Capped Benefits: Know the Pitfalls and Dangers!


With most insurance plans, there will always be marketing materials such as brochures or a table of benefits that explains the benefits of that particular plan. While this may give you a bird’s eye view of your plan, this is NOT the official policy wording of your policy and you might be surprised to find out that the benefits you thought you had are in fact capped at a lower benefit amount! But why?

In this blog we are going to explore the concept of capped benefits, what they are, and how to spot them so you know what your insurance plan does – and doesn’t – cover.

What Are Capped Benefits?

Health insurance plans may have limitations on benefits, regardless of the overall coverage on your policy. These limits, also known as capped benefits, reduce your coverage by either:

  1. Putting a maximum dollar amount on a certain benefit (i.e., hospitalization is covered up to $600/day)
  2. Putting a maximum number of days a benefit is covered (i.e., medicine is covered for 30 days)

In both examples, you could have an insurance plan that covers you up to $500,000, but you would be stuck with a large bill since your policy would stop paying after a certain dollar amount or after a certain period of time.

Example 1. Let’s explore the first scenario where hospitalization is covered up to $600 per day. Hospitalization in the US can cost thousands of dollars every day that you are in the hospital, so if you have an insurance plan that covers only $600 each day, you’d have to pay the remainder of your bill out of pocket.

Example 2. Now, let’s explore the second scenario where you have a condition that requires you to take medication daily. In this scenario, your insurance plan would cover your medication for the first 30 days, but after you would have to pay the full cost of your prescriptions. This may break the bank as some prescriptions can cost hundreds or even thousands of dollars.

In either example, however, it’s important to know how your plan works so that you can budget appropriately! Many international students look for the most affordable plan, but these plans can have these capped benefits. If you need to use the plan, you may find that it wasn’t very economical after all -especially after paying for both the insurance and the portion of the medical bills not covered. Typically, if you pay a little more, you can find a plan without these caps.

But how do you know if your plan has capped benefits?

How To Spot Capped Benefits

As you can imagine, capped benefits can increase the amount you pay out of pocket, and with some insurance plans these limits are hidden! Oftentimes insurance companies provide a summary of benefits in an easy-to-read table that details what is covered on your plan, and they might have a great brochure that summarizes coverage. It’s important that you know that this is NOT the policy wording, and that there may be key pieces of information that isn’t explained in the table or marketing material.

While many insurance companies include this information in their materials so that the consumer knows what they are buying – not all companies do this! To prevent any unwanted surprises, along with large medical bills, it’s important that BEFORE you purchase the plan you ask the insurance company for your policy wording. There are many ways to refer to this document but the most common are:

  • Master Policy
  • Description of Coverage
  • Certificate of Coverage
  • Policy Wording

While this document may seem lengthy and a bit daunting (yes, it really does look and read like a contract!), it’s important to read through the benefit descriptions to make sure you understand how the benefits are applied. After all, this is the document that the insurance company uses to process your claims.

To learn more about other out of pocket expenses that may come up on your insurance plan, read our Understanding Out of Pocket Expenses article.

Posted by Jennifer Frankel

Jennifer is the International Director at International Student Insurance. Jennifer is a graduate of the University of Florida where she holds a Masters in International Business and a Bachelors of Science in Business Administration. She has lived and worked abroad in Mexico, Chile, Costa Rica and England, and traveled extensively in South America, Europe and Asia.

2 thoughts on “Capped Benefits: Know the Pitfalls and Dangers!”

David Wilson says:

Hi Jennifer,

Thankyou for your post. I am going to read all the recent posts now as I am finding the US INSURANCE process and terminology quite daunting.
We live in Australia and we all have the impression here that everybody sues everybody in the states, hospital and medical cost are over the top and if you’ve got the top insurance, you still got to pay out of pocket.
Jennifer, my daughter has got a 4 year soccer scholarship with a College in Indiana (Its a NCAA member school). The College provides a “secondary insurance” but I don’t really understand what it covers but they have requested we get “primary insurance” (new terminology to me). I obviously want to get the best possible cover for my daughter without breaking the bank but I don’t want to skimp on costs either.

Could you assist as I have a number of questions:

1.Do I get “travel” , “medical ” or “hospital cover?
2.Do I get all or a combination of 2 of them?
3.The school period is from 5th August 15 to 5th July 16.
4.Is she covered when she travels inside and outside of the US during that time?
5.What insurance do I buy when she stays in the States after 5th July?
That isn’t an entire list but a start.

So far your Company has the best options. I was interested in the “Select and Budget” but the “Elite” is the only one that has “Personal Liability” ( I am still worried about the suing mentality of you guys”

Could you provide some comment to assist me in deciding the best option for her please. There is 14 hours time difference between here and Indiana. 14 hours behind that is.

Kind Regards

David Wilson

Hi David,

Thanks for your comment and I hope to ease your fears.

First things first. You should contact the company that offers your daughter’s secondary plan to verify exactly what is covered and how it would interact if you were to purchase a second plan. Specifically, it’s important to understand her sports coverage – if this is something covered by the plan. This will help you make a more informed decision when choosing an accompanying plan. I would like to note, however, that the plans that are offered on our site (including the Student Secure – Select, Budget and Elite levels) will be seen as secondary insurance plans, not primary.

1.There are a variety of plans offered in the US, so this section of our website can be extremely useful:
2. You are able to have more than one insurance plan, but it’s important to know how they will interact with each other.
4. On the Student Secure plan, your daughter will be eligible as long as her J1 or F1 visa remains valid. It will provide coverage across the US, as well as anywhere outside of her home country.
5. It is best to purchase one plan and keep it for as long as possible in most instances. If you decide on our Student Secure plan she can have coverage after July 5th, again presuming that her visa remains valid.

If you have additional questions, please give us a call at (877) 758-4391 or send us an email at Have a great day!

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