How Does Cashless Health Insurance Work?

Cashless health insurance is a type of health insurance that allows policyholders to receive medical treatment without making direct payments at the time of service. It simplifies the reimbursement process and reduces the financial burden on individuals seeking healthcare services.

What is cashless health insurance?

Cashless health insurance is a type of health insurance where the policyholder can avail medical treatment at network hospitals or healthcare providers without making direct payments at the time of service. Instead, the insurance company settles the bills directly with the hospital, subject to the policy’s terms and conditions.

This eliminates the need for the policyholder to pay out-of-pocket expenses and simplifies the reimbursement process. The policyholder only needs to obtain pre-authorization from the insurance company before undergoing treatment and adhere to the coverage limits and guidelines specified in the policy.

Benefits of cashless health insurance

Cashless health insurance offers several benefits to policyholders. Here are some key advantages:

  • Convenient and Hassle-Free: Cashless health insurance provides a convenient and hassle-free experience for policyholders. They can receive medical treatment without the need to make immediate payments, reducing the financial burden during emergencies or planned medical procedures.
  • Immediate Access to Healthcare: With cashless insurance, policyholders can access healthcare services without delay. They can visit network hospitals or providers directly and receive treatment without waiting for reimbursement or arranging funds upfront.
  • Financial Protection: Cashless health insurance offers financial protection by covering medical expenses up to the policy’s sum insured. This helps individuals avoid depleting their savings or facing significant financial strain due to unexpected medical costs.
  • Wide Network of Hospitals: Insurance providers usually have a wide network of hospitals and healthcare providers. Policyholders can choose from these network hospitals, which are empaneled with the insurance company, ensuring access to quality healthcare services.
  • Streamlined Claims Process: Cashless health insurance simplifies the claims process. Policyholders need to obtain pre-authorization from the insurance company, and the settlement is directly handled between the insurance provider and the network hospital. This eliminates the need for policyholders to submit reimbursement claims and wait for approval.
  • Enhanced Coverage: Cashless health insurance often provides comprehensive coverage for various medical treatments, hospitalization expenses, surgeries, diagnostic tests, and more. Policyholders can avail the benefits of the insurance policy to cover a wide range of healthcare needs.
  • Cash Flow Management: Cashless health insurance helps policyholders manage their cash flow efficiently. They don’t have to worry about arranging funds for immediate medical expenses and can focus on their health and recovery.
  • Additional Services: Some cashless health insurance policies offer additional services like teleconsultation, second medical opinion, wellness programs, and preventive healthcare check-ups. These value-added services can contribute to overall well-being and proactive health management.

How Does Cashless Health Insurance Work

Here’s how cashless health insurance typically works:

  • Insurance Provider Network: Insurance companies have tie-ups with a network of hospitals, clinics, and healthcare providers. These providers are known as network hospitals or network providers.
  • Policy Purchase: To avail cashless health insurance, individuals need to purchase a health insurance policy that offers cashless benefits. The policyholder pays the premium to the insurance company based on the coverage and terms selected.
  • Policy Coverage: The policy document specifies the coverage details, including the sum insured, pre-existing conditions, waiting periods, and other terms and conditions. It is important to review the policy carefully to understand the coverage and any limitations.
  • Network Hospital Selection: When in need of medical treatment, the policyholder selects a network hospital that provides the required healthcare services. The insurance company usually provides a list of network hospitals or an online portal to search for nearby network providers.
  • Pre-Authorization: Before undergoing treatment, the policyholder needs to obtain pre-authorization from the insurance company. This involves informing the insurance provider about the planned treatment, estimated costs, and sharing relevant medical records.
  • Verification Process: The insurance company reviews the pre-authorization request and verifies the coverage details. They may request additional information or documents if necessary.
  • Approval and Intimation: Once the verification process is complete, the insurance company approves the cashless claim. The policyholder and the hospital are informed about the approval, and a pre-authorization letter is issued to the hospital.
  • Hospitalization and Treatment: The policyholder receives the required medical treatment at the network hospital. The hospital directly bills the insurance company for the eligible expenses covered under the policy.
  • Settlement and Deductibles: After completion of the treatment, the insurance company settles the bills directly with the network hospital, up to the sum insured. If there are any deductibles or co-payments specified in the policy, the policyholder is responsible for paying them directly to the hospital.
  • Disallowed Expenses: If there are any expenses not covered by the policy, such as non-medical items or treatments not included in the coverage, the policyholder is liable to pay for those expenses.

