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As per Outlook India Business, many health insurance claims in India get rejected due to a lack of understanding of the policy terms and conditions. As per the article, many policyholders do not understand many insurance jargons, which finally lead to claim rejection or partial claim. The sub-limits and deductibles are among the many insurance terms you shouldn’t ignore while purchasing a health insurance plan. You need to have a thorough understanding of what is a sublimit in insurance and the term deductible insurance in order to avoid your claim from being rejected or settled partially.
Having said that this article will help you understand what is deductible and sub limits in insurance, their differences and how these affect the coverage in your health insurance policy. So, without further ado, let’s come to the point!
What is Sub-limit in Health Insurance?
In health insurance sublimit is a pre-determined and declared capping on specifically mentioned medical procedures, hence forming a maximum percentage of the coverage by the particular policy. These sub-limits are clearly mentioned in what is commonly referred to as the fine print of a policy document. This is another reason to go through your policy document thoroughly so as to avoid the disappointment of a rejected claim or partial claim when you need it the most. A substantial amount of out-of-pocket expense at the time of your claim may have a big impact on you financially, reducing the effectiveness of your health insurance.
Sub-limits are usually placed on the room rent of the hospital, the charges for an ambulance or for specific treatments such as dental, cataract and knee reconstruction.
What is Deductible in Health Insurance?
Deductible in health insurance refers to a pre-determined and pre-declared amount of the medical expenses in any claim that you must compulsorily pay out of pocket, after which the health insurance company will settle the remaining bill amount directly with the health care provider.
So, your health insurance company will only pay the claim in excess of the deductible amount you must pay. The deductible clause is added to a health insurance policy to ensure that the claim is genuine and to avoid scams and fraud.
Difference between Sub Limit and Deductibles
You have read about both sub-limits and deductibles in health insurance policies and how and under what circumstances they are applicable. Let us now understand how they differ in tabular form as below for easy reference and understanding at a glance:
| Parameter | Sub Limits | Deductibles |
|---|---|---|
| What is it? | It is a pre-determined and documented limit on the amount of medical expenses up to which the health insurance company will pay | It is a pre-determined and documented amount or percentage that the policyholder must compulsorily pay before the health insurance company provides coverage |
| What is the Purpose? | It limits the amount of expenses the health insurance company covers for specific expenses | It makes it compulsory for the policyholder to share a certain portion of the cost of treatment |
| How much is the Amount? | The amount or limit is different for various health insurance companies | The amount is a fixed amount or a percentage of the claim amount |
| What is the Scope? | A sub-limit applies only to specific expenses | Deductibles may apply to all expenses covered by the health insurance policy |
| Who Pays and When? | Paid by the policyholder only if the expenses exceed the limit | The health insurance company covers the expenses only after the policyholder pays the deductibles |
| How does it Impact the Premium? | In the case of a policy with sub-limits, the premium is lower as it reduces the liability on the health insurance company | The premium is lower than a comprehensive insurance policy as the policyholder is sharing the risk of the health insurance company. In the case of higher voluntary deductibles, the premium is lower or vice versa |
| How is the hospitalisation expense shared? | The expense is shared by both parties – the policyholder and the health insurance company in case the policyholder opts for facilities beyond the defined sub-limit | The expense is borne by the policyholder till the pre-decided deductibles limit |
Sub-Limit in Health Insurance: Types and Importance
You need to ideally check for the sub-limits of a health insurance policy before you purchase it. A health insurance policy with sub-limits will come with lower premiums than a comprehensive one with no sub-limits. In the former case, the liability of the health insurance company is lower. If you want to purchase a basic health insurance policy with lower premiums, you may look at one with sub-limits.
What are the Types of Sub Limits in Health Insurance?
Most health insurance companies place two sub-limits in their policies namely on room rent and specific treatments. Health insurance companies often provide you with an option to opt in for a rider with an additional premium to have these limits removed. Let us read further on these two types of sub-limits:
1. Sub-Limit on Room Rent or Category: This sub-limit means that your health insurance company will cover the expenses for your hospital room rent up to a certain limit. The room type may also be capped. If the room type is capped, a health insurance company usually offers the facility of a twin-sharing room or a general room to keep the treatment cost down. You may choose to opt for a room where the rent or the type is beyond the capping but will have to bear the difference in rent out of pocket.
