Health insurance terms and conditions can be difficult to understand (which is why you should check out our useful glossary of health insurance terms here). One term that you really need to get a handle on is the “benefit limitation period”. It’s not something that you want to discover when you go to make a claim.
What is a health insurance benefit limitation period?
A benefit limitation period is a period of time after taking out your health insurance policy where you will only be able to claim a restricted amount of benefit for nominated conditions. Generally, you will nominate the types of conditions and the amount of time you are willing to be restricted for; the reason for doing this is to negotiate a cheaper health insurance premium.
As an example, when shopping for a health insurance policy you might decide that having a hip replacement is something you are very unlikely to need in the near future. As such you might choose to have a two year benefit limitation period on hip replacement procedures in return for a lower health insurance premium. The downside, of course, is that if you do need a hip replacement during that period, you would expect some significant out of pocket expenses.
A word of caution: you need to check with your insurer as to whether the benefit limitation period would start as soon as you take out the health insurance policy, or whether the limitation period doesn’t commence until after the standard waiting period for that treatment.
For example, if your health insurance policy has a standard 1 year waiting period before you can claim for hip replacement, and you also nominate to have a 2 year benefit limitation period on hip replacement, you will need to ask your insurer whether the total period of time before full benefits would be payable for hip replacement is two years or three years.
The amount of time that a benefit limitation period applies for will vary depending on the health insurance policy and coverage level you choose, as will the amount you’ll be able to claim back on services that have a benefit limitation period. The good news is that once the benefit limitation period is finished, you’ll be entitled to the full benefit claimable via your policy for that treatment.