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Sub-limits in Health Insurance Policy

Sub-limit defined

Sub-limit is the extent to which an insurer will pay for claims arising from associated medical expenses. Thus, expenses like cost of medicine or cost of surgery will be limited to an amount determined in the sub-limit. For example, the doctor’s fees could be limited to 2% in a health plan worth Rs 2 lakhs.

The insured will therefore be paid no more than Rs 4,000, even if the doctor’s fees amount to Rs 10,000. When one is purchasing an insurance, one has to be careful about the sub-limits in the policy. Sub-limits are used by insurance companies to reduce their claims outgo.

Sub-limit for specific treatment

Mr Kumar was diagnosed with gallstones and was advised surgery by his physician. He promptly perused the list of hospitals approved by his insurance provider. He approached the one nearest to his residence and submitted the details of his health insurance policy to the third party administrator (TPA) in order to avail cashless treatment.

He was informed that a laproscopy would cost Rs 35,000 and that an approval has been received from the TPA. However, the surgery was a partial success as the doctors could not remove the gall bladder owing to certain complications that Mr Kumar had. The doctors advised him to come back after a month as he would require another surgery.

Mr Kumar approached the TPA and was told that the expenses for the surgery would amount to Rs 50,000. However, the TPA informed him that he would receive an approval for Rs 5,000 only, and he would have to pay the rest out of pocket.

The TPA explained that Mr Kumar’s policy had a provision of Rs 40,000 for this type of treatment. Since the insurer paid Rs 35,000 already, he was entitled to cashless treatment to the extent of the balance amount.

These sub-limits are usually for the more common ailments, like gallstones, kidney stones, piles, sinus, cataracts, etc.

Room rent sub-limit

In most cases, the sub-limit on room rent is the most common one. It is usually limited to a maximum of 1.5% of the sum assured, on a daily basis. These days, hospitals offer various packages depending upon the room type selected.

Thus, a room with double occupancy might cost around Rs 3,000 for a day, while a single occupancy room might set one back by Rs 5,000 for the same duration. So if Mr Vijayhas a policy worth Rs 3 lakhs and it’s specified that per day room rent should not exceed 1.5% of the total amount, he should opt for double occupancy unless he wishes to pay the rest out of pocket.

Additionally, it must be noted that not staying within the sub-limit might adversely affect the policyholder’s claim. The insurance provider will reduce the other sub-limits for the other expenses. In Mr Vijay’s case, if he opts for single occupancy, he exceeds the specified limit by 16.67% and all the sub-limits on associated medical expenses will also be reduced by the same percentage.

Post hospitalization sub-limit

After a policyholder is discharged from the hospital, he/she will incur some post hospitalization expenses. The insurer can introduce a sub-limit to put a ceiling on the amount the insured can claim under such circumstances.

It is always advisable to purchase medical policies that do not have any sub-limits. It might require the policyholder to pay more premium but it results in fewer hassles. That way, during the time of medical emergency, the insured individual will be spared the headache of calculating and spending according to the sub-limits in the policy.