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Insurance Claim Shortfall Letter

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To,
The Grievance Redressal Officer

Date:

Subject: Grievance — deductions in settlement of Claim No. , Policy No. 

Dear Sir/Madam,

I hold the above health insurance policy (Policy No. , period  to ). My claim (Claim No. ) for hospitalisation of  at  from  to  (billed amount Rs. ) was settled at Rs.  vide your settlement/deduction letter dated  (copy enclosed), leaving a shortfall of Rs.  which I had to pay out of pocket at discharge.

I dispute the following deductions:

Items deducted as “non-payable”. The following items were deducted as non-payable:

Many such items are payable when they are integral to the treatment. Please cite the specific policy clause and list entry relied upon for each of these deductions.

“Reasonable and customary” cuts. The following amounts were cut as above reasonable and customary charges:

Please disclose, in writing, the benchmark used and the calculation applied for each of these cuts.

Sub-limit cuts. The following deductions were made citing room-rent or category sub-limits:

Please show the exact policy clause, the sub-limit arithmetic, and that the category applied is correct.

Deductions with no reason given. The following deductions were made without any stated reason:

Claim-wise written reasons for every deduction are required under IRDAI's policyholder protection norms; a deduction with no stated reason cannot stand.

Proportionate deduction. A proportionate deduction was applied across the whole bill:

Proportionate deduction can only apply as the policy wording allows, and never to items unrelated to room category (medicines, implants, diagnostics at actuals).

Other deductions. I also dispute the following:

Please state the specific policy clause relied upon for each of these deductions, in writing.

Total disputed: Rs. 

I request that you:

  1. Provide the complete deduction-wise settlement rationale for this claim in writing, including the specific policy clause relied upon for each deduction, as required under the IRDAI's policyholder protection and health insurance norms.
  2. Reassess the disputed deductions listed above and pay the balance of Rs. .
  3. If any deduction is maintained, state the specific policy wording and calculation supporting it.

Please respond within 15 days of receipt of this grievance. Kindly also confirm the grievance registration number. If this grievance is rejected or remains unresolved for 30 days, I will approach the Insurance Ombudsman under the Insurance Ombudsman Rules, 2017.

Thank you,


Policy No.


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How to use this letter

What this letter does

It challenges the insurer's deductions one by one, in writing, and asks for a clause-wise reason for each. It goes out under the policyholder's name — the insurer must respond to you directly.

What to do with it

  1. Find the Grievance Redressal Officer's email on the insurer's website — look for the "Grievance Redressal" page.
  2. Email the letter with all attachments. Also file the same grievance on the insurer's online portal and on IRDAI's Bima Bharosa / IGMS portal.
  3. Ask for a grievance registration number and save it — this is your paper trail.
  4. Calendar 15 days for a first response and 30 days as the deadline before the Ombudsman route opens.
  5. Keep every reply, screenshot, and delivery receipt in one folder.

Questions you may be asked

“These items are standard non-payables.”
“Please point me to the specific policy clause and the IRDAI list entry for each deducted item, in writing.”
“The deduction is within reasonable and customary limits.”
“Please share the benchmark you used and how it was calculated for this claim.”
“The TPA processed the claim, not us.”
“The policy is with your company. Please treat this as the grievance and coordinate with the TPA on your side.”
“You accepted the settlement at discharge.”
“Payment at discharge was to secure release of the patient. It is not a waiver of the right to dispute deductions under the policy.”

Keep calm, keep records

  • Dispute each deduction on its own reason — the total on the settlement letter is not the argument, the line items are.
  • Everything in writing. Phone calls from the insurer or TPA don't count unless followed up by email.
  • No satisfactory reply within 30 days? The next step is the Insurance Ombudsman — free, no lawyer needed (Template 6 on billokay.com/templates).
Before you send

Attach: the insurer's or TPA's settlement letter or deduction sheet, the itemised hospital bill, the discharge summary, receipts for the shortfall you paid at discharge, and the policy schedule if the dispute turns on a clause.

How to send: email the Grievance Redressal Officer at the address on the insurer's website, and also file the same grievance on the insurer's online grievance portal and on IRDAI's Bima Bharosa / IGMS portal at bimabharosa.irdai.gov.in — that creates a numbered record you can produce later at the Ombudsman stage.

When you need this letter

Use it whenever your health insurer or TPA settles the claim for less than the hospital raised and the shortfall lands on you at discharge — the pre-auth was approved for a smaller amount, items were struck off as “non-payable”, sums were cut as above “reasonable and customary”, sub-limits were invoked, or a proportionate deduction was applied across the whole bill. In every one of these situations the insurer must give you claim-wise written reasons for every deduction; this letter is what asks for them, item by item.

Deductions don’t all come on the same ground, so the letter is built around disputing each kind on its own ground. Non-payables are challenged by asking for the specific clause and IRDAI list entry. “Reasonable and customary” cuts are challenged by asking for the benchmark and calculation used. Sub-limit cuts are challenged by asking for the exact clause and arithmetic. Unexplained deductions are challenged as a plain violation of the reason-in-writing rule. Proportionate deduction is challenged where it has been over-applied — to medicines, implants, and diagnostics that don’t depend on room category. Not sure which deductions on your settlement are which? Our mediclaim deductions guide decodes all six types and which are worth contesting.

What happens after you send it

Frequently asked questions

Can I challenge deductions the insurer calls “non-payable”?

Yes. IRDAI does publish a standard list of items that insurers may treat as non-payable, but many of those items are payable when they are integral to the treatment — the specific policy clause and the exact list entry must be cited. Ask, in writing, for both. Blanket “non-payable” with nothing behind it is not a defensible reason.

What is a proportionate deduction, and when can the insurer apply it?

It is a scaling-down applied when the patient chose a room above the policy’s eligible room-rent category — associated charges get reduced in the same proportion. It only applies as far as the policy wording actually allows, and it should never be applied to items that don’t depend on room category — medicines, implants, and diagnostics billed at actuals.

How long does the insurer have to respond to my grievance?

IRDAI’s policyholder-protection norms require the insurer to register every grievance with a number and resolve it within defined windows — commonly a first acknowledgement within a few working days and resolution within about two weeks. If the grievance is unresolved for 30 days, or the reply is unsatisfactory, the Insurance Ombudsman route opens up.

Does this letter work for cashless claims too, or only reimbursement?

Both. Deductions can happen at pre-authorisation (the insurer approves less than the hospital raises) or at discharge (the hospital collects the shortfall from you) or in a later reimbursement decision. The same grievance letter works in each case — you are disputing the deduction, not the mode of settlement.

The escalation ladder

← All templatesHospital bill dispute templatesNext step →Insurance Ombudsman complaint