

• Co-Payments, Sub-Limits and Non-Payable Items

  Even a covered claim can fall short because of a co-payment (you share a percentage), a disease-wise sub-limit (such as for cataract), or items the policy treats as non-payable, such as some consumables and administrative charges. These show up in your CIS and exclusions list, so read them before you buy.

• Policy Lapse and Grace Periods

  A gap in renewal can wipe out the continuity that makes waiting-period credit and the moratorium count. IRDAI’s circular provides a 15-day grace period for monthly premiums and 30 days for quarterly, half-yearly or annual premiums. Treat that grace period as a safety net, not a plan.

• Delay in Intimating the Insurer

  Policies usually ask for intimation within a set time (check your wording for planned and emergency admissions). Late intimation gives the insurer an argument to reduce or contest the claim.

• If Your Claim is Rejected Or Short-Paid: Your Escalation Pat
  • Ask for the rejection or deduction reasons in writing and the policy clause relied on
  • Write to the insurer’s grievance officer, who must resolve within 14 days
  • Escalate on IRDAI’s Bima Bharosa portal
  • Approach the Insurance Ombudsman if the insurer’s reply doesn’t satisfy you
  • Make use of the Consumer commission as a last resort. Remember that the Ombudsman office has jurisdiction limits and filing windows. So, check the Insurance Ombudsman Rules 2017 for the current claim-value cap and the filing time limit.

Looking Ahead: 2026 Reforms in the Pipeline

Policymakers are discussing standardised hospital rates, a simpler baseline product, mandatory NHCX integration for insurers and hospitals, and caps on hospital room charges. As of this update, the IRDAI sub-committee’s 28 August 2026 meeting records discussion and suggestions, not binding rules, and no implementation dates were set. Check IRDAI’s website for new circulars before you rely on any of these.

So, these were the 15 most common but little-known reasons why your health insurance claim can see major deductions or even denial by the insurer. It is important to be aware of these so that there are no hassles when you apply for a claim under your health insurance policy.