A group health insurance scheme specifies an amount or limit for different medical expenses for claim settlement which is called capping.
What is capping?
Capping refers to the maximum amount that the insured can claim for a specific medical expense under a group health insurance plan. If the amount paid for a particular medical expense exceeds the capping amount, then the insured has to bear the excess.
The policy document of the group health insurance scheme specifies capping limits for claim settlement. Thus, if the medical expense exceeds the cap, the insurer will only pay the amount stated or calculated as per the cap. The insured person will have to bear any expense above the capping amount.
How does capping work?
Capped expenses in a group health insurance policy include room rents, ambulance charges, daily cash, maternity charges, attendant allowance, and certain medical procedures.
For daily room rent, capping is often 1–2% of the sum assured. The cap can also be an absolute amount. Let’s assume, the cap for room rent is Rs 5,000. If the insured incurs a room rent of Rs 7,000, they will have to pay for the additional Rs 2,000 themselves. The insurance company will not be liable to pay the additional amount.
Similarly, insurers often set the cap for ICU charges at 2–4% of the sum assured per day. If the expense is less than or equal to the capped amount, the insurer will pay it in its entirety. The insured person will have to pay for any additional expense.
Different insurance companies have different caps on ambulance charges. It may be based on either ambulance charges per hospitalization or ambulance charges for a fixed number of visits.
It would be incorrect to assume that since your sum assured is high, the insurance company will pay the entire benefit in case of any medical cost. Carefully read and understand the group mediclaim policy to know the cap for each type of expense.
Additional Read: What is deductible under employee group insurance policy
Case study: Insurance provider only pays the capped amount
Shivani has been working for a manufacturing firm for the past three years. She is insured under her company’s group health insurance plan.
In 2016, Shivani’s left eye started itching. Her vision deteriorated and her eyes watered daily. Her ophthalmologist diagnosed a cataract in her left eye. The doctor advised her to undergo cataract surgery. She underwent the surgery on the prescribed date.
Her medical expenses for the cataract surgery were Rs 35,000. She believed that her company’s corporate health insurance plan would cover all her expenses. However, the insurance policy had specified a capping amount of Rs 25,000 for cataract-related surgery. So, the insurer only paid Rs 25,000 and Shivani had to pay the additional Rs 10,000 herself.