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4 reasons why your health policy may not cover all your medical bills

Bavadharini KS BL Research Bureau | Updated on June 19, 2021

Terms and conditions that don’t catch the eye in the policy document could come into play at the time of claim settlement


Covid-19 has been a wake-up call for many to include health and life insurance in their basic financial plan. It has also brought to light the many problems that policyholders face, particularly with a health insurance policy, at the time of claim.

In a recent survey conducted by BusinessLine Portfolio on the impact of the pandemic on personal finances, quite a few participants reported receiving much less as claim amount than what was spent, particularly during Covid hospitalisation. This could be due to a few terms and conditions buried in the policy document, such as co-payment clause, sub-limit, waiting period and coverage exclusions. The Annual Report of the Insurance Ombudsman, 2019-20, states that lack of clarity in some of these clauses in the policy is one reason for policyholder grievance regarding claims.

Here, we explain why there could be a gap in the actual health claim amount received and the amount spent on medical expenses, or why at times no amount is offered as claim, to help you make an informed decision while buying health insurance.


While health insurance policies typically cover the entire period of hospitalisation, there are a few clauses that, when applicable, limit the insurer’s settlement.

A key factor is the location of policy purchase and location of hospitalisation. Medical expenses in metro cities (Tier-1) like Mumbai are higher than in Tier-2 or Tier-3 cities such as Coimbatore or Gurugram, hence you find differences in your claim too.

So, if you have purchased a policy in Coimbatore and get hospitalised in Mumbai, then your claim amount would be lower than the medical expenses you incurred because of the co-pay clause. Let’s understand this with an example. In Max Bupa’s GoActive health policy, an individual paying premium in Zone I (includes cities such as Mumbai and Delhi) can avail treatment all over India without any co-pay.

But for a person paying premium in Zone II cities (such as Bengaluru, Chennai, Hyderabad and Pune), 20 per cent co-pay is applicable to avail treatment in Zone I hospitals. However, there is no co-pay if he/she takes treatment in Zone II or Zone III cities. That is, if you have taken a policy with cover of ₹10 lakh in Pune and avail treatment in Mumbai, then 80 per cent will be paid by the insurer. You will have to take care of the remaining 20 per cent. The zone classification varies with health policies, and insurers.

You can upgrade your zone in health policy at the time of purchase only (for additional premium) if you want to avoid unnecessary hassles at the time of claim. Alternatively, there are health policies in the market that have removed the zone-wise co-pay. You could go for them if you don’t mind the extra premium.

Room rent limits

Some health policies cover hospitalisation expenses based on the sub-limits on room rent mentioned in the policy. If you exceed this room rent limit, the entire hospitalisation expenses are charged proportionately, thereby reducing the claim. That is, the insurers will settle your final claim only on a proportionate basis, since, based on the room you occupy, the billing of other expenses, including consultation fees, nursing, and other amenities, also increases.

Let’s consider Joe, a 30-year old individual with ₹10 lakh sum insured (SI). His health policy has a room rent limit of ₹5,000 per day. Upon admission, the hospital offers him a room for ₹6,000 per day. So Joe will get only ₹5,000 per day from his health insurer and the balance ₹1,000 has to be borne by him. If the final bill comes to ₹9 lakh, the insurer will settle only ₹8.33 lakh (in the ratio of room rent eligible-to-actual room rent)

However, many health policies have done away with room rent limit. Tata AIG Medicare Premier, ICICI Lombard Complete Health Insurance, Max Bupa ReAssure and Apollo Munich Optima Restore, for example, have no cap on room rent.

While there are no explicit room rent limits, they still exist in some form. For instance, in Aditya Birla Health Insurance’s Active Health policy, there is no cap on room rent under the Platinum Premiere variant of the plan. But if you consider any other variant of the same policy, up to SI of ₹3 lakh, one is eligible for shared room or single private room while for an SI of over and above ₹4 lakh, one can have any room.

However, to standardise the claim settlement process, the insurance regulator IRDAI has established that the associate medical expenses — the cost of pharmacy, consumables, implants, medical devices and diagnostics — cannot be subject to proportionate clause. Insurers are not allowed to charge proportionately on the ICU as well. This means, the actual costs, if they fall within the coverage of health policy, should be paid by the insurer, irrespective of whether the policy has a cap on room rent.


