Before opting for a group health insurance policy, employers need to be aware of and familiar with the terms and conditions of the policy. There are several details in a policy which may seem minor but can have far-reaching consequences. It is better to go through the policy document carefully so that there are no surprises later.
Capping or sub-limits is one such concept that employers and policyholders need to be aware of.
In this article, we’ll cover everything employers need to know about capping or sub-limits in a group health insurance policy.
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What is Capping or Sub-Limits in a Health Insurance Policy?
A cap or a sub-limit is the maximum amount that an insurance company will pay for a particular type of expense under an insurance policy. A group health insurance policy can have several sub-limits or no sub-limit. A policy with no sub-limits may have a higher premium than a policy with certain sub-limits.
If a person is undergoing treatment and hospitalization for a medical condition, then they will face several different types of expenses. Some examples are the room rent, the cost of surgery, medicine, tests, reports, etc. A sub-limit can be placed on any of these types of expenses to limit the amount that the insurance company will for that type of expense under the policy.
It needs to be noted that the sub-limit is different from the sum insured. The sum insured is the total amount that can be recovered from an insurance policy while a sub-limit is the amount that can be recovered for a particular type of expense. The sub-limit can be a fixed amount or it can be a percentage of the sum insured.
Before picking a group health insurance policy, the employer should carefully go through the policy document and check the capping and sub-limits under the policy. If the sub-limits are too strict, then you can the insurance company to adjust the limits and provide better terms and conditions. However, this may come with a higher premium. We hope this explains what is capping in health insurance.
What are the Types of Sub-Limits or Caps in a Health Insurance Policy?
There can be three types of sub-limits under an insurance policy even though the concept remains the same. We have discussed each type of sub-limit that can be provided for in a group health insurance policy.
1. Sub-Limit on Room Rent
The room rent refers to the daily charges that a patient needs to pay for their room during hospitalization. Hospitals may several different types of rooms available and the charges for each type of room may differ. For example, the charge for a five-person hospital ward will be less than the price for a single room.
Usually, health insurance policies place a cap on the room rent that they will reimburse the patient for. The sub-limit on room rent is usually expressed as a percentage of the sum insured. For example, the sub-limit for room rent can be 3% of the sum insured.
If the cost of the room exceeds the room rent limit, the employee will need to cover the difference in cost from their own pocket.
2. Sub-Limit on Type of Medical Condition
A sub-limit can be placed on the treatment of a particular type of disease or medical condition. For example, the insurance policy may state that a sub-limit of Rs. 25,000 is placed on the treatment of Cataract. Hence, if the insured undergoes cataract surgery, they can only claim a maximum of Rs. 25,000 for the Cataract surgery.
This type of sub-limit can usually be found on surgery which is of a pre-planned nature. Since the treatment is pre-planned, the insurance company places a limit so that the insured does not opt for a needlessly expensive treatment.
3. Sub-Limit on Post-Hospitalization Expenses
After surgery, a person may need to undergo treatment or rehabilitative care at home. Such expenses are known as post-hospitalization expenses. These expenses can amount to a lot since post-hospitalization treatment can go on for a long period of time and there may be several type of treatment, tests, medicines, etc. that may be required.
Some group health insurance policies place a limit on post-hospitalization expenses. For example, the maximum amount that they may pay for post-hospitalization care can be 25% of the total sum insured.
If the cost of such care exceeds the health insurance sub-limit, then the employee will need to cover the difference in cost.
Sub-limits and capping are common in group health insurance policies. Fortunately, health insurance without sub-limits is also available. Before opting for a policy, it is essential to read the policy document carefully so that there are no surprises later.