Sub Limit In Health Insurance

When purchasing a health insurance policy, the first preference is often to look for plans that have no restrictions or limits in coverage. But is it truly possible to buy a health insurance policy without sub limits? With many insurers marketing ₹1 crore health insurance plans at so-called affordable premiums, one might assume these plans cover every hospitalization expense, even if it reaches ₹1 crore. However, this is not always the case. Hidden sub limits and restrictions often apply. In this article, we will discuss the various types of sub limit in health insurance, including those that are clearly written in policy document and those that are less apparent or misunderstood.

Clearly Written Sub limits in Health insurance

Many health insurance policies clearly mention specific sub limits in the policy document. These sub limits restrict the amount the insurer will pay for certain expenses or treatments. Examples include:

• Room Rent Limit: Often capped at 1% of the sum insured per day in many health insurance policies especially those having lower sum insured.
• Cataract Surgery Limit: Often capped at ₹30,000 per eye.
• Bariatric Surgery Limit: Limited to 10% of the sum insured.

These sub limits may apply to specific diseases (e.g., Hernia), treatments (e.g., robotic surgery), or even hospital bill components like room rent. Low-sum-insured policies are more likely to have these restrictions, as insurers use them to encourage customers to opt for higher coverage plans, which naturally come with fewer limitations at high premium. Insurance companies make more profit from policies with higher sum insured that come with expensive premiums.

Reasonable and Customary (R&C) Clause

The R&C clause limits claim payouts based on standard treatment costs in a specific geographical area. It typically applies to treatments in non-network hospitals.

Read More: What is Reasonable and Customary(R&C) Clause in Health insurance?

For example:
• If a non-network hospital charges ₹1,00,000 for a procedure typically priced at ₹70,000 in similar hospitals nearby, the insurer may pay only ₹70,000.
• The policyholder will need to cover the remaining ₹30,000.

To minimize such deductions, it is advisable to seek treatment in network hospitals of insurance company, where the R&C clause is less likely to apply.

Insurer-Hospital Agreements

This is a lesser-known area of health insurance that often leads to a lot of confusion. For cashless treatment insurance companies tie up with hospitals which are known as network hospital or preferred provider network(PPN). Insurance companies have pre-agreed rates with network hospitals for various treatments, often at discounted prices. However, these agreed rates are not disclosed to policyholders neither by insurance companies nor by hospitals.

Issues arise when Hospitals charge above agreed rates: Hospitals may bill patients based on their own rates, but insurance company settle claims only as per the pre-agreed rates. The policyholder is then required to pay the difference. Large tertiary-care hospitals are a particular pain point as they often charge above agreed rates. Insurers have limited leverage to enforce compliance, leaving policyholders to bear the additional costs.

Some big hospitals, which are not part of an insurance company’s network or denying cashless treatment for various reasons, often charge policyholders their standard rack rates(prices charged by the hospital for various medical services, treatments, or facilities). Later, the insurance company settles the claim but deducts a significant amount, giving various excuses. Despite no fault of their own, policyholders end up bearing the brunt of this unfair practice.

How to Minimize the Impact of Sub limits

In order to avoid or minimize the impact of sub limits and deductions at the time of hospitalsiation policyholders can follow following steps:

1. Choose Policies with Minimal or No Sub limits. Policies which mention no disease wise limit or room rent limits are often better than those explicitly stating such limits in their terms and conditions. One simple way to chose a health insurance policy with lower or no restrictions is to go for higher Sum Insured Plans. Policies with a sum insured of ₹20 lakh or more generally have fewer restrictions and lower deductions.
   
2. Understand Your Policy Term – We often spend hours scrolling through social media posts that add no value to our lives, but we don’t even take a few minutes to read the terms of our health insurance policy, despite paying premiums for years. Always read the policy document carefully before paying the premium. If the terms feel unclear or unfair, you have a 30-day free-look period to return the policy and get your money back.
   
3. Raise Queries for Unjust Deductions- If you believe a deduction is unfair, raise a grievance with the insurer. Do not accept the settlement until you receive a satisfactory explanation. Sometimes, just one query can get an unfair deduction reversed. Always challenge deductions that don’t seem right and escalate them to the appropriate forums if needed.
   
4. Stick to Room Categories Within Your Entitlement – For low-sum-insured policies, choose a room category within your policy limits. This prevents proportional deductions on other expenses. In few cases even the policyholders not aware of policy coverage chose a room category higher than policy entitlement, Room rent category matters the most as treatment costs are often linked to the room rent category. If a patient chooses a room beyond their entitlement, it can increase other costs (e.g., doctor’s fees, surgical charges) proportionately, leading to claim deductions.
   
5. Plan Ahead for Elective Procedures – For planned surgeries, talk to your insurance company in advance to understand any limits for that condition. Check with your hospital to ensure it’s not blacklisted or flagged by the insurer for overbilling or other issues. This simple step can save you from unnecessary hassles during treatment and at the time of discharge.

Health insurance is designed to provide financial support during medical emergencies. However, no health policy offers truly unlimited coverage. Sub limits—whether related to treatment costs, insurer-hospital agreements, or specific diseases—exist to prevent misuse and maintain balance in the system.

While these limits are often necessary, they can also lead to frustrations due to lack of awareness or transparency. As a policyholder, understanding these restrictions and staying informed about your policy terms is crucial to avoiding unnecessary out-of-pocket expenses.