A person who thought his corporate health insurance had his family covered was hit with an unexpected reality during a medical emergency and ended up shelling out nearly Rs 2.7 lakh from his savings, money he had been saving for his wedding.
This claim story, shared by Pawan Kumar Rai, co-founder of Ditto Insurance on LinkedIn, has struck a nerve with many salaried professionals. As a user commented, “Corporate cover is like free WiFi, it feels great until it stops working when you need it most”—such ”a situation is not uncommon.
What was the case?
Person X’s father needed an urgent angioplasty. The hospital bill came to Rs 4.2 lakh. His employer-provided group health cover (short for GMC) which provided a total sum insured of Rs 3 lakh, and it included parental cover. But when the claim was processed, the insurer approved only Rs 1.5 lakh.
Here’s why that happened, and why you need to look beyond the overall sum insured in your corporate plan.
Disease-wise, Capping Can Shrink Your Coverage
The biggest hit came from an addition that sits in the majority of GMCs called “disease-wise capping.” This is a clause in many group insurance policies that puts a specific limit on how much can be claimed for certain treatments, regardless of your total sum insured. In this case, angioplasty had a cap of Rs 1.5 lakh and that is all the insurer paid, even though the overall policy was for Rs 3 lakh.
Many corporate plans follow this cost-containment approach by allocating smaller limits to common procedures like cataract surgery, joint replacements, or even chronic conditions like diabetes and hypertension. This is done so that the group covers can provide a wider set of conditions but the trade-off is lower payouts for each one.
Room Rent Limits - Another Clause You Must Check
Disease-wise, capping is not the only clause in your insurance that can reduce the payout at the time of claim. The second blow for Person X was the hospital room rent. Their policy had Rs 3,000 per day room rent limit for parents, but the family opted for Rs 7,000 room.
Because of this mismatch, the insurer applied what they call ‘proportionate deductions,’ which means that they won’t just reduce the room rent reimbursement but also cut down on other associated costs too, like doctor’s fees, nursing charges, ICU costs, and so on.
Insurers follow a logic here: if you chose a room that’s more expensive than what your policy allows, they assume all related charges would be inflated and reduce the payout across the board.
Room rent limits come in different types, such as fixed daily amounts (e.g., Rs 3,000 per day) or a percentage of your sum insured (e.g., 1 per cent of Rs 5 lakh = Rs 5,000 per day). Most basic corporate plans stick to the fixed type, which tends to be restrictive.
Co-pay Clause For Parents
Pawan also pointed out the co-pay clause in Person X’s policy which further reduced their claim settlement amount. “Because his father was a senior citizen, a 20 per cent co-pay applied to the entire bill,” he noted.
What Can You Do?
Corporate health policies are a good base layer of protection, but they are often designed with cost-sharing mechanisms to keep premiums low for employers. They rarely match the financial realities of serious medical emergencies, especially if you are covering ageing parents.
Here’s what financial advisors typically suggest: Don’t rely solely on your corporate health plan; it is better to have an individual or family floater plan, especially for your parents, while they are still young and eligible.
Moreover, it is even more important to read the fine print of your policies, even if they are GMC, to avoid such shocks when you are making a claim.
