Everybody expects a prompt and seamless response from their insurance company or group health insurance broker during medical emergencies. An efficient settlement process is vital in making the insured know they have made the right choice by choosing a particular insurance provider.
Claim settlement has two main types, i.e., Cashless and Reimbursement. In a country where most people live paycheck to paycheck, choosing the right kind of health insurance claim even before stepping into a hospital is crucial.
What is a Cashless Claim?
A cashless claim means you do not have to pay for treatment if admitted to a network hospital. Cashless claims are facilitated mainly by e-cards. In such a claim, the insurance company settles the payment directly with the hospital, ensuring you have one less thing to worry about.
What is a Reimbursement Claim?
In the case of a health insurance reimbursement claim, you will have to pay the hospital bill for your treatment. Then, initiate a reimbursement request with your insurer and follow the procedure to have the amount reimbursed based on the clauses.
Before we dive in further, here are a few terms you should be familiar with:
- Network Hospitals
Network hospitals are stated in the agreement when buying health or life insurance from the insurance provider. These are the hospitals where you can opt for cashless health insurance if you get a treatment subject to the policy's terms and conditions. That doesn't mean you cannot claim a reimbursement at a network hospital. Non-network hospitals, on the other hand, are not specified in the contract with the health insurance provider.
Getting treatment from a network hospital will be beneficial.
- Third-Party Administrators (TPAs)
TPAs are coordinators between you, your insurer, and network hospitals. TPAs are associated with a large network of hospitals. They are responsible for managing all aspects of claims, such as coordinating with healthcare service providers, passing the bills raised on behalf of your insurance company, etc. The treatment expenses are paid to you by the insurance company. However, the TPA takes care of your complete health care management.
- Co-pay Clause
It is always advised to read the policy document carefully, and co-pay is one of the reasons why. If your policy has a co-pay clause, it essentially means that you will have to pay part of the total hospital bill, irrespective of the claim type.
Let's say your policy underlines a co-pay of 10%.
In case of a cashless claim, you will have to pay 10% of the total bill from your pocket. In case of a reimbursement claim, only 90% of your claim amount will be reimbursed.
Points of differences between a Cashless Claim and a Reimbursement Claim
The claim settlement process is quite different for the two types of claims. The insurer must ensure they follow the steps outlined in their policy statement to the T to avail themselves of all the benefits their policy offers.
- Treatment cost: In case of hospitalization, a cashless health insurance method eliminates the need for you to pay any money out of pocket, as the insurer directly settles the costs with the network hospital. However, in the event of a reimbursement claim model, you must bear all initial expenditures and later get reimbursed by your insurer. As a result, a cashless claim procedure reduces the financial strain on the patient and family members because your insurance provider covers the bills directly with the hospital.
- Choice of Hospital: When opting for a cashless claim model, you will only be eligible for a claim if you are admitted to a hospital in your insurance company's network. This creates a need to select insurance with an extensive network of network hospitals carefully. On the other hand, opting for a reimbursement claim allows you to get treatment from any hospital. You can be admitted to any hospital and seek payment in an emergency. In this way reimbursement model provides flexibility not offered by the cashless model.
- Waiting Period: There is no waiting period associated with the cashless claim. As soon as you submit your health care information, the hospital will cross-check it with the insurance, and once validated, all medical expenditures will be paid. You may be required to carry pharmaceutical bills for reimbursement later, but everything from the hospital's end will be free from the non-network hospital. Even after submitting all of the paperwork, there is a waiting period for the document to be verified before you are paid the covered amount. In this aspect, a cashless claim is preferable to a reimbursement claim.
- Informing your Insurer: To get a cashless settlement, the insured needs to notify the insurance company before or within 24 hours of hospitalization. However, the insurance company can be informed after discharge from the hospital in case of a reimbursement claim. In a medical emergency, informing your insurer beforehand is sometimes impossible, and this problem renders a cashless model useless.
- Authorization from the insurer: A pre-authorization form must be submitted when choosing a cashless settlement. No pre-authorization form must be submitted in case of reimbursement of claim. The paperwork required pre-treatment when opting for a cashless claim exceeds that of a reimbursement claim.
Let's settle the debate
The cashless claim is faster, more convenient, and doesn't burden you financially. The only downside of a cashless claim is the network hospital, and make sure you check the hospital network beforehand. The limitation of a network hospital becomes profound in tier two and three cities. In that case, a reimbursement claim is the only option.
In case of reimbursement, you will have to engage your money for a longer duration. Once all the bills are paid, you must submit ample proof to file a claim. Even after doing so, the claim may be rejected. According to your insurer, the probability of reimbursement is negligible if you get treated at a blacklisted hospital.
Medical expenditures continue to push over 50 million Indians into poverty. The government's decision to levy 5% GST on room rent clubbed with rapid inflation promise no signs of relief for the average Indian consumer. It is thus, crucial that you make the right choice.
A cashless claim is always better than a reimbursement claim!