Understand how sub-limits can impact your health insurance coverage and what to consider when choosing a plan

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Did you know that nearly 60% of Indian health insurance claims get rejected due to sub-limits?

Why does this happen?

There are often ‘overlooked clauses’ in your policy that determine the maximum amount that the insurer will pay for specific expenses such as room rent, ambulance charges, and specific treatments.

It's non-negotiable that both employers and employees understand the impact of sub-limits on their group health insurance coverage to avoid being blindsided by high medical bills.

In this blog, we will explore what health insurance sub-limits are, how they affect your coverage, and what factors to consider when choosing a health insurance plan with sub-limits.

Definition of health insurance sub-limits

Sub-limits in health insurance are pre-determined caps on specific medical expenses that usually make up for a certain percentage of the sum insured.

In simple terms, health insurance sub-limits are the ‘fine print of your policy’, and they can have a big impact on your out-of-pocket expenses.

Think of sub-limits as limits within limits.

They're specific caps on certain benefits or services covered by your health insurance plan. You might encounter sub-limits for services like hospital room charges, ambulance services, or even dental treatments.

Importance of understanding sub-limits in health insurance coverage

While sub-limits can help keep healthcare costs in check, they can also be a source of confusion and frustration for your employees.

Imagine going to the hospital only to find out that your insurance plan will only cover a portion of your room charges. If the actual cost of the room exceeds the sub-limit, the employee would be responsible for paying the difference out of pocket.

By knowing your sub-limits, your employees can:

Avoid unexpected expenses and medical bills that they are not prepared to pay
Make informed decisions around exploring alternative treatment options or planning for potential out-of-pocket expenses
Choosing the right plan that provides the best value for their needs and budget

To avoid any unpleasant surprises, it's crucial to carefully review your health insurance plan, including all the sub-limits before you enrol. That way, you'll have a better understanding of what your plan covers.

Types of sub-limits

1. Sub-limit on room rent

Sub-limit on room rent refers to a cap on the amount that an insurer will pay for the room rent during hospitalisation. This sub-limit is usually a percentage of the sum insured or a fixed daily amount.

For instance, let's say that your employee has a health insurance policy with a sum insured of ₹10 lakhs, and the insurer has set a sub-limit of 1% for room rent expenses. This means that the insurer will pay a maximum of ₹10,000 per day for room rent.

Now, imagine that your employee gets admitted to a hospital and opts for a private room with a rent of ₹15,000 per day. In this scenario, the insurance company will only pay ₹10,000 per day towards the room rent, and your employee will have to pay the remaining ₹5,000 out of pocket.

2. Sub-limit on specific treatment

Sub-limits also often apply to specific treatments and/or diseases, especially those that are very common and pre-planned procedures, such as kidney stones, cataracts, piles, gallstones, hernias, tonsils, sinus, etc. Under the sub-limit clause, your insurer will only bear a certain percentage of the bill for these treatments.

For instance, let's say that your employee has a health insurance policy with a sum insured of ₹10 lakhs, and the insurer has set a sub-limit of 50% for the treatment of kidney stones. This means that the insurer will pay a maximum of ₹5 lakhs for the treatment of kidney stones.

Now, imagine that your employee is diagnosed with kidney stones and incurs medical expenses of ₹8 lakhs for the treatment. In this scenario, even though the sum insured is ₹10 lakhs, the insurer will only pay a maximum of ₹5 lakhs towards the treatment, and your employee will have to pay the remaining ₹3 lakhs out of pocket.

3. Sub-Limit on Pre or Post Hospitalisation

Some health insurance providers also include sub-limits for pre and post-hospitalisation expenses.

Suppose your policy covers pre-hospitalisation expenses (ex. for diagnostic tests), and post-hospitalisation expenses (for example, medications, therapies or tests during recovery). In that case, these may also be subject to a sub-limit.

For instance, let's say that your employee has a health insurance policy with a sum insured of ₹5 lakhs, and the insurer has set a sub-limit of 20% for pre and post-hospitalisation expenses. This means that the insurer will pay a maximum of ₹1 lakh for expenses incurred before or after hospitalisation.

Now, imagine that your employee is hospitalised and apart from the cost of surgery, incurs medical expenses of ₹3 lakhs, including the cost of medications, diagnostic tests, and follow-up visits. In addition to this, your employee also incurs expenses of ₹50,000 for pre-hospitalisation diagnostic tests and ₹40,000 for post-hospitalisation physiotherapy.

In this scenario, even though the total medical expenses incurred by your employee are ₹3.9 lakhs, the insurer will only pay a maximum of ₹1 lakh for pre and post-hospitalisation expenses, and your employee will have to pay the remaining ₹2.9 lakhs out of pocket.

In addition to the commonly known sub-limits on room rent, specific treatments, and pre/post-hospitalisation expenses, there are several other sub-limits that employers and employees need to be aware of.

These sub-limits may not be explicitly stated in the health insurance policy and can catch policyholders off-guard.

