Capping or Sub-Limit in Group Health Insurance

Capping or Sub-Limit in Group Health Insurance

Sub-limit or capping in group health insurance policy refers to the maximum limit to which the insurer will pay for the hospital bill, which is usually categorized under various expense heads. Generally, in the case of hospitalization, various expenses are incurred such as doctor's fees, nursing charges, medical procedure charges, room rent charges, medication costs, etc.

A few of these headers may have an upper cap, that is, a maximum limit up to which the insurer will reimburse these amounts. Any difference is then borne by the insured (employee in group health).

Sub-limit in employer employee insurance is one of the crucial features that need to be evaluated by the employer before purchasing a group medical insurance. It is calculated as a percentage of the total sum insured that an insurance company pays for at the time of claim settlement.

Types of Sub-Limits

The sub-limits condition doesn't apply to the entire hospitalization bill. Instead, they are reserved for treatment of certain diseases, room rent charges and post-hospitalization expenses. Let us discuss a few types of sub-limits or capping in group insurance.

1. Sub-limit on the Treatment of Certain Diseases:

   This sub-limit clause is usually placed for the treatment of pre-planned ailments procedures like cataracts, kidney stones, gallstones, piles, etc. The insurer provides a coverage limit on the total cost of treatment for the ailments mentioned in the terms and conditions in the policy document.

   For example, if the policy document mentions a sub-limit clause for cancer treatment at 50% and the sum insured is INR 15 lakhs, even if the cost of treatment is INR 10 lakhs, the employee will not be reimbursed for more than INR 7.5 lakhs.

2. Sub-limit on Room Rent:

   This is one of the most common type of capping in a group insurance plan. In this clause, the insurance company covers the hospital room charges per day up to a specific limit. Usually, the insurer puts a cap between 1% to 2% of the sum insured for this clause. For example, if the actual room rent exceeds the sub-limit clause of the policy, the insured (employee) will have to pay the difference in the rent from his pocket.

3. Sub-limit on Post-hospitalization:

   Sometimes, an insured may need medical supervision even after getting discharged from the hospital. Or the post-hospitalization expenses, too, can be high. Post-hospitalization charges may be covered in a group medical scheme but to a certain extent. A sub-limit is applied in most cases for post-hospitalization expenses, and the employee pays the difference.

Conclusion

Group medical insurance policies with no sub-limits are rare; even if they do, they come with a higher premium vis-à-vis a policy with sub-limits. Thus, the employer should be well-informed about the sub-limits in the group insurance scheme before buying or renewing the policy.