Definition - What does Unallocated Benefit mean?
An unallocated benefit is a benefit that is not specified on a health insurance policy, yet the policy may cover it up to a certain amount. Unallocated benefits usually refer to coverage for miscellaneous costs during a hospital stay. Coverage for these micscellaneous costs is grouped under the name, "unallocated benefits" in order to prevent each one from having to be named individually on the policy.
Insuranceopedia explains Unallocated Benefit
When a health insurance policyholder is having a stay at a hospital, a number of expenses can accumulate. For example, the cost of an IV, of a medication, of a lab test, etc. These are examples of things that are frequently covered by unallocated benefits.
Grouping these various costs together saves the insurance company a lot of time and resources because it prevents it from having to examine each individual expense. Instead, it just ends up reimbursing the person for a certain amount of the total cost for the various expenses.