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How claim is settled if you have two Health Insurance plans?

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Many of us have more than one health insurance policies. And I receive a number of queries over e-mail and as comments in my blog post about discontent with claim settlements for two policies.  Many have a grievance that the insurers did not settle as they expected and they had to pay the balance from their pockets.

I had done a post on the pros and cons of having multiple health insurance plans. However, the post did not specify how the claims are settled in case you have multiple policies. In this post, I will demonstrate calculations involved when you make a claim for the same bill with two insurers.

An interesting point is that if you have two health plans, the order of claim can impact the reimbursement amount.

What is Contribution Clause in Health Insurance?

This clause is applicable when you have multiple mediclaim policies.

Contribution means the right of an insurer to share the cost of an indemnity claim with other insurers in the proportion of Sum Insured. This is applicable only in case of multiple policies.  So, if you had two policies and the claim amount exceeds the Sum Insured, the insurance company can ask the second insurer to share the cost in the proportion of Sum Insured.

Must Read: How to claim from multiple health insurance policies

Must Read: How to get a higher health insurance cover at a low premium?

The concept of Contribution has been done away with in Health Insurance Regulations, 2016. You can choose to file a claim with the company of your choice and the company will have to settle in full (subject to terms and conditions of the policy). The insurance company cannot insist on sharing expenses with the other insurance company.

By the way, even when contribution clause was permitted (before 2016), the insurance companies were not too keen to invoke contribution clause. This is based on my interaction with insurance executives and the reading of various online resources.

Then, how are the claims settled in case of multiple health insurance policies? Let’s find out.

How claim is settled across multiple health insurance policies?

Since the contribution clause has been done away with, my calculations do not consider any such premise or cost-sharing between insurers.

Let’s say you have two health insurance plans with Sum Insured of Rs 3 lacs each.

In case the claim amount is less than Rs 3 lacs, you have the choice to approach any insurer and ask it to settle the claim. The insurance company has no say in this matter. The choice of insurer is entirely your discretion. Of course, the insurance company will pay as per the terms and conditions of the plan.

If the claim amount is greater than Rs 3 lacs (after considering deductibles and co-payment), you can still choose the insurer to settle the claim. After the settlement, you can approach the other insurer to settle the balance amount.

The second insurer calculates the insurance liability as per the policy terms. Subsequently, it deducts the amount settled by the first insurer and pays the remaining amount.

This is better understood with the help of an example. However, before jumping to the illustration, let’s try to understand what co-payment means.

What is Co-payment clause under Health Insurance?

If you have a co-payment clause under your health insurance plan, you have to share hospital expenses with the insurance company.

Let’s assume your insurance plan has co-payment of 20% i.e. you must share 20% of the hospitalization cost (or rather admissible claim).

Suppose you run a hospital bill of Rs 1 lacs and Rs 90,000 is admissible as per policy terms and condition. The difference can be due to expense items not covered under the insurance plan.

The insurance company will settle only 80% of Rs 90,000. This means the insurance company will settle the bill for only Rs 72,000. You have to pay the remaining amount from your own pocket.

Can the order of claim affect the claim settlement amount?

Yes, it can.

Let’s assume you have purchased two health insurance plans A and B.

  1. Plan A with Sum Assured of Rs 3 lacs and no co-payment clause
  2. Plan B with Sum Assured of Rs 3 lacs with a co-payment of 20%

For the purpose of this exercise, let’s assume that the entire hospitalization expense is admissible under the insurance policy.

Let’s say you get hospitalized and run a hospital bill of Rs 4 lacs.

two Health insurance plans two policies Claim illustration claim settled

Claim from A first and B later

As per plan A, the admissible claim is Rs 4 lacs. Since the Sum Insured is Rs 3 lacs, the insurance company A pays Rs 3 lacs to you.

Subsequently, you approach Insurer B. According to B too, the admissible claim is Rs 4 lacs. 80% of Rs 4 lacs is Rs 3.2 lacs. Out of Rs 3.2 lacs, Rs 3 lacs has already been settled by insurer A. Hence, B pays the remaining Rs 20,000 to you.

