I had a bug bite 8 months back on my left arm near the elbow, it's become hard lump now. Doctor earlier said its an epidermoid cyst and asked to obser?

Bug Bite Lump. It probably is a lumpy scar called Keloid or a benign skin tumor called Dermatofibroma. Cysts in general are soft and compressible. See a Dermatologist. It can be easily taken care of.