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Health Insurance Claim: This is why your insurer may not pay the entire claim amount
Financial Express, May 18, 2019

The basic purpose of buying a health insurance policy is that one doesn’t have to dip into one’s savings to pay for the medical bills after hospitalisation. By paying the premium for a health insurance policy, one is expected to come out of the hospital without settling the bills. The cost of hospitalization is to be borne by the insurance company up to the sum insured opted by the insured.

However, even if one is carrying a cashless health cover that too in a network hospital of the insurer, there could be an instance when the insured may have to bear a portion of the medical bill as an out-of-pocket expense.

The reason why your claim may get paid partially is because of a clause called ‘sub-limit’ in the health insurance policy. The mention and the applicability of sub-limits are clearly there in the policy document but not many of us actually read and are in a position to comprehend the terms and conditions.

Before we see how it impacts, let us see what it is and how it works.

Sub-limit in a health insurance plan defines the maximum amount of coverage that the insurance company is liable to pay for each of the medical expense-head such as room rent, doctor fees etc during the hospitalization. So, while the ‘sum insured’ defines the maximum amount of coverage of the policy which the insurer is liable to reimburse, the ‘sub-limit’ will be the internal caps of the various hospital expenses.

Room rent with sub-limit
Generally, with almost all insurers, the room-rent is fixed at 1 per cent of the sum insured. For example, in a policy with sub-limit having a sum insured of Rs 4 lakh, the daily room rent will be capped at Rs 4,000, which will be the policy’s eligibility amount. “If the sum insured is Rs 2 lakh and the daily room rent is Rs 4,000, you would get 50 per cent of the claim amount as the room rent is limited to 1 per cent of Rs 2 lakh i.e. 2,000 per day,” says Rajagopal Rudraraju, Senior Vice President & Product Head – Health & Health Claims, Tata AIG General Insurance Company.

Proportional deduction
In a way, the insurers peg the room-rent to all other hospital expense-heads. And, if one takes a room with a daily rent higher than the policy’s eligibility, there is a proportional deduction on all other expense-heads. “If any room is selected with a daily room rent higher than the eligible limit, they disallow not only the difference in room rent but also all other expenses in the same proportion,” says Rudraraju.

This will make the insured to pay up the difference as an out-of-pocket expense because the insurer will not reimburse the amount exceeding the sub-limits cap.

There are, however, certain health insurance plans that do not come with any sub-limits. The premium of no sub-limits plans may be on the higher side but may avoid any unpleasant surprises during hospitalization. “As a general guide, the premium difference due to sub-limits would be smaller in higher sum insured plans, and larger in lower sum insured plans,” informs Rudraraju.

What to do
So, what should a buyer do? Here is what Rudraraju suggests, “It is better to choose plans without room rent sub-limits. If they are to choose a plan with sub-limit, they should choose the limits such that they are reasonably adequate for the city they reside in. For instance, if one has to choose a Rs 1 lakh plan with a 1 per cent room rent limit in a city like Mumbai, less than 30 per cent of the claim would eventually be paid.” If you already have a health insurance policy, read the policy document carefully to see if there are sub-limits in it else as a new buyer choose plans that come with no or few sub-limits after carefully evaluating the premium and the features across the plans.

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