Should I use cashless hospitalization facility or pay and then reimburse?

Published: September 16, 2016 at 10:54 am

Last Updated on September 20, 2017

There are many who believe that cashless hospitalization facility available with medical insurance policies can be misused by hospitals and that it is better to pay cash and the reimburse it via the policy later. A discussion on should I use cashless hospitalization facility or pay and then reimburse?

What does misuse mean? Attempting to exhaust the sum insured limit without any need for it. Recommending more tests than necessary, an extended in an ICU, recommending an expensive room etc. Someone else maybe paying the charges, but the hardship is on the patient and those who take care of them.

I have personally witnessed this happen and have heard stories from hospital staff – I have spent several days (weeks actually) in a hospital (mostly as a patient attender) so the staff gets friendly with a familiar face.

Such practices can occur with any insurance policy, not just corporate group cover. However, the treating doctor is still the boss when it comes to determining hospitalization expenses and insurers in general, do not mistrust them too much – from my experience of course (have seen claims which would normally fall under policy exclusions honoured because of the way in which it was reported by the treating doctor). If there is a significant difference between the insurer’s estimate for a treatment and the actual bill, there will be trouble during the claim process.  This is the reason that one should try and get admission in a preferred network hospital (GIPSA network for PSU insurers).


Build a complete financial plan with our Robo Advisory Tool. More than 1000 investors and financial advisors use it!
Get free money management solutions delivered to your mailbox! Subscribe to get posts via email! (Subscribers get exclusive discounts!)


New Tool! => Track your mutual funds and stocks investments with this Google Sheet!

For a young earner, there is no choice. They may not have enough net worth to cover a foreseen/unforeseen hospitalization expense and therefore will have to opt for the cashless facility. This discussion applies only to those who do not mind spending anywhere between 50K to 1-2 Lakhs for a hospitalization and the claim it via reimbursement.

If I have a liquid net worth of 10 lakhs, on the face of it does not look difficult to pay the above amount and claim it later. However, cashless offers some conveniences (as well as drawbacks) which one could consider.

I have processed two cashless and one reimbursement claims so far and if I can control certain aspects of the hospitalization, would prefer cashless.

In the case of emergencies, we do not have control over the two elements – the hospital admitted to and the treating doctor. If these two are unknowns then it is better to pay and then claim later (if possible).

One of the key lessons from interacting with the medical community is the importance of having a family physician. She/he could refer us to a specialist in the case of planned hospitalization. A referral reduces the chances of cashless misuse. It is always better to request the family physician to call on us each day in the hospital. Even if this is not covered by the policy, it can possibly prevent unnecessary tests. Naturally, all this is possible only a hospital that is eligible for cashless.

Pros of cashless

All we need while getting admitted is the policy number. The insurance dept of the hospital will take the trouble of getting consent forms signed by the treating doctor and inform the insurer within the prescribed time.

Once the cashless application is accepted, the onus of arranging continuous cash for treatment disappears. We still need cash to pay for non-medical expenses (10-15% of total bill) while getting discharged.

There is no need to run around for medicines at ungodly hours. The nurses will arrange for medicines from the pharmacy and we need not/should not get them, unlike a reimbursement claim. This is a big help. Especially if the attender is not worldly wise. Also, an employed person can safely leave a paid attender to tend to the patient during office hours.

Cons of Cashless

Getting discharged can be a pain. The discharge summary should be sent to the insurer and they will have to approve it. This can cause delays and there maybe trouble in getting the full amount approved. Again the preferred network matters here.

Pros of reimbursement Claims

Getting admitted is easy! All you need is cash!

You can witness first hand your money going down the drain! (is that a pro or a con?!)

Can have some control over the situation in the case of unknown doctors/hospital.

Cons of reimbursement claims

One must be aware of reimbursement rules! The hospital must be intimated upon admission and there is a time limit (~15 days) within which the claim documents with bills have to be sent.

The paperwork for extended hospital stays can be a pain. If you are someone who will not visit a CAMs or AMC office for in-person verification because it is too much work, stick to cashless.

Note: Cashless is a privilege and not a right. A cashless application can be denied at any time. So a robust emergency fund which is liquid and much fatter than the usual six months expenses worth is essential.

Read more:

Illustration: Factors that matter while choosing health insurance

How to Buy a Health Insurance Policy

Things to do AFTER you buy a health insurance policy

Do share this article with your friends using the buttons below.

Use our Robo-advisory Excel Tool for a start-to-finish financial plan! More than 1000 investors and advisors use this!
  • Follow us on Google News.
  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Join our YouTube Community and explore more than 1000 videos!
  • Have a question? Subscribe to our newsletter with this form.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Get free money management solutions delivered to your mailbox! Subscribe to get posts via email! (Subscribers get exclusive discounts!)
 
Explore the site! Search among our 2000+ articles for information and insight!

About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation for promoting unbiased, commission-free investment advice.
  Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low volatility stock screeners.
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)