You get Rs 3 lacs (from A) and Rs 20,000 (from B). The total amount you got is Rs 3.2 lacs.

You will have to pay Rs 80,000 from your pocket.

Claim from B first and A later

As per plan B, the admissible claim is Rs 4 lacs. 80% of Rs 4 lacs is Rs 3.2 lacs. Since liability of B is capped at Rs 3 lacs, B will pay you Rs 3 lacs.

Subsequently, you approach insurer A. As per A, the admissible expenses total Rs 4 lacs. Rs 3 lacs has already been paid by insurer B.  Hence, A will pay Rs 1 lac from own pocket.

You get Rs 3 lacs from insurer B and Rs 1 lac from insurer A. Total Rs 4 lacs.

Illustration 2

Let’s make this example a bit complex. In the earlier example, we had only co-payment clause. In this example, we will include cap on room rent too. Under plan B, let’s assume there is room rent cap of 1% of Sum Insured (1% of Rs 3 lacs = Rs 3,000 per day.

Room rent cap can be quite tricky. If you stay in a room which costs more Rs 3,000 per day, all your other expenses (apart from medicines) will be settled proportionately by the insurance company.

For more on how room rent sublimit can affect your health insurance claim, go through the following post.

Must Read: How room rent sub-limit affects your insurance claim?

Let’s see how your claim settlement gets affected because of this additional room rent sub-limit.

Health insurance multiple policies policies Claim illustration 2 room rent sub-limit co-payment

You can see the order of claim is important.

If you have multiple health insurance plans, you must first claim from the plan with co-payment clause or sub-limits.

If both the plans were without sub-limits and co-payment, then you would have got the entire amount of Rs 4 lacs irrespective of the order. However, most of us do not focus on such terms at the time of purchase and realize the impact only at the time of claim.

There is a caveat

To explain the issue, I am copying excerpt about multiple health insurance plans from IRDA Health Insurance Regulations, 2016.

1. In case of multiple policies which provide fixed benefits, on the occurrence of the insured event in accordance with the terms and conditions of the policies, each insurer shall make the claim payments independent of payments received under other similar polices.

2. If two or more policies are taken by an insured during a period from one or more insurers to indemnify treatment costs, the policyholder shall have the right to require a settlement of his/her claim in terms of any of his/her policies.

  1. In all such cases the insurer who has issued the chosen policy shall be obliged to settle the claim as long as the claim is within the limits of and according to the terms of the chosen policy.

  2. Claims under other policy/ies may be made after exhaustion of Sum Insured in the earlier chosen policy / policies (Fortunately, IRDA has removed this condition of exhaustion of Sum Insured vide its circular dated January 10, 2017. This means you can claim from the second policy even if the Sum Insured under the first policy is not exhausted.)

  3. If the amount to be claimed exceeds the sum insured under a single policy after considering the deductibles or co-pay, the policyholder shall have the right to choose insurers from whom he/she wants to claim the balance amount.

  4. Where an insured has policies from more than one insurer to cover the same risk on indemnity basis, the insured shall only be indemnified the hospitalization costs in accordance with the terms and conditions of the chosen policy.

Refer to Point 2(II) and 2 (III). These can be interpreted as: You can make claim with the second insurer only when your claim amount after considering co-payment and deductible exceeds Sum Insured. If it does not, the second insurer may decline to honour your claim. No longer applicable.

In one of the comments on my other post on multiple health policies, a reader pointed out that his insurance company has taken this stance and refused to honour claim (for the balance amount).

Let’s say you have two policies of Rs 3 lacs each. Policy A has co-payment of 20% while Policy B does not have any co-payment.

You run a bill of Rs 3 lacs and make claim under Policy A first. Policy A settles Rs 2.4 lacs (considering 20% co-payment). Subsequently, you approach insurer for Policy B to settle remaining 60,000. Insurer B declines to settle the claim because Sum Insured under Policy A has not been exhausted.

If you had approached insurer B first, it would have settled entire Rs 3 lacs.

