Many people are often caught off-guard when they find ‘Out-of-pocket’ expenses despite having a health insurance plan. Out-of-pocket expenses in health insurance refer to costs that the insured is responsible for paying and that may or may not be reimbursed later. Though your policy insures you against medical expenses, it is important to understand that it may not necessarily eliminate all out-of-pocket costs.
Most health insurance policies have exclusions, deductibles, co-payments, and coverage limits that could result in out-of-pocket expenses. Understanding these potential expenses can prevent unpleasant surprises during an already stressful time.
Here’s what you should check in your health plan regarding these extra costs:
Exclusions: These are specific conditions or treatments that the insurance policy does not cover, which means that any costs associated with these will have to be paid out-of-pocket. Moreover, many policies come with exclusions for services that aren’t directly related to medical care such as admission fees or non-essential items used during a hospital stay.
Says Mahavir Chopra, the founder of Beshak.org, an insurtech platform, “It is important for customers to clarify from the policy wordings whether the insurer excludes any such non-medical items, which should otherwise be part of the essential services provided by a hospital.”
This means reading and understanding the fine print in your policy is crucial to avoid surprises.
Deductibles: This is a kind of top-up people choose in their policy, referring to the amount that the policyholder must pay before the insurance coverage kicks in.
Co-payments: A little like deductibles, this refers to the percentage of the treatment costs that the policyholder has to bear as per policy terms.
Coverage limit: This refers to the cap on the amount the insurance will pay for specific treatments or services. If the treatment costs go above this limit, the policyholder will have to pay the amount themselves.
Sub-limits: Many health insurance policies have sub-limits on certain expenses like room rent, ambulance charges, common medical procedures, doctor’s consultation fees, etc., which means that if the actual costs exceed these limits, the policyholder will need to cover the difference.
Sub-limits also extend to certain modern medical procedures. For example, if an insurer deems a costly treatment like robotic surgery unnecessary, they may only cover the cost equivalent to a standard procedure, leaving the policyholder responsible for the balance.
Consumables Charges: Policyholders are usually unaware that some portion of their hospital bill goes towards non-medical items that may not be covered in their health plan. Even in-network hospitals might bill patients directly for certain items, such as consumables (e.g., syringes, gloves, etc.) that are typically not covered by insurance.
However, there’s a way to avoid paying for these expenses out of your pocket. Many insurers offer an optional rider or add-on for consumables with the health insurance policy. Opting for the same can guard you against hefty hospital bills after discharge.
Adds Chopra, “Many insurance policies include a 'reasonable and customary charge' clause, which protects the insurer from overcharging by hospitals.” This means the insurer will only pay what is deemed a reasonable charge for a hospital of the same grade and locality. He emphasises that customers should not take the promise of 100 per cent payment at face value; instead, they should act prudently by comparing or verifying the hospital's charges with those of other hospitals.
“Consumers must recognise that while insurers may intend to cover 100 per cent of hospital bills under certain plans, this does not absolve them from the responsibility of making informed decisions when selecting treatments or hospitals,” Chopra advises.
