A recent case highlights that a ₹25 lakh health insurance policy may still leave policyholders facing substantial out-of-pocket expenses due to deductions under ‘reasonable and customary’ charges, demonstrating that coverage limits do not guarantee full reimbursement.
A health cover of ₹25 lakh can still leave a policyholder facing a far larger out-of-pocket bill than expected, as one recent claim case shows. According to Business Today Bazaar, an insured person who received a hospital invoice of ₹12 lakh was paid only ₹5 lakh after multiple deductions, with the shortfall driven in part by the policy’s reasonable and customary charges clause. The episode is a reminder that the sum insured is only the ceiling on cover, not a guarantee that every rupee billed will be reimbursed.
The phrase reasonable and customary charges refers to what an insurer considers a normal price for a procedure, test or hospital service in a given market. Health insurance guides from the US Centers for Medicare & Medicaid Services and consumer health insurance references say similar concepts are used to set an allowed amount, which becomes the maximum the insurer will pay for a covered service. If a provider charges more, the patient may have to make up the difference, a practice commonly known as balance billing.
That framework helps explain why the same treatment can produce very different bills. Prices can vary by city, hospital, doctor experience, medical complexity, technology used and the quality of implants or consumables. In the claim highlighted by Business Today Bazaar, deductions included surgeon fees of ₹1,12,230, anaesthesia charges of ₹76,570 and a further ₹3.07 lakh trimmed after comparison with charges at other hospitals. Another ₹29,040 in consumables was excluded, along with an additional ₹9,500 deduction under the same clause.
Insurance specialists say policyholders should not assume a large cover will automatically translate into a full settlement. Other limits, including exclusions, room-rent caps, co-payments, deductibles and sub-limits, can reduce the payout further. Consumer resources also note that patients can sometimes challenge a low reimbursement by asking the insurer for the benchmark used, the amount it considered reasonable and the exact policy clause applied.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
