Health claim after portability: moratorium, room-rent pro-ration and grievance deadlines
Meera, aged 47, bought a family floater health policy with a sum insured of Rs 10 lakh from a new insurer in January 2023, porting from her previous insurer with which she had four years of continuous unbroken coverage. The policy allows room rent up to 1% of sum insured per day, ICU up to 2% per day, excludes listed consumables, and applies a 10% co-payment on every claim. At portability the proposal form asked whether she had ever been treated for diabetes, hypertension or any endocrine disorder. She answered 'yes' for hypertension, declared it, and completed the two-year waiting period; she answered 'no' to everything else. In June 2024 she was admitted for a coronary angioplasty with one drug-eluting stent. The hospital bill was Rs 6,85,000: room at Rs 14,000 a day for 6 days, ICU at Rs 19,000 a day for 2 days, surgeon/OT/nursing Rs 4,00,000, pharmacy and implants Rs 1,45,000, and consumables Rs 18,000 on the non-payable list. The TPA's audit of hospital records shows she was diagnosed with type 2 diabetes in 2020 and treated as an outpatient, which she never disclosed.
1. Assuming the diabetes issue is resolved in the insured's favour, work out the amount payable on the hospital bill.
Read the worked answer
Step 1 - Apply the room-rent caps. Room limit = 1% of Rs 10 lakh = Rs 10,000 per day; billed Rs 14,000 x 6 days = Rs 84,000, admissible Rs 60,000. ICU limit = 2% of Rs 10 lakh = Rs 20,000 per day; billed Rs 19,000 x 2 = Rs 38,000, which is within the cap, so fully admissible.
Step 2 - Pro-rate the associated charges. Where the policy provides proportionate deduction, the excess room rent is carried into the associated hospital charges. Ratio = 10,000/14,000 = 0.7143. Surgeon/OT/nursing Rs 4,00,000 x 0.7143 = Rs 2,85,714.
Step 3 - Build the admissible bill.
- Room Rs 60,000 + ICU Rs 38,000 + surgeon/OT/nursing Rs 2,85,714 = Rs 3,83,714
- Pharmacy and implants (not pro-rated) Rs 1,45,000
- Consumables on the non-payable list minus Rs 18,000
- Net admissible Rs 5,10,714
- Less 10% co-payment Rs 51,071
- Payable Rs 4,59,643, say Rs 4.60 lakh.
Step 4 - Flag the alternative reading. If the clause does not permit pro-ration of associated charges and only deducts the room excess, the payable amount is Rs 6,85,000 - Rs 24,000 - Rs 18,000 = Rs 6,43,000, less 10% co-payment = Rs 5,78,700. The difference is Rs 1.19 lakh, so the exact wording of the proportionate deduction clause must be quoted before the payment is released.
2. Is the non-disclosure of diabetes a valid ground for repudiation? Reason using the moratorium and the effect of portability.
Read the worked answer
Step 1 - Measure continuous coverage. The 60-month moratorium in health insurance is counted as continuous coverage, and portability expressly preserves continuity for waiting periods and for the pre-existing disease clock. Meera has 48 months with the previous insurer plus 18 months with the present insurer = 66 months, which crosses the 60-month threshold before the June 2024 admission. Verify this from the portability record - the previous policy schedule and the declared pre-existing conditions - because if the earlier policy was itself a fresh policy with a break, the arithmetic changes.
Step 2 - Effect of the moratorium. Once 60 months of continuous coverage have run, the insurer cannot repudiate the policy or a claim for non-disclosure or misrepresentation, except where the claim is proven to be fraudulent. A wrong answer on a form where hypertension was honestly disclosed is an oversight, not automatically fraud; fraud requires intent to deceive, and the insurer would have to establish that she knew the diabetes was material and deliberately concealed it, against the fact that a routine outpatient diagnosis is often not thought of as a 'disease' by a layperson.
Step 3 - Effect on the PED waiting period. The maximum pre-existing disease waiting period in the product also runs with continuity, so the diabetes waiting period cannot be used to load the angioplasty claim either, particularly when the claim itself is cardiac and the declared hypertension already put the insurer on notice of a cardiac risk.
Conclusion: repudiation is not sustainable on these facts. The insurer's proper course is to pay subject to the policy deductions, and to reserve the option of an internal fraud review only if there is evidence of deliberate concealment, for example a second suppressed hospitalisation or a forged discharge summary.
3. The insurer rejects the claim on 10 September. Set out the redressal route and the deadlines the insured must watch.
Read the worked answer
Step 1 - Internal grievance first. Meera should write to the insurer's Grievance Redressal Officer, quoting the policy and claim number. The insurer must resolve the complaint within 14 days. This step is not a formality: the ombudsman will expect to see that the insurer's internal machinery was used.
Step 2 - Regulatory escalation. If the reply is unsatisfactory or absent, she can log the complaint on IRDAI's Bima Bharosa portal. This creates a trackable record and often produces a faster internal review.
Step 3 - Insurance Ombudsman. Under the Insurance Ombudsman Rules, 2017, a complaint must be filed within one year of the insurer's written rejection or partial settlement, in the territorial jurisdiction where the insured resides or the insurer has an office. There is no fee and no lawyer is required. The ombudsman is required to pass the award within three months of receiving all required documents, and the award is binding on the insurer. The complainant may accept it within 30 days of receipt; if she rejects it, she is free to go to a consumer commission or civil court, but she cannot use the ombudsman route again on the same dispute.
Step 4 - Interest for delay. Separately from the Ombudsman route, note that the policyholder protection framework requires a claim decision within 30 days of the last necessary document, and delay beyond the prescribed period attracts interest at a rate above the prevailing bank rate. Meera should demand interest from the date of the last document, not merely the Rs 4.60 lakh, and ask for the TPA's audit report that was used against her so she can answer it.