Why Mediclaim Rejections Are Rising And What Policyholders Must Know

India’s health insurance sector is expanding rapidly, with year-on-year growth in premium collections indicating that more families are relying on Mediclaim to manage rising healthcare costs. 

But as coverage grows, so do complaints about rejections, partial settlements, and delays. Many policyholders discover the fine print after hospitalization, when a claim comes back “denied” or “approved for less.” This post explains why rejections are rising, what your rights are, and how to protect your claim.

The Current Landscape: More Policies, More Complexity

Between government schemes like PM-JAY (covering appx 55 crore people) and private policies, India’s insured population is large and growing.

Yet settlement practices vary widely across insurers and products. This results in  different documentation norms, different timelines, and different interpretations of exclusions. For families already stressed by illness, this complexity becomes a barrier to reimbursement.

At the same time, regulators keep refining rules (e.g., cashless approvals and TATs), and the market keeps evolving (e.g., GST reforms spurred a spike in health-policy purchases in 2025).

Five Common Reasons Claims Get Rejected

1) Incomplete or Incorrect Documentation

Missing discharge summaries, unsigned bills, unclear prescriptions, or absent itemized invoices are frequent triggers for denial. Hospitals and TPAs sometimes use different formats, and small omissions can stall a valid claim.

2) “Non-Disclosure” of Pre-Existing Conditions

This is one of the most litigated causes. Insurers reject claims alleging a disease existed before policy inception or within the waiting period. In many disputes, the medical link to the current hospitalization is weak and rejection can be challenged.

3) Policy Exclusions & Waiting Periods

Disease-specific caps, sub-limits (room rent/ICU), and waiting periods often surprise policyholders. These clauses are enforceable, but ambiguous language is typically interpreted in the insured’s favour, a principle courts frequently apply.

4) Delayed Intimation or Late Submission

Insurers require timely notification (often 24–48 hours) for planned admissions and quick intimation for emergencies. Late intimation isn’t always fatal, but it gives insurers a ground to deny unless you demonstrate valid reasons.

5) Cashless Denials in Network Hospitals

“Approval pending,” “limit exceeded,” or “not payable as per policy” are common cashless messages. IRDAI has emphasized strict turnaround times for cashless authorisations and claim settlement; policyholders should insist these are honoured.

The Human Cost Behind a “Technical” Rejection

A rejection isn’t just paperwork, it can disrupt treatment, drain savings, and push families into debt. 

National surveys show hospitalization costs in private facilities are significantly higher than in public ones; medicines, diagnostics and bed charges make up the bulk of expenditure. 

When a valid claim is denied or delayed, families are forced to liquidate assets, borrow at high interest, or postpone follow-up care. That is precisely why timelines and fair-play rules exist and why challenging unfair denials matters.

Your Legal Rights

1) Written Reasons Are Mandatory : For every denial or short-payment, ask for a written repudiation letter detailing the clause and reasons. IRDAI requires transparency in claim processing; vague oral explanations are not acceptable.

2) Insurance Ombudsman (Bima Lokpal) : If you disagree with the insurer’s decision (and your dispute amount is within the limit), you can approach the Insurance Ombudsman. 

3) Consumer Protection Act, 2019 :  For deficiency in service such as unreasonable delays, arbitrary denials, or unfair interpretation of exclusions, you can file a complaint in Consumer Commissions (District/State/National) seeking claim amount, interest, compensation for harassment, and litigation costs.

4) IRDAI Timelines (TATs) : IRDAI prescribes turnaround times for cashless decisions and reimbursement settlements. Use these standards to push back on avoidable delays: approvals should be prompt, and reimbursement is generally to be completed within defined timeframes once all documents are in.

Why Rejections Appear to Be Rising

Greater utilisation: With more people insured and medical inflation running high, more claims are filed and more are scrutinised. (Health-insurance market expansion is well-documented in 2024–25)

Complex policy designs: Sub-limits, disease caps, and extensive exclusions create interpretive friction at the claim stage.

Uneven hospital documentation: Busy facilities sometimes miss details that insurers insist on, causing friction and “technical” denials.

Process gaps: TPAs and insurers operate at scale; without tight coordination, valid claims face avoidable queries or cycles of “deficiency” letters.

Practical Checklist for Policyholders

Before hospitalisation : Inform insurer/TPA and check network status; keep pre-authorisation and doctor’s advisories.

During admission : Ensure accurate admission notes, treatment charts, and itemised bills; keep copies of all forms you sign.

After discharge : Collect discharge summary, all reports, prescriptions, invoices, payment proofs; submit claims within stipulated time.

If denied/short-paid : Request a written repudiation letter; file an internal grievance; escalate to Ombudsman or Consumer Commission with supporting medical evidence.

Final Words

As India’s health insurance coverage expands, the growing number of Mediclaim rejections reveals an uncomfortable truth, many policyholders still don’t fully understand what their policies cover, and insurers don’t always communicate with the clarity they should.

The solution lies in awareness and accountability. It is essential that policyholders read their policies carefully, maintain complete documentation, and insist on written explanations for every claim decision. 

Insurers, on the other hand, must ensure that claims are evaluated with fairness, medical reasoning, and respect for the insured’s rights.

Mediclaim is not a privilege or a favour, it is a legal and financial right. And protecting that right begins with being informed, vigilant, and prepared to question what doesn’t seem fair.

---

The Author :

Dr. Sunil Khattri 

sunilkhattri@gmail.com

+91 9811618704

Dr Sunil Khattri MBBS, MS(General Surgery), LLB, is a Medical doctor and is a practicing Advocate in the Supreme Court of India and National Consumer Disputes Redressal Commission, New Delhi.