Capped expenses in group health plans
In a group health insurance plan, an insurer can apply caps on certain expense heads. Capping refers to the maximum amount or the limit that the insured can avail for a specific head under a group health insurance plan. If the capped expenses under one of the heads exceeds under a group health plan, then the insured person has to pay the excess.
The policy document of the group health insurance policy specifies capping limits. Some of the capped expenses in group health insurance plans include the following.
Usually, most corporate health insurance providers cap room rent at 1% of the sum insured per day. However, this cap can also range from 2% to 5%. In some situations, it may also be a fixed amount per day. Let’s say, the cap is Rs 5,000 per day and the expense that the insured incurs as room rent is Rs 7,000 per day. Then, the insured will have to pay the additional Rs 2,000 per day. In many cases, the insurer will also reduce other expenses pro-rata, in line with the room-rent cap. Therefore, this is one of the most important features to consider in a group health insurance policy.
Most group mediclaim providers put the cap on ICU charges at a multiple of the basic room cap; typically, twice the room cap. So, if your room rent cap is 1%, then the ICU cap will be 2% of the sum assured per day. Some might even specify a fixed amount in the policy document. The insured person will have to bear any expense above this limit.
The cap here may vary from one insurer to another. The capping amount could be based on ambulance charges per hospitalisation or ambulance charges for a fixed number of visits. Or some insurers might put a cap on the amount that can be availed in the form of ambulance charges in a year. A typical cap ranges between Rs 1,000 to Rs 3,000 per trip. This became a significant issue in Delhi during the pandemic as ambulances began charging over Rs 10,000. As a result, the state government had to step in and fix a ceiling for the charges.
The advantage of group health insurance is that maternity costs are covered without any waiting period if the organisation opts for this feature. However, almost every insurer specifies a fixed amount for maternity benefits, and the policyholder has to bear any expenditure exceeding this sum. Typically, in a metro, this will be between Rs 50,000 and Rs 75,000. In smaller locations, this could be Rs 20,000 to Rs 50,000.
Many group health insurance companies can provide a daily hospital allowance for the person accompanying an insured child. Such daily expenses are also capped. The insured person has to bear any additional daily charges incurred.
Certain medical procedures
Insurers also place a cap on the amount that the insured can claim on hospitalisation for certain ailments, like cataract. Usually, the insurer fixes the cap on the basis of the sum insured. However, they could also specify a fixed value for certain ailments. In the same fashion, another common cap is on robotic surgeries or bariatric procedures.
This is not an exhaustive list as there are other expenses as well on which a group health insurance company can put a cap. It is necessary to know what is included in a group health insurance policy. Similarly, it is important to know these caps to anticipate and prepare for expenses that you might have to bear.
Additional Read: What is deductible under employee group insurance policy
Case study: Caps on specific treatments
Shivani is an employee of a manufacturing firm. She has been working with the firm for the past three years. She is insured under a group health insurance plan.
In 2016, Shivani’s left eye began itching continuously. Her vision deteriorated and her eyes started watering. She went to an ophthalmologist for a check-up. The doctor prescribed treatment for conjunctivitis, but also noticed that she had developed a cataract in her left eye. The doctor advised cataract surgery as well.
Shivani underwent the surgery on the scheduled date. Her medical expenses totalled Rs 35,000. She thought her group health insurance would cover the cost. However, the insurer had a cap of Rs 25,000 on cataract surgery. Thus, the insurer only paid Rs 25,000 and Shivani had to pay the remaining Rs 10,000.