Health Insurance Sub-Limits – All You Need To Know

Rahul had a comprehensive health insurance policy for which he was paying an annual premium of Rs 15000. He had the policy for over four years. In the fifth year, he was hospitalized for a surgery, which cost Rs 60,000. 

When he filed the claim for Rs 60,000, he was in for a shock. It was then that he learnt about the sub-limit clause in his health insurance policy. Rahul’s health insurance policy had a sub-limit clause – a cap of Rs 25,000 on any kind of surgery, which meant that the insurer would pay only Rs 25,000 irrespective of the amount of total claim made. 

Certainly, Rahul is not alone. Like Rahul, there are many who aren’t aware of sub-limits in health insurance plans. What is sub-limit and how does it affect the insured? Do all health insurance policies have sub-limits? We’ll look at all these questions and more, in detail.

• What is sublimit in health insurance?
• What are the different types of sub-limits?
• How do sub-limits affect the policyholder?
• Health plans with sub-limits – to buy or not to buy?

 Related: A Layman’s Guide to How Health Insurance Works

What is sub-limit in health insurance?

Every customer looking to choose the best health insurance must know what is sublimit in health insurance. A sub-limit is a cap or limit on an insurance claim. Sub-limits are pre-specified in health insurance policies if you read the fine print of the contract. Sub-limits are either specified as a fixed amount or a percentage of the sum insured. 

Typically, sub-limits are placed on claims towards expenses such as room rent, certain types of surgeries such as knee and cataract, among others. In short, sub-limit is a way in which health insurance companies limit their liabilities to policyholders. This makes it very important for customers to review the insurance details carefully to choose the best health insurance for themselves.

What are the different types of sub-limits?

Knowing the different types of sub limits in health insurance helps us make the right choice when it comes to health insurance. There are two key types of sub-limits.

Sub limit on diseases/treatments

There are several diseases that are so common that 3 in 5 people suffer from them. Insurers often have sub-limits on these diseases or treatments. Some of the common diseases that insurers have sub limits on are cataract operations, high blood pressure, pre-planned procedures like plastic surgery, knee surgeries of certain types, kidney stones, tonsillitis, and piles. An insurer puts a sub-limit on treatments for such conditions and procedures. It is important to check the sub-limit clause in a health plan before purchasing it, so as to select the best health insurance policy with minimum sub-limits. 

For example, there could be a sub limit clause for such treatments that specifies that an insurer will bear only 80% of the bill or 1% of the sum insured can be used for treatments with sub-limits. Similarly, if there is a sub-limit of 40% on a kidney stone surgery, and the cost of the surgery is Rs 1 lakh, the insurer would pay only Rs 40,000. The policyholder would have to shell out Rs 60,000 from his own pocket.

Sub limit on room rent, ambulance, doctor’s fee

Sub limits in health insurance plans can also be there on expenses like room rent, doctor’s consultation charges, ICU charges, oxygen supply, ambulance charges, and diagnostic tests. Typically, insurers have a sub limit of 1% to 2% of the sum insured or a fixed sum of money on these types of expenses. Most times, this may lead to the policyholder paying a huge amount from the claim. All of these sub limits are mentioned in the terms and conditions of the insurance policy. Top health insurance plans make sure that their customers are covered to the maximum extent against these charges.

E.g. If the room rent in a hospital is Rs 2000 per day, with a sub limit of Rs 1000 per day, hospitalization for 10 days would mean the policyholder would have to shell out Rs 10,000 from his own pocket. 

A hospital charges separately for the patient’s stay at the same. It is advisable to choose a room depending upon the comfort and cost of a hospital bed or the room. The best way out of sub limits on room rent is to get a room that gets fully covered under insurance even with sub limits. This helps you reduce the out-of-pocket expenses for treatment.

The room rents also depend on the treatment, medical equipment required, and other factors. These could form a significant portion of the total bill. It is advisable to check how a sub-limit clause could affect these costs before buying the best health insurance policy.

Apart from the above, there is one more kind of sub limit in health insurance plans, which is the post-hospitalization sub limit.

Post-hospitalization sub-limit

Sometimes, the treatment continues even after a patient gets discharged, especially in the case of major surgeries or prolonged hospitalization. A policyholder may incur healthcare expenditure post hospitalization such as pharmacy bills, diagnostic tests and doctor’s visits, among others. Health insurance companies might have sub-limits on post hospitalization expenses, too. In that case, the policyholder will have to bear the remaining cost if the post-hospitalization expenses exceed the coverage. The top health insurance companies make sure that the customers are comfortably covered for post-hospitalization expenses without sub-limits.

Make sure that you check the terms and conditions of the health insurance policy thoroughly to be familiar with the sub-limits before buying health insurance.

How do sub-limits affect a health insurance policyholder?

Sub limits in health insurance plans limit the medical coverage and essentially the financial protection that they purchased the health insurance for. Sub limits affect the policyholder in various ways:

Out-of-pocket expense

A sub limit in health insurance would affect the claims made by a policyholder. The insurance company will accept claims only within the sub-limit amount mentioned in the policy. The policyholder would have to pay the amount above the sub-limit from his own pocket.

It is a policyholder’s responsibility to understand sub-limit clauses so as to avoid any nasty surprises at the time of making claims. Normally, the best health insurance policies with a higher sum insured might not have a sub-limit clause. Hence, it is advisable to buy policies of a higher sum – Rs 8 lakh to Rs 10 lakh. 

Premium amount

A health insurance policy with a sub-limit clause might come at a lower premium. Hence, a policy with sub-limits could make sense for those who have a smaller budget. However, policyholders should keep in mind that this would increase the amount of money they would have to pay on their own in case of hospitalization or treatments. The best health insurance companies have a wide product portfolio with flexible plans that make sure that the policy provides the best value for money with the least sub limits at an affordable premium.

Charges linked to room rent

Hospitals charge for doctor’s fee, operation theatre and anaesthesia, among few other costs, according to the room rent. E.g. costs for the above-mentioned services taken in a private room costing Rs 5000 a day, would be more compared to a shared room costing Rs 2000 a day. At times, insurers apply a proportionate deduction clause based on the room rent sub limit clause. 

Health plans with sub-limits – to buy or not to buy?

Experts suggest it is better to be on the lookout for sub limits in health insurance and avoid buying health insurance plans with any sub-limits. The reasons: it increases the out-of-pocket expenditure significantly and it might make calculations and claims process complicated. At times, if a policyholder wrongly claims an amount, the insurer could reject the claim. It is best to avoid health plans with sub-limits to the extent possible to avoid any last-minute surprises and select the top health insurance plans with least sub limits. When you know the terms health insurance policy, you are less likely to be caught in the wire of sub limits and make decisions that help you avoid them.

If you can’t afford a health insurance policy without sub-limits, it is better to ensure that room rent charges and treatment costs of specific diseases mentioned in your policy are reimbursable. Knowing the sub limits in your health insurance policy helps you make informed decisions. Also, make sure that you get admitted to a network hospital that is listed by your insurance provider. This is because the rate structure of the hospitals tied up with your insurer are aligned with the sub limits in your policy.

It is prudent to opt for health insurance policies that don’t have restrictive sub-limits on specific ailments and treatments, expenses like room rent, or post-hospitalization expenses. But if you can’t afford a policy without any sub-limits, it is better to be familiar with the terms of your policy.