There are chances for your claim amount to be lower (than your medical expenses) if you are above a certain age. In other words, a few policies offered by some insurers have a co-pay clause for policyholders aged 60 years and above. For instance, Care’s health plan for family and individuals has a co-pay of 20 per cent per claim where insured or the eldest member is 61 years or above. However, you can circumvent the co-pay clause with the payment of additional premium — if you don’t want to foot a portion of the bill at the time of claim, especially considering the age.

Other sub-limits

There are sub-limits specific to coverages in the policy such as maternity, ambulance and OPD cover. In these cases, the claims will be settled only up to the limit mentioned and not in full.

There are caps on home treatment expenses. Under domiciliary hospitalisation, the insured gets treatment at home due to non-availability of room in a hospital or when the insured is unable to be taken to the hospital. Most health policies launched in the past year cover home treatments up to the SI, provided treatment continues for three consecutive days, which has come in handy for Covid-19 affected patients. However, there are a few policies that cover treatment at home up to 10 or 20 per cent of SI only. For instance, in Liberty General Insurance’s Connect health policies, domiciliary hospitalisation covers up to 10 per cent of SI.

OPD cover also comes with certain limits. For instance, in Aditya Birla Health insurance’s Activ Health policy (platinum enhanced) OPD cover is available for SI of ₹15 lakh and above for ₹1,000 per policy year. OPD consultations usually cover expenses including diagnostic and preventive tests, prosthetics, physiotherapy, pharmacy expenses and dental treatments. Recently, many insurers have offered to cover telemedicine too as part of OPD. But the scope of this coverage varies with the insurer.

Other covers including ambulance cover, hospital cash and modern treatment (includes treatment such as robotics surgery and stem cell therapy) too have limits.

When a health policy may not cover you at all

Though certain terms and conditions in your health policy prevent full settlement of your medical bills, you still get a portion of the money spent. But there are times when your policy won’t pay at all. Here’s listing them

Waiting period

There are three waiting periods in a health policy before the policy starts covering you — the initial waiting period is 30 days, the pre-existing disease waiting period ranges from two to four years and the disease-specific waiting period ranges from one to four years. Covid-specific health policies Corona Kavach and Corona Rakshak have a 15-day waiting period. Maternity coverage too has a waiting period, usually between 24 and 48 months. If you opt for a critical illness cover as an add-on or go for a critical illness policy, you face a waiting period of 90-180 days.

Do note that, upon payment of additional premium, you get to reduce the pre-existing disease or disease-specific waiting period. For instance, policyholders can opt to reduce maternity waiting period in Pro Health policy of Manipal Cigna from 48 months to 24 months.

Survival period

It applies to critical/terminal illnesses. It is basically a time frame where the insured must survive for a minimum time period after the diagnosis. The survival period varies from seven to 30 days, amongst insurers. As critical illness policies or riders are benefit policy where the policyholder receives a lump sum amount upon the diagnosis, the benefit is payable only if the insured survives the term mentioned in the policy. For instance, for Bajaj Allianz General’s CI policy, the survival period is 30 days.

Critical illness coverage

Another important point to note while buying a health policy is that it covers only a list of critical illnesses, though the list varies with insurers. The number of covered illnesses varies between 20 and 65 diseases among insurers. While major critical diseases are covered by most of the insurers, take care to note that not all stages of illnesses are given coverage. For instance, in case of cancer, only the first occurrence is covered. When it comes to this illness, it recurs most of the time, leaving the patient to fend for himself/herself.

Other exclusions

Certain expenses: Non-medical expenses such as baby food, laundry charges, diabetic footwear, arm sling and diaper of any type are not covered. Each health policy will have an annexure listing which lists out the expenses that are not covered by the policy. Similarly, expenses related to weight reduction, change of gender treatments or plastic or cosmetic surgery, excepting in cases of accident, burns or part of cancer treatment, will not be covered unless otherwise stated by medical experts to be of health risk to the insured.

Occupation: Expenses related to any treatment necessitated due to participation in hazardous or adventure sports, such as para-jumping, rock climbing, rafting, motor racing, scuba diving, and sky diving will not be covered by health policies. Apart from this, suicide or intentional injuries are not covered, along with expenses related to unproven treatments, infertility and sterility.

Published on June 19, 2021

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