With IRDA clarification as discussed above, such problem or confusion (as discussed in the above example) will not arise in the future.

If you see, this runs counter to what I have said earlier in this post. In this case, you are better off claiming from insurance policy without co-payment clause first.

Hence, the order of claim may depend on the claim amount too.

If you are going for cashless treatment, you have to pick up the insurer before knowing the final amount. So, it gets more and more complex.

PersonalFinancePlan Take

In my opinion, a health insurance plan of Rs 6 lacs is far better than two plans of Rs 3 lacs each for the following reasons:

  1. You just have to claim once. You are spared the hassles of claiming from two plans.
  2. With a single plan, you can go for cashless treatment up to Rs 6 lacs. With two plans of Rs 3 lacs each, you can claim cashless treatment (of up to Rs 3 lacs) from one insurer. You will have to apply for reimbursement from second insurer.
  3. You avoid this confusion regarding claim calculation. Believe me this can be complex.

You may be better off enhancing the Sum Insured in one of the plans and surrendering the second plan.

However, I can foresee scenarios where it is better to continue with two plans. For instance, you were diagnosed with an illness after the purchase of two plans. Going by my suggestion, you want to surrender one plan and try to enhance cover in the other plan subsequently. However, if you do that, the insurer will load the premium for the enhanced Sum Insured. On the other hand, if you were to continue with two plans,  the insurer cannot increase the premium for the existing plans since claims based loading is not permitted (hike in premium based solely on claims experience).

For such cases, you must know how these calculations are done. Claim first from policies with sub-limits and co-payment clauses. However, there is a minor caveat (explained earlier in the post). No such caveat now.

You have a group health insurance plan provided by your employer. You have a personal health cover too. Many choose super top plans with employer cover as deductible value to augment their health insurance coverage.

In such a case, twin covers become unavoidable. It is wise to have a personal cover even if you have health coverage from the employer. In this case, dynamics are a bit different. In most cases, it is smarter to claim under your employer plan otherwise you may lose no-claim bonus Sum Assured. However, do not jump to any conclusion. You know the math.

Other posts on Health Insurance Plans

Tax Benefits for Purchasing a Health Insurance Plan

Use this smart Health Insurance Strategy to get higher cover at a lower premium

How room-rent sub-limit can affect your insurance claim?

Individual Health Insurance Plan Vs. Family Floater

What are Top-up and Super Top-up Health Insurance Plans?

How Health Insurance Companies can easily trick customers?

Health insurance plans you must avoid

Top 10 Exclusions under your Health Insurance Plans

Should you purchase Critical Illness Plans?

Should you purchase a Health Insurance Plan with Maternity Benefits?

Should you purchase a Health Insurance Plan with Restore/Refill Benefit?

What is a Hospital Cash Insurance Plan?

Disclaimer: These calculations are based on my understanding of how claims are settled. Before making any decision, you are advised to verify calculation methodology from the insurance company.

The post was first published on August 12, 2016 and has been updated since.

20 thoughts on “How claim is settled if you have two Health Insurance plans?”

  1. Nice Article. The examples were great. It was made quite clear & easy to understand. Before this I always assumed option one was always better.
    Thanks Deepesh for clearing the air.

    1. Thanks Nandan!!!
      These things are always confusing. Best way to avoid this confusion is to have a single large policy (rather than multiple policies).

  2. Hi Deepesh,

    Again a good article and explains quite well. Would like to ask you on antoher situation.

    I have a group insurance of 4 lakhs from my employer and my wife has same amount of group insurance (4 lakhs) from her employer (we work in different companies). Both of us are covered in both the policies including our daughter.

    Do you think that we can do a multiple claim, as you discussed above in my scenario (if say total bill was 6 Lakhs).

    Also would you advise getting a personal health cover in such a scenario, even if we can claim for total of 8 Lakhs (and my requirement is 8 lakhs)?

    Thanks
    Rahul

  3. Hi,

    Can you clarify in following conditions if the insurer can reject my claim.