Provider Networks in Cashless Health Insurance

Provider networks play a crucial role in cashless health insurance. Here’s how they work:

  • Tie-ups with Hospitals and Healthcare Providers: Insurance companies establish tie-ups with specific hospitals, clinics, and healthcare providers to form a network. These network providers agree to offer their services to policyholders covered by the insurance company.
  • Empanelment and Credentialing: The insurance company evaluates and empanels hospitals and healthcare providers based on predefined criteria such as infrastructure, quality of care, medical expertise, and other relevant factors. Empanelment ensures that the network providers meet certain standards set by the insurance company.
  • Network Hospital List: The insurance company maintains a list of network hospitals and providers. Policyholders can refer to this list to identify the hospitals and providers where they can avail cashless treatment.
  • Direct Settlements: When a policyholder seeks treatment at a network hospital, the hospital bills the insurance company directly for the eligible medical expenses covered under the policy. The insurance company then settles the bills with the hospital, reducing the financial burden on the policyholder.
  • Pre-Authorization Process: Before undergoing treatment at a network hospital, policyholders need to obtain pre-authorization from the insurance company. This involves sharing relevant medical information and treatment details with the insurance provider for approval. Pre-authorization ensures that the treatment is within the policy’s coverage limits.
  • Coverage Limitations: Cashless health insurance coverage is typically limited to the network hospitals and providers specified by the insurance company. If a policyholder seeks treatment at a non-network hospital, they may need to pay for the treatment upfront and later file a reimbursement claim, subject to policy terms.
  • Network Expansion: Insurance companies continue to expand and update their network of hospitals and providers to offer wider coverage and accessibility to policyholders. They may periodically review and update the list of network hospitals to ensure quality care and meet the evolving needs of policyholders.

Steps to Avail Cashless Health Insurance

To avail cashless health insurance, follow these steps:

  • Purchase a Cashless Health Insurance Policy: Select a suitable cashless health insurance policy from an insurance provider. Consider factors such as coverage, sum insured, premium, waiting periods, and exclusions. Complete the necessary documentation and pay the premium to activate the policy.
  • Understand the Policy Coverage: Thoroughly read and understand the policy document. Familiarize yourself with the coverage details, including inclusions, exclusions, limits, deductibles, and co-payments. Be aware of any waiting periods for specific treatments or pre-existing conditions.
  • Locate Network Hospitals: Obtain a list of network hospitals or providers from the insurance company. Check for nearby network hospitals where you can receive cashless treatment. The insurance company’s website or customer support can provide this information.
  • Seek Pre-Authorization: Before undergoing treatment, contact the insurance company or use their online portal to request pre-authorization. Submit relevant details such as your policy number, treatment information, estimated costs, and medical records as required. The insurance company will review the request and inform you of the approval or additional requirements.
  • Receive Pre-Authorization Letter: If your pre-authorization is approved, the insurance company will provide a pre-authorization letter. This letter confirms your eligibility for cashless treatment at the chosen network hospital.
  • Visit the Network Hospital: Visit the network hospital for the required medical treatment. Present your cashless health insurance policy card, along with the pre-authorization letter, to the hospital’s insurance desk during admission.
  • Verification and Treatment: The network hospital will verify your identity and policy details with the insurance company. They will also submit the necessary documents and medical records to the insurance provider for validation. Once verified, you can proceed with the planned treatment.
  • Direct Billing by the Hospital: The network hospital will directly bill the insurance company for the eligible medical expenses covered under your policy. You may need to pay for any non-covered or deductible expenses as per the policy terms.
  • Settlement and Payment: The insurance company will process the claim and settle the bills directly with the network hospital. They will pay the approved amount based on the coverage and policy terms. If there are any co-payments or deductibles, you will be responsible for paying them directly to the hospital.
  • Review the Final Settlement: Carefully review the final settlement details provided by the insurance company. Ensure that all eligible expenses are covered, and if there are any discrepancies, contact the insurance company for clarification or resolution.


Cashless health insurance offers numerous benefits and convenience to policyholders. By following the steps outlined above, individuals can avail themselves of medical treatment without the need for immediate payments. The policyholder selects a network hospital, obtains pre-authorization from the insurance company, undergoes treatment, and the hospital directly bills the insurance company for the covered expenses.


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