Must Know: All About Sub-limits in a Health Insurance Plan

Health Insurance, in today’s times, is a necessity. This is evident with a sharp rise in lifestyle-related ailments and the associated rise in healthcare costs. Therefore, owning a comprehensive and optimized health insurance portfolio is crucial.

When buying a medical plan there are numerous factors to assess to ensure you obtain the required coverage, but understanding this jargon can become confusing or overwhelming. Sub-limit is one such jargon that is an essential element to a health plan. 

So, here is a quick guide for all you need to know about sub-limits in a health insurance plan in simple terms. 

What do Sub-limits Mean in a Health Insurance Policy? 

In the most basic sense, sub-limits are caps on expenses for some medical treatments and procedures put in place by a health insurer for the policyholder. Corresponding to this cap, the expenses for a particular treatment or condition covered by the policy cannot cross this threshold irrespective of the sum insured. 

This limit is predetermined by the insurance provider. For instance, insurance providers put a cap on ambulance charges, hospital room rent, and a few medical procedures or treatments like cataract operation and plastic surgery, etc. 

However, a point to note is that sub-limit usually differ from claim to claim. For some claims the sub-limit can be a defined percentage of the total sum insured amount or, in other claims, it can be a specified maximum sum the policyholder can spend on the specified illness and treatments. For example, the limit on hospital room rents and the ICU charges are usually about 1-2% of the total insured sum of the policy. For cataracts, however, the limit is expressed in absolute amounts.

Let us understand this with an illustration:  

• If you have medical insurance with a sum insured amount of INR 5 lakhs and a cap of 1% on room rent, then the admissible amount of health insurance claim on hospital room rent will be INR 5000 which means you can choose a room in the hospital with rent up to INR 5000 per day.
• As for the second scenario, let’s take a cataract removal medical procedure. If the insurance provider places a cap of INR 60,000 on the treatment of cataract, the insurer will only cover for the limit set and any costs over this INR 60,000 will have to be covered by the policyholder. This limit, as mentioned, will be regardless of the total sum insured or the cost of surgery.

Two types of Sub-limits in a Medical Policy

The sub-limits under the medical policy are generally divided into two categories: 

1. Sub-limits on ailments and medical procedures-

In most cases, the insurer applies sub-limits to some of the most common illnesses or planned surgeries and procedures like cataract, maternity, knee replacement, sinus, piles, etc. 

2. Sub-limits on hospital room rent-

The most common sub-limit condition is hospital room rents. If the actual room rent exceeds the threshold limit, the concept of the proportionate deduction would apply to inpatient hospitalisation expenses. The total claim amount of inpatient hospitalisation would be reduced in proportion to the allowed room rent by the actual room rent.

For example, in a health plan of INR 5 lakhs, the room rent limit is 1%, i.e. INR 5000. If, however, you opt for a room rent of INR 7500, the actual room rent is 150% higher than the allowed room rent. If the inpatient hospitalisation claim amounts to INR 1 lakh, the claim is considered to be 150% of the allowed claim. Thus, the health insurance company would pay a claim of (100,000/7500)*5000 = INR 66,666.67

Things to Keep in Mind about Sub-limits

• The basic objective of health insurance providers for inserting sub-limits clauses in the policies provided is to manage their overall claims outgo or limit their liability. They, therefore, calculate and measure costs and estimates under different heads of the coverage to maintain rates charged by hospitals and mitigate fraud as well as manage unwarranted inflated treatment bills by policyholders.
• Hospitalisation expenses depend on the type of room that the patient chooses. This is also true for doctor’s fees when a specialist visits a shared room as compared to a single room, both in order to check the progress of the patient.
• The cap in medical treatment costs for various ailments and the list of ailments differ from one health insurance provider to another. Moreover, many insurers also include sub-limits in their policies for pre and post-hospitalisation expenses as well.
• In most cases, policies with no sub-limits come for higher premiums as compared to those with sub-limits. Therefore, it is advisable to choose policies depending on your requirement as sub-limits can have an effect on the coverage provided.

Things to Keep in Mind If You Can’t Avoid Sub-limits

If a health insurance plan without a sub-limit is too expensive for your pocket, here are some things you must ensure:

1. Try opting for a hospital room within your room rent so that your policy is not proportionately paid
2. You can try increasing your overall coverage by opting for top-up health insurance coverage
3. Therefore, prior to signing up for medical insurance, you must look into the applicable sub-limits
4. Take an estimate of both cashless and reimbursement claims. Then you can opt for a reimbursement claim if the cost of the same is lesser than cashless.

Final Word- 

Do note that many health insurance companies provide policyholders the flexibility to opt-out of sub-limits by offering the choice of going with extra premiums to do so. Moreover, sub-limits can be avoided in high-value insurance plans. But, depending on your budget, you can go with either of the two options. Both these choices have their own perks and disadvantages, so be sure to go through the policy print carefully before deciding.