Health insurance claims: Can insurers deny hospital discounts on non-claim portions of your bill?

Health insurance companies cannot deny hospital discounts on items they consider inadmissible for claims, according to an order of Insurance Regulatory and Development Authority of India (IRDAI) in the matter of Care Health Insurance Ltd dated December 15, 2025.

The issue

During remote inspection, the IRDAI observed that the insurer reduced the claim amount by applying the deductions towards:

• Discount by hospital/network provider

• Difference in tariff.

However, the final hospitalisation bills did not reflect the discounts as deducted by the insurer, which meant that the policyholder was not aware of the actual bill raised by the hospital.

What the insurer submitted before IRDAI

The insurer submitted that it provides a detailed breakdown of claim amounts paid to customers, including the claimed amount, breakdown of the paid amount, and deductions, including hospital discounts offered, if any.

The company further said that it passes the complete discount received from the network hospital as per the agreement without any retention. "Hence, there is no loss to the customer as the discount is applied on the amount payable as insurance claim."

On the issue of discounts not reflecting on the final bill, the insurer submitted the following before IRDAI:

What did IRDAI say?

The regulator said that the absence of discounts in the final bills suggests that the insurer has failed to meet regulatory requirements and to treat the customer fairly.

While the insurer admitted that discounts offered by network hospitals are applied only to the amount admissible as insurance claim and not on the disallowed portion of the bill, the regulator said this practice is "grossly unfair."

"The insurer admitted that discounts offered by network hospitals are applied only to the amount admissible as insurance claim, while the disallowed/inadmissible portion of the bill is excluded from any discount," the order said.

"This practice is fundamentally flawed and grossly unfair, as it results in policyholders being unjustly deprived of the full benefit of discounts that should have been applied to the entire hospital bill," it added.

The regulator further said that such conduct not only violates the principle of fair treatment but also demonstrates a clear disregard for the policyholder’s financial interests.

"This is a serious lapse that raises concerns about the insurer’s commitment to regulatory compliance and ethical business practices. The insurer’s approach effectively treats policyholders unfairly and undermines trust in the insurance process," IRDAI said.