Sub-Limit on Alternative Treatment
‍Some health insurance policies cover alternative treatments such as Ayurveda, Unani, Homeopathy, or Siddha. However, there may be a sub-limit on the amount that the insurer will pay out for such treatments.For instance, your policy may cover Ayurvedic treatments up to 20% of the sum insured, but with a cap of Rs. 20,000 per year.
Sub-Limit on Medical Equipment
‍If you require certain medical equipment such as oxygen cylinders, ventilators, or nebulisers during your hospital stay, your insurer may cover only a portion of the cost, subject to a sub-limit. For instance, your policy may cover up to Rs. 10,000 for the use of medical equipment during your hospitalisation.
Sub-Limit on Maternity Expenses
‍If your policy covers maternity expenses, there may be a sub-limit on the amount that the insurer will pay out. For example, your policy may cover up to Rs. 50,000 for delivery and related expenses, but with a sub-limit of Rs. 5,000 for prenatal checkups.
Sub-Limit on Outpatient Treatment
‍Some health insurance policies cover outpatient treatment, which includes doctor's consultations, diagnostic tests, and minor procedures that do not require hospitalisation. However, there may be a sub-limit on the amount that the insurer will pay out for such treatment. For example, your policy may cover up to Rs. 10,000 for outpatient treatment, but with a cap of Rs. 2,000 per consultation.

It is important to read the fine print of your health insurance policy carefully to understand all the sub-limits and hidden clauses that may affect your coverage.

Differences between sub-limits and deductibles

Factors to Consider When Choosing a Health Insurance Plan with Sub-limits

Choosing the right health insurance plan with sub-limits can be a daunting task. Here are some important factors to consider when making your decision:

Type of sub-limits: It's essential to understand the type of sub-limits that come with your health insurance policy. Sub-limits can be on room rent, specific treatments, pre or post-hospitalisation expenses, or others. Check which sub-limits are included in your policy, what the limits are, and how they may impact your coverage.
Cost of the plan: Look beyond the premium and check other costs such as co-payments, deductibles, and coinsurance. Ensure that your employees can afford the expected out-of-pocket expenses before selecting a plan.
Network hospitals: Check if preferred hospitals are within the insurer's network. If not, your employees may have to bear the cost of treatment, which could be higher than the sub-limits.
Waiting period: Sub-limits may not apply during the waiting period. Check how long the waiting period is for specific treatments, and if there are any waiting periods for sub-limits.
Renewal policy: Check if the policy is renewable and if there are any changes in sub-limits upon renewal. Also, check if the policy allows your employees to increase the sum insured or if there are any restrictions on renewals.
Claims process: Check how easy it is to file a claim and how long it takes for the claim to be processed. You do not want your employees to be stuck with an insurer who makes it difficult to file a claim.
Exclusions: Check for exclusions that the policy might have, such as pre-existing illnesses, mental health treatments, or alternative treatments, among others.
Riders: Check if the insurer offers any riders that may enhance the coverage for your employees. For example, maternity riders, critical illness riders, or personal accident riders, among others.

Consider these factors before selecting a health insurance plan with sub-limits to ensure that you get comprehensive coverage that meets your needs.

Know more about: How To Get The Best Value For Money On Group Health Insurance

How can Nova Benefits help you make the most of your health insurance sub-limits?

At Nova Benefits, we understand that navigating sub-limits can be a confusing and overwhelming experience. That's why our team of experts is here to help you make informed decisions and get quotes from multiple insurance providers, ensuring you get the best coverage at the best cost.

Simplify your employee healthcare experience today: Book your free consultation call

FAQs

What are health insurance sub-limits?
‍Health insurance sub-limits are specific limits on the amount an insurance company will pay for certain medical expenses or services within an overall policy limit.
What types of sub-limits exist in health insurance policies?
‍Sub-limits can be applied to specific treatments, procedures, or services such as room rent, ICU charges, ambulance charges, etc.
How do sub-limits differ from deductibles?
‍Sub-limits and deductibles are both ways to limit insurance payouts, but they differ in how they are applied. Deductibles are a set amount that the policyholder must pay before the insurance company starts covering the cost of care, while sub-limits apply to specific expenses or services and are set at a percentage of the overall policy limit.
Do all health insurance policies have sub-limits?
‍No, not all health insurance policies have sub-limits. Some policies offer comprehensive coverage without sub-limits.
How do sub-limits affect my out-of-pocket expenses?
‍Sub-limits can increase your out-of-pocket expenses if your medical expenses exceed the sub-limit amount. You may be responsible for paying the difference between the sub-limit and the actual cost of care.
Can sub-limits change over time?
‍Yes, sub-limits can change over time as insurance policies are renewed or modified.
How can I find out what sub-limits apply to my health insurance policy?
‍You can check your insurance policy documents or contact your insurance provider directly to find out what sub-limits apply to your policy.
Can I purchase additional coverage to avoid sub-limits?
‍Some policies may offer additional coverage to avoid sub-limits or provide higher sub-limits, but this may come at an additional cost.
How do sub-limits apply to pre-existing conditions?
‍Sub-limits may apply differently to pre-existing conditions, depending on the policy. In some cases, pre-existing conditions may be subject to lower sub-limits or excluded altogether.
Can I negotiate sub-limits with my insurance provider?
‍The insurance provider typically sets sub-limits and cannot be negotiated by the policyholder.
How can I compare sub-limits across different health insurance policies?
‍You can compare sub-limits across different policies by reviewing policy documents or contacting insurance providers directly to obtain information.
Are sub-limits the same for all policyholders under the same policy?
‍Yes, sub-limits are typically the same for all policyholders under the same policy.
Can I change my sub-limits during the policy term?
‍It may be possible to change sub-limits during the policy term, but this will depend on the policy and insurance provider.
Do sub-limits apply to all medical expenses or services?
‍No, sub-limits only apply to specific medical expenses or services outlined in the policy.
How can I ensure that I have adequate coverage for medical expenses?
‍To ensure that you have adequate coverage for medical expenses, it's important to review your policy documents, consider your personal healthcare needs, and evaluate potential medical costs. It may be helpful to consult with a financial advisor or insurance agent for guidance.