    Total bill 90k
    InsurerA coverage 60k (Settled)
    InsurerB coverage 60k (Denied under terms “Contribution condition not applicable”)

    Please note that contribution clause is not applicable. As per my understanding contribution clause decides nature of settlement between insurers. InsurerB insists that absence of Contribution condition means that I cannot make multiple claims whatsoever.
    Please let me know if that is the case.

    1. Hi Vikrant,
      Contribution clause has not done away with by IRDA. However, that does not mean that you can’t claim from multiple policies.
      Has the claim been rejected by the TPA or the insurer?

        1. Deepesh Raghaw

          I suspected so. TPAs do this all the time.
          Technically, they are not even allowed to reject claims. Only an insurance company can.
          Escalate to the insurance company for proper resolution.

  4. Hi Deepesh,

    Thanks for the nice article. I am facing a similar situation to what you have explained in Illustration 2. I have 2 insurances and I have maternity claim of Rs 84000. My first insurance (Insurance A) has a cap of 50000 for maternity and second Insurance (Insurance B) has a cap of 40000 with the room rent limit of Rs 4000 per day. My room rent charges in the claim amount is Rs 7500 per day.

    I claimed from Insurance A (cashless) and they settled the full 50000 amount. So, I am left with the 34000 balance which I submitted to Insurance B. Now insurer B has just approved an amount of 10000 deducting 24000 as the extra room rent charges.

    My question to you is are they right in doing that ? Has anything changed in IRDA guidelines after you wrote this article. I know you explained this example very well but I am asking this again in case there are any changes in the guidelines.
    – Thanks in Advance.

    1. Hi Sunny,
      Insurer B seems right. They had room rent limit of Rs 4,000. You paid Rs 7500 per day. They are unlikely to pay the entire amount.
      As per them, the admissible claim would have been Rs 60,000. Since you were paid Rs 50K already, they paid you the remaining 10K.
      The story would have different if you had reversed the order of claim.

  5. Hi Deepesh

    I have two insurance policy with HDFC Ergo General Insurance Co Ltd
    1. Health Suraksha plan for cover of Rs 2.00 Lacs
    2. Critical Illness Policy with cover of Rs 5.00 Lacs

    My querry is I have raised a claim under Critical illness policy for reimbursement of my medical bills for Rs 1.05 L
    Earlier the hospital expenses is been directly paid by HDFC ergo under health suraksha policy for Rs 2.00 L
    As i got no claim bonus of Rs 40k under this policy, the health claim amount i recd was rs 40k only instead of Rs 1.05 L , they give reason that the cover is completed, I said that claim was under ciritical illness and not under healfth suraksha,

    Now Shall i claim the shortage of Rs 60k and i Have addition medical bills worth Rs 1..50 lacs for further claim under critical illness policy

    Also the cover is fully settled under health suraksha plan no need to renew it further right ?

    1. Hi Manjunath,
      Critical Illness plans are fixed benefit policies i.e the amount that they pay does not depend on the medical bill.
      If you are diagnosed with an illness covered under the critical illness plan, they will pay you the entire amount and the policy will lapse.
      Therefore, the insurance company will not pay under the critical illness plan unless you contracted one of the covered illnesses.
      So, I think the insurance company is right.
      About Health Suraksha plan, it is a health insurance and the coverage will reset to 2.4 lacs at the beginning of the new policy year. You can use itfor claims again. So, RENEW your insurance policy.

      Suggest you through this post on Health insurance and Critical illness plan to understand the difference between the two.
      https://www.personalfinanceplan.in/critical-illness-insurance-plan-should-you-buy/

  6. Hi Deepesh,

    I have two policies:
    (Family Policy) Policy A – 5 lacs coverage with 10% co-payment
    (Corporate Policy) Policy B – 3 Lacs coverage with no co-payment clause

    My mother-in-law (who is covered under both the policy) had a surgery with claim amount Rs. 337722. Firstly, from Policy A (which has 10% co-payment), we get:
    Pass amount of Rs. 303409
    Deduction: Rs. 34313 (Co-payment of Rs. 33713)
    TDS Deduction: Rs. 30341

    Thereafter, I went for Policy B for the co-payment part. However, they rejected the claim.
    Reason they are saying that the co payment part is pertaining to the previous policy ( 10 % of final bill amount as to be borne by the Insured).

