DEFINITION of 'Unallocated Benefit'

A provision available in health insurance policies, where the insurer covers extra miscellaneous hospital expenses up to a predetermined maximum amount, instead of specifying a maximum payment for each individual type of expense. An unallocated benefit reimburses policy holders for extra hospital expenses, such as the costs of anesthesia, X-rays, lab tests, medications and supplies, all of which may be provided without entirely conforming to a schedule.

BREAKING DOWN 'Unallocated Benefit'

A health insurance policy's schedule of benefits lays out which services the policy covers, how much the policy will pay toward the cost of those services and how much the policyholder is expected to contribute. It also states the policyholder's annual deductible, annual out-of-pocket maximum and lifetime maximum, and shows the difference in benefit amounts, if a medical service is acquired from an out-of-network provider, rather than an in-network provider.

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