Why is it important to check the exclusions and sub-limits in health insurance plan?

The purpose of insurance is to provide cover to the insured against an eventuality and provide compensation for the damage that they ultimately cause. These eventualities vary in both nature and scope. That is why there are different categories of insurance based on these eventualities. There is insurance available to secure oneself in the event of any harm caused to one’s body (health and medical insurance), property (property insurance), car or motorcycle (motor insurance) etc.

In this blog, Student Cover tries to explain why it is important to check the exclusions and sub-limits in health insurance plans. International students going abroad to countries like the US should also check for exclusions and sub-limits mentioned the student health insurance plans that they purchase or get enrolled in, in the US.

What are the different types of exclusions?

However, having insurance does not mean that the insurance provider would provide cover against all eventualities. For example, a health insurance that compensates an insured person for a fractured leg may not do so if he/she suffers from cancer. The nature of exclusion can be of 4 types – Categorical exclusion, Permanent exclusion, conditional exclusion and time-based exclusion.

CATEGORICAL EXCLUSIONS– The categorical exclusion includes compensation for those eventualities that do not fall under the purview of the plan. For example, dental insurance or vision insurance, despite being a sub-set of health insurance would not cover for illnesses related to say kidney or liver. It is somewhat similar to property insurance not compensating the insured for the theft of vehicle as it falls under a different category of insurance i.e. motor insurance.

PERMANENT EXCLUSIONS – These are exclusions in health coverage that an insurance provider would not cover irrespective of the nature of the eventuality. For example, a health insurance plan that does not have provision for compensation for death caused due to suicide would not compensate the nominee if it is proved that the insured has committed suicide.

TIME BASED EXCLUSIONS – Certain exclusions such as critical illness or kidney stone etc. remain exclusions but only for a certain period of time i.e. 90 days, 2 years etc. These time-based exclusions are to ensure that the insured is not using health insurance to get free treatment for any pre-existing disease or illness.

Note: In US, Student Cover health insurance plans, such as SC Elite and SC Plus, for international students are ACA comparable. Hence, they provide cover against pre-existing diseases as well.*

CONDITIONAL EXCLUSIONS – Conditional exclusions include treatment for those eventualities which normally do not get covered by the insurance plan. For example, a treatment for eye or tooth which does not normally get covered by general health insurance gets covered if it is undertaken due to accident or injury to the two body parts. Similarly, certain other diseases not normally covered by the plan also get covered in the event of medical emergency.

What are sub-limits?

While exclusions exclude the benefit that an insured person may receive on a particular eventuality, sub-limits put a cap on the extent to which the insurance provider would provide the benefit.

In other words, a health insurance of sum insured say, $ 100,000 per year may pay for treatment cost of only $50,000 per event (treatment). It means that a person, through eligible for expenditure up to $100,000 per year can claim it if he or she undergoes two treatments in a year.

Some health insurance plans have cap specific to a disease. For example, in Student Cover Elite plan, the treatment for natural tooth in case of accident or injury may not exceed $250 per natural tooth and a total of $ 1,000 for such treatment in a policy year.

Why it is important to check the exclusions and sub-limits?

1. To avoid financial shock – The most common mistake that people with health insurance make while going for treatment is that they take coverage to be universal for granted without properly going through the policy document. This could lead to shock and severe financial difficulty if during the time of claim it is found that the treatment for a particular disease was not covered by the health plan.

2. To prepare oneself for treatment – While some illnesses are critical in nature and require immediate treatment, others such as gallbladder or kidney stones are not so severe. A person can carry out his or her daily work without facing severe and life threatening complications. Going through time-based exclusions can help a person take the health insurance quite early, sit through the waiting period, and then undergo treatment when the plan starts covering the illness.

3. To avoid extravagance – This is important in case of sub-limits. The cost of treatment varies depending on the hospital or medical institutions. And while health insurance pays for treatment and treatment related expenditure, it does not pay for any extravagant expenditure. For example, if a person’s health insurance covers standard room rent in a general ward while he or she recuperates after a surgery, the insurance plan would not pay the cost of a single room or a villa taken by the insured for the same.

4. To file insurance claim properly – At times, ignorance of exclusions such as OPD treatment (if the plan excludes OPD expenses) may lead to insured seeking claim on OPD expenditure such as
X-ray, blood test done without the insured getting admitted in the hospital. This claim would get rejected by the health insurance.

5. To save money on premium – Some health insurance plans give option to the buyers to add certain exclusions and compartmentalizing compensation into specific groups in return for lower annual premium. Knowledge of such exclusions and sub-limits can help save money.

Let’s Wrap Up!

Health insurance plans have exclusions and sub-limits that either exclude or limit the coverage for a particular plan. The exclusions can be based on the category, time-based, permanent or conditional. Sub-limit puts a cap on the amount that a health insurance plan would pay for a particular treatment and related service. Knowing exclusions and sub-limits helps the insured not only prevent financial shock but also prepare for treatment and save money.

Disclaimer: The content of the following blog is based on the personal research of the writer. Readers are advised to exercise discretion and read the terms and conditions carefully while purchasing any health insurance policy. Student Cover will not be liable for any wrongful interpretation of the content of this article.

*Conditions Apply

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