How to File a Claim in case of Multiple Health Insurance Policies?

Neeraj Gupta faced a tricky situation when he had to pay medical expenses from his pocket even when he had two health insurance policies. Though he had two health insurance policies with Rs. 5 lakh coverage each, he neither informed the health insurance companies at the time of buying a new policy nor mentioned it at the time of claim. As a result, his claim was rejected.

Like Neeraj, many people purchase multiple health insurance policies but do not follow all the guidelines, and due to this, they have to face issues.

Considering the fact that medical inflation is rising at an alarming rate, it is a good move to have more than one health insurance policy, however, understanding the claim process in case of multiple health insurance policies is necessary in order to make the best use of them.

Further, if you are a salaried professional, the chances are high that your employer may also be covering you under a group health insurance policy. In this case, if you also have an individual health insurance plan, it is necessary to know the claim process that would be applicable.

Contribution Clause

While taking a health insurance policy, one is required to fill up the insurance proposal form, wherein the applicant is required to disclose all their health insurance policies. The main purpose of asking this is that most of the health insurance policies come with a contribution clause. Before we discuss other things, let’s first talk about what a contribution clause is.

As per the contribution clause, if there is more than one health insurance policy, the claim amount will be divided among both the health insurance policies. For instance, if a person has two health insurance plans for Rs. 2 lakh and Rs. 5 lakh each and there is a claim of Rs. 50,000, the same will be divided between both the insurance policies.

Now, let’s discuss the claim process which will be applicable in the case of multiple mediclaim policies.

If you already have a health insurance policy, it is necessary to inform the second insurer about your first policy at the time of buying the policy or making a claim. In case you do not disclose it, you are violating the important condition of a health insurance policy, and in case any of your health insurance companies finds it later, your claim could be rejected.

Declare all the health insurance policies for which you are paying premiums from your pocket.

If a policyholder is holding more than one health insurance policy, he/she can file a claim with any of the insurers. For instance, if a person is holding both the group health insurance and individual health insurance policies, he/she can approach any insurer for the settlement of the claim.

However, at the time of filing a claim, the policyholder would have to give details about another health insurance policy as well with the claiming insurer. If required, the claiming insurer can exercise the right to invoke the contribution clause, i.e., ask the other insurer to share the claim amount.

Now, let’s understand the claim settlement process in case of multiple health insurance policies with the help of the following case scenarios:

Scenario 1: Where the claim amount is less than the sum insured

Solution: If the claim is less than the sum insured, the contribution clause will not be applied.

For instance, Rajiv has a health insurance policy from Insurer X which is offering Rs. 5 lakh coverage, and other health insurance policies from Insurer Y with Rs. 2 lakh cover. In case, the claim amount is Rs. 1 lakh, Rajiv can choose any of the health insurance companies for the settlement of the claim and that insurer can’t impose the contribution clause.

Scenario 2: Where the claim amount is more than the sum insured

Solution: If the claim amount is more than the sum insured (even after applying deductible), the policyholder has all rights to choose the insurer by whom the claim should be settled. However, in this case, the insurer will settle the claim only after applying the contribution clause.

In case, the policyholder doesn’t disclose about the other health insurance policy at the time of claim, the insurer’s liability would be restricted only up to the sum insured, and the rest of the claim amount would be paid by the policyholder.

Scenario 3: Claim is made under a defined benefit plan

Solution: The contribution clause will not be applicable in the case

• The sum insured is fixed
• The medical cost doesn’t affect the sum insured

The health insurance policies like critical illness insurance plans, hospital cash policy, etc.; offer fixed benefits. Therefore, the claim amount doesn’t have any impact on the payable amount, which is fixed in nature.

It means, if you have two critical illness policies, both the insurer will make a lump sum payment, and the policyholder can approach both the health insurance policies and none of them can exercise the contribution clause.

Similarly, if you have one critical illness insurance and one mediclaim policy, the policyholder can approach both the insurance companies who would be liable to settle the claim.