5 restrictions in health insurance plans: Know them before you buy one

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Updated: May 10, 2019 6:34:29 PM

There are certain specific restrictions in almost all health insurance plans and one needs to be aware of them for a smooth settlement of the claims.

health insurance, claim settlement, Sub-Limits, Network Hospital, Waiting Periods, Co-paymentsHere are five restrictions in a health insurance plans that every buyer needs to know for avoiding any bad surprises during claims settlement or during hospitalisation.

Buying health insurance is considered to be the first step in the financial planning process. But, with several different features across different plans of various general insurance or standalone health insurance companies, it could be difficult to choose the right one. Also, there are certain specific restrictions in almost all health insurance plans and one needs to be aware of them for a smooth settlement of the claims. Being unaware of these restrictions can result in an unhealthy claim experience and can even turn costly for the policyholder.

Here are five such restrictions that every buyer or a policyholder needs to know for avoiding any unplesant surprises during claims settlement or during hospitalisation.

1. Sub-Limits

When it comes to making a claim, health insurance plans have a restriction in the form of sub-limit which basically is the maximum limit to which the insurer will pay up the claim amount under each expense head. A hospital bill will carry medical expenses under different heads such as doctor fee, room rent etc. No matter what the sum insured of the policy is, most health insurance plans restrict the re-reimbursement limit of each such expense head to a certain percentage of the sum insured. For example, if the sum insured is Rs 5 lakh, the room-rent is capped at 1 per cent i.e. Rs 5,000. If a policyholder chooses a room with rent higher than that amount, the claim will be restricted to Rs 5,000 only. Similarly, the caps could be there for other expense head.

When the insurer doesn’t pay any amount above the mandated limit, the expense has to be borne by the policyholder. In some health insurance plans, there may not be any such sub-limits while in others it may be waived off by paying an extra premium.  Sub-limits also plays a role in the settlement of total claims. If a policyholder takes a room with rent higher than the upper limit, the other claim for other expense heads is proportionally reduced.

2. Network Hospital

When it comes to a medical emergency requiring hospitalisation, the hospital that is nearest to one’s residence is preferred by most. However, as a health insurance policy holder, knowing whether the hospital is on the insurer’s list of network hospitals is important. All insurers have a tie-up with specific hospitals in different locations which they call them as a part of the network list. Insurers prefer policyholders to take hospitalisation in the network hospitals and not in a hospital outside the list.

It doesn’t matter if you hold a cashless card, the claim process in a non-network hospital may be subject to re-reimbursement and may result in partial claims too. Insurers share the list of network hospitals, also check with them before one has to make a planned hospitalisation.

3. Waiting Periods

After buying a health insurance policy, it’s not that the coverage starts from day one. Other than accidental hospitalization, some diseases have a waiting period of 30 days, some others of 24 months or 36 months or even 48 months. The pre-existing ailments after proper disclosure at the time of buying insurance are generally covered after 48 months. It is important that one keeps renewing the policy so that the benefit of the waiting period is not lost. Also, on porting the policy, the advantage of the waiting period is not lost.

4. Co-Payments

Sometimes, even if one holds a cashless policy, not the entire bill amount is paid by the insurer. A portion of the bill is to be borne by the insured. Co-payment or co-pay is that portion of the bill that the policyholder has to bear as an out-of-pocket expense. Such co-pay could be 10 or 20 per cent of the hospital bill.

For example, if a policy has a 20 per cent co-pay, and the bill comes to Rs 30,000, then the insured will have to pay Rs 6,000 while the balance of Rs 24,000 will be paid by the insurer. Co-payments are generally found in health insurance plans for senior citizens. Plans with co-pay come at a lesser premium than the ones without this feature.

5. Cashless or reimbursement claims

The claims settlement in a health insurance policy can be either on a cashless basis or on the basis reimbursement. In a cashless policy, one need not pay anything up to the sum insured amount, to the hospital if it is there on the network list. The insurer’s in-house claims settlement team or the insurer’s third-party administrator settles the bill on behalf of the insured.  In case of reimbursement claims, which generally happens in a non-network hospital, the insured has to pay the hospital before getting discharged and then submit the bills to the insurer for reimbursement.

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