2. Sub-Limit on Certain Specific (Pre-Listed) Treatments: This sub-limit means that the health insurance company places a maximum percentage or monetary limit payable from your sum insured towards the treatment of certain specific diseases. This means that even if you have a sufficient sum insured and your treatment for a specific disease exceeds the sub-limit, you will have to pay the excess amount out of pocket.
A list of some of the treatments on which such sub-limits are placed is as follows:
- Cancer
- Cardiovascular disorder
- Dental
- Cataract
- Knee ligament reconstruction
- Kidney stones and other renal complications
- Piles
- Gallstones
- Hernia
- Breakage of bones
There are certain other sub-limits that you should be aware of. These are as follows:
- Sub Limit on Pre and Post-Hospitalisation Expenses: Some health insurance companies have limits on reimbursing your pre and post-hospitalisation expenses. This is usually expressed as a percentage of your sum insured.
- Sub-Limit on Alternative Treatment: Health insurance companies often set sub-limits on treatments like Ayurveda, Homeopathy, Unani or Siddha.
- Sub-Limit on Medical Equipment: This sub-limit is the cost incurred using medical equipment such as ventilators, nebulisers or oxygen cylinders.
- Sub-Limit on Maternity: Most health insurance policies have a sub-limit of Rs 50,000 for maternity-related expenses.
- Sub-Limit on Outpatient Treatment: Health insurance policies may impose a sub-limit on outpatient treatment, such as fees for doctor’s consultations, diagnostic tests, and minor procedures that do not require hospitalisation.
Types of Deductibles in Health Insurance Policies
There are two types of deductibles in health insurance in India:
1. Compulsory Deductibles: This type of deductible is mandatory in some health insurance policies. The deductible is either in the form of a fixed amount or in the form of a percentage of the total expenses in a claim. Such an amount or percentage is pre-declared and is mentioned in your health insurance policy document. The premium in such a policy with compulsory deductibles is less than that of a comprehensive health insurance policy with no deductibles.
2. Voluntary Deductibles: This type of deductible is the amount that you choose to pay out of pocket whenever you raise any claim. As you are already prepared to cover a certain portion of the medical expenses from your own resources, the risk to the health insurance company is lesser in such cases, and correspondingly, the health insurance company passes on the benefit to you in the form of lower premiums. The amount or percentage is determined at the time of policy purchase and is mentioned in your health insurance policy document. You would opt for voluntary deductibles if you do not foresee the need to raise claims regularly and wish to avail of health insurance coverage at lower premiums.
Advantages of Deductibles in Health Insurance Policies
Deductibles in health insurance policies come with the following advantages:
- A health insurance policy with deductibles is cheaper than one without deductibles. By purchasing a health insurance policy with deductibles, you can lower the premiums.
- Once you file a claim after paying the deductible from your own pocket, a health insurance company feels confident about the genuineness of your claim and usually settles the same faster.
- The health insurance company is assured of the urgency of the treatment for which you are raising a claim. You are paying the deductible out of pocket and losing out on the No Claim Bonus (NCB) for next year’s renewal. Thus, you would not tend to raise a claim for small and unnecessary claims for minor treatments.
Final Word
Hope this information gives enough scope to learn the difference between sub-limits and deductibles. Both these terms play an important role in deciding your premiums and coverage and that is why it is essential to choose them wisely.
While opting for sub-limits and deductibles may decrease the amount of the premium, they will also add up to a significant out-of-pocket amount when filing a claim. Understand your requirements, financial position and budget before deciding on health insurance policies with or without sub-limits and deductibles. With Care Health Insurance, you can opt for health insurance plans with no sub-limit as well. Connect with our insurance experts to know more about these plans and get yourself a comprehensive cover today!
>> Also Read: FAQs About Sub-limits under Health Insurance
Disclaimers: The above information is for reference purposes only. Kindly consult your general physician for verified medical advice. The health insurance benefits are subject to policy terms and conditions. Refer to your policy documents for more information.