    Is the reasoning from Policy B is correct or can I claim the co-payment amount of Policy A from Policy B ?

    Thanks in advance.

    Regards,
    Sudharm

    1. Deepesh Raghaw

      Hi Sudharm,
      In my opinion, Policy B should pay your co-payment amount.
      The co-payment in the previous policy has nothing to do with their policy without co-payment.
      Don’t let them get away with this nonsense.
      Escalate to higher authorities in the insurance company.
      Put pressure through your employer.
      If corporate policy is from a private insurer, create noise on social media. You will get the claim amount.

      1. Thanks Deepesh for the reply and the suggestions.

        Is there any IRDA guideline for the same so that I can escalate this issue on a higher scale by referring the same IRDA guideline?

        Best regards,
        Sudharm

        1. Deepesh Raghaw

          Hi Sudharm,
          If they are rejecting, they must have a solid grounding as per regulations. Fortunately, for us, there is none.
          Look for relevant clauses on claims from multiple policies under Health Insurance Regulations, 2016 along with this revision.
          https://www.irdai.gov.in/ADMINCMS/cms/Uploadedfiles/clarification%20on%20Product%20Filing%20Guidelines.pdf
          There is no ground for your claim rejection. And this is all the insurance company can rely upon.

          1. Hi Deepesh,

            Policy B is rejecting the co-payment part of RS 34133 saying the reason “as per GIPSA”. When I see settlement letter of my Policy A, it shows:

            Expense Name Billed Amt Deduction Amt Approved Amt Reason
            Investigation Charges 2000 400 1600 Others Rs. 400 Not
            payable
            PPN GIPSA Package 205500 0 205500 –
            PPN GIPSA Package 130222 0 130222 –
            Co payment – 33713 0 10% Co-payment
            Deduction

            I am manually populating entries in the above table as in this portal as pasting snapshot is not working and your email is also not available.

            Is the reason/statement from Policy B regarding reduction is correct ?
            Also, since I am not from this background, Can I know more on deductions as per GIPSA ?

            Thanks.
            Sudharm

          2. Hi Deepesh,

            Insurer A – Raksha Health Insurance TPA Pvt.Ltd./ The Oriental Insurance Co. Ltd.
            Insurer B – Paramount Health Services & Insurance TPA Private Limited/ The Oriental Insurance Company Ltd.

  7. Hi DEEPESH RAGHAW,

    Your post is very good.
    Could you please provide/share your thoughts on below item, which i am currently facing with Two policy claim.

    I have one corporate policy (ICICI Lombard ) and one Family individual policy(STAR ).
    I spent 1,28,077rs for Maternity C-sec delivery. I made payment in hospital from my pocket.
    I went for reimbursement with ICICI Lombard corporate insurance first.
    Out of 1,28,077rs, they approved 1,24,677. Balance 3400rs (Medical bill + preparation charges ) is Non payable.
    My cap limit for maternity is 1lak. Hence ICICI settled me 1Lak rs. 24,677rs for Visiting consultation charges was not payable to me due to sub limit exhausted.
    Next i submitted my bills and settlement letter to 2nd Insurance (STAR).
    Cap limit in star insurance is 40,000/-
    STAR insurance rejected my claim stating maximum eligible amount already settled by ICICI. hence rejecting .
    When i checked with STAR customer care, they stated , Out of 1,28,077rs their calculation of payable amount comes around 70,000/-
    As already ICICI paid 1lak and STAR calculation is coming around 70K which is less than 1 lak , we are rejecting this claim.

    My Query : 24,677rs for Visiting consultation charges bill got rejected in ICICI for sub limit exhaust and same bill got rejected in STAR stating already max 1lak received from icici.
    Is there way to claim 24,677rs ? as this bill was not paid by both parties .

    Thanks,
    Rajkumar

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