Sub-limits are caps placed by health insurance companies in health insurance policies in the form of a predetermined limit on the claim amount for a specific disease and/or treatment procedure. In some cases, sub-limit may be a percentage of the sum insured or a specific amount specified by an insurance company. In other words, the overall coverage offered by a health insurance policy is divided into maximum payable for specific expenses and/or diseases. In many cases, the caps on room rent and ICU charges are usually 1% and 2% of the sum insured respectively. For instance, if you have opted for a health insurance plan with a sum assured of Rs.2.5 lakh, you can stay in a room which has a tariff of Rs.2500. In other words, if you wish to stay in a more expensive room for your medical treatment in a hospital, you will have to pay the additional room rent from your own pocket.
Why are sub-limits fixed by health insurance providers?
One of the primary objectives of health insurance providers inserting sub-limits’ clauses in their policies is to decrease their overall claims outgo or limit their liability to pay to their customers. Insurance companies calculate costs or make estimates under different heads (room rents and treatment costs) on the basis of prevailing rates charged by most hospitals to mitigate fraud and reduce unwarranted inflated medical bills by customers. It is important to note that there are no specific guidelines issued by IRDA (Insurance Regulatory and Development Authority) on sub-limits in health insurance policies offered in the country.
What are the different kinds of sub-limits?
In most cases, sub-limits apply to common ailments and pre-planned procedures such as cataract removal, kidney stones, tonsils, sinus, knee ligament reconstruction, hernia, piles and so forth. Many health insurance policies include sub-limits on hospital room rent, ambulance charges, oxygen supply, physicians’ consultation fees, anaesthetists’ charges and diagnostic tests (x-rays) among many others. It is important to note that the list of ailments and cap in treatment costs for various diseases differ from one health insurance provider to another. Furthermore, some health insurance providers include sub-limits in their policies for pre and post hospitalisation expenses as well.
It is important to note that more often than not, hospital charges depend on the type of room opted by a patient. For instance, a specialist’s visit to a shared room to review a patient’s progress may cost higher than a visit to a private room (the sub-limits on room rent and physicians’ fees assume greater significance in this context).
Sub-limits and premiums offered by health insurance providers:
In most cases, a health insurance policy with no sub-limits comes with a higher premium compared to an insurance policy with sub-limits. Experts, therefore, opine that you should choose your health insurance policy based on your overall budget but never lose sight of the fact that health insurance plans with sub-limits provide limited coverage to you.
What if sub-limits are unavoidable?
In case you cannot afford a health insurance policy without sub-limits, you must ensure that room rent charges and treatment costs of specific diseases mentioned in your policy are reimbursable prior to getting admitted in a hospital.
It is therefore, advisable that prior to signing up for a health insurance policy, you should check the sub-limits applicable. If you feel that the actual coverage offered in a policy falls short of your specific requirements or healthcare costs, you can choose to increase your sum insured. However, it some cases you cannot claim your hospitalization expenses owing to the sub-limit clause even if you have a high sum assured. For instance, if your policy has 50% of your sum assured as a sub-limit for a specific disease, you cannot claim more than half of the sum assured owing to the clause.
It is, therefore, important to note that you should read your policy document carefully and analyse various parameters such as co-payment options (a fixed percentage of your claim amount has to be paid by you) and list of exclusions before buying a policy. Furthermore, you should always get admitted into a network hospital listed by your insurance provider as the former’s rate structure is, by and large, in tandem with the sub-limits mentioned in your insurance policy.
There is a view that it is more prudent to avoid opting for health insurance policies which have restrictive options such as sub-limits on room rents, specific treatments and co-payments as you may run the risk of compromising on your financial security and face unpleasant surprises during medical emergencies. You would do well to read up on ‘limits’, ‘deductible’ and ‘co-pay’ options in your insurance policy and their respective weigh the pros and cons before signing up.
Chola Classic health (Individual) Policy does not have any sub-limits for diseases. Similarly, L&T my:health Medisure Prime insurance policy does not have sub-limits on any medical expenses. Star Care insurance policy has sub-limits on ICU charges (Rs.2000 per day), subject to a maximum of Rs.10,000; while National Mediclaim Policy has sub-limits on room rent (1% of sum insured per day) and ICU (2% of sum insured per day, subject to a maximum of Rs.15,000 per day).
*Rates may be changed at the discretion of an insurance company. Please contact the aforementioned insurance providers for confirmation before buying a policy.
GST rate of 18% applicable for all financial services effective July 1, 2017.
Disclaimer: Premiums may vary depending upon factors like age, location and prevailing taxes/GST.