Health Insurance Sublimits: How They Work And What You Need To Know

Health insurance is important as it helps one cover the cost of medical expenses due to hospitalization. However, insurance policies may not cover all the costs of medical care subject to certain conditions. 

One of them is sublimits. Sublimits in health insurance are restrictions placed by the insurance company on the maximum amount they will pay for specific expenses within a hospital bill. “These expenses include ambulance services, surgery fees, room rent, and consumables like gowns and gloves. Sublimits are intended to prevent excessive spending by capping the amount the insurer will reimburse for particular services or categories of expense,” says Pankaj Nawani, CEO of CarePal Secure. 

“If you have a cover of say Rs 5 lakh and a room rent cap of one per cent of the sum insured, the insurer will only pay Rs 5000 for the room rent under the sublimits clause,” says Siddharth Singhal, head - health insurance, Policybazaar.com, an insurance portal. 

“It’s important to note that the sublimits may cut down on premiums but it also means that anything over and above the limit will have to be borne by the policyholder,” says Singhal. 

Sublimits Can Cause Misunderstanding Among Policyholders 

Sublimits can cause misunderstandings because policyholders often expect their claims to be fully covered up to their sum insured. However, they may find that certain expenses are only partially covered due to these sublimits. 

“For example, a patient admitted to a higher category room than what their policy covers might end up paying not just the difference in room rent but also the additional costs associated with higher charges for surgery or other services,” says Nawani. 

Similarly, specific surgeries or pre- and post-hospitalization expenses might also have sublimits that result in the policyholder receiving less reimbursement than expected, leading to confusion and frustration.

Understand Sublimits Better 

Policyholders should carefully review their health insurance policy to understand its sublimits. 

“They should ask their insurance company for detailed explanations of these sublimits and request examples of how they might affect claims. It's important to keep a record of these explanations for future reference,” says Nawani. 

Additionally, policyholders should discuss the cost heads with their hospital during hospitalization to avoid unexpected charges. Consulting with a knowledgeable insurance agent or distributor can also be beneficial to ensure they have a clear understanding of their policy's terms.