Most insurance providers offer similar coverage for their health insurance plans. They cover pre and post-hospitalisation expenses, cashless health insurance facilities, access to network hospitals, ambulance charges, costs of daycare operations, personal accident insurance cover, and more. While most inclusions are common, there are some inclusions and exclusions that may vary from insurer to insurer. One such health insurance component to watch out for is the room rent limit.
Here’s everything you need to know about room rent capping in health insurance.
What is the room rent limit?
The room rent limit is the amount of compensation you can claim for hospital room charges if and when admitted. When you get admitted to a hospital, the final bill comprises charges for all the services that were availed, including the room rent. Now, depending on the particulars of your health insurance plan, there can be a capping on the room rent. Such capping on certain components of insurance is known as a sub-limit.
This is irrespective of whether or not you have cashless health insurance. If your room rent is higher than the room-rent sub-limit, you will have to pay the extra amount out of your pocket. The excess amount will not be settled by the insurer.
This capping on room rent could be in the form of a percentage amount of the sum assured or an exact amount for your everyday stay at the hospital. Let us use an example for better understanding:
Suppose ABC buys a health insurance plan that offers room up to the charge of Rs 15,000. And, XYZ buys a health insurance policy that has a sum assured of Rs 500,000 and the room rent limit is set up to 3% of the sum assured. This means XYZ is entitled to a room rent of Rs 15,000.
The claim settlement of your health insurance policy depends on the room rent you opt for. Other than the rent, the doctor’s fee and other charges are related to the room rent.
Types of room rent capping
There are primarily four types of room rent features under a general health insurance policy:
- Room rent without any sub-limits: This is one of the most sought-after features of a health insurance policy. Here, the insurer puts no capping on the room rent. You are free to choose the kind of room you want whether it is a general ward or a private room.
- Room rent with co-payments: In this type of arrangement, the insurance company puts a cap on the room rent. If you opt to get a room with a higher rent than the one mentioned by the insurer, then the additional room rent charges have to be borne by you.
- Room rent without sub-limits as an add-on cover: One can buy an add-on cover offering the benefit of no sub-limit for room rent. If your health insurance policy does not offer the benefit of a no-sub limit on room rent, you can buy an add-on cover offering the same by paying a small additional premium.
- Room rent with specified rooms: Some health insurance providers specifically outline the kind of rooms covered by them. It could be a private suite or a twin-sharing room. You must opt for the room outlined in the policy document for coverage.
What happens if you exceed the room rent cap limit?
If you exceed the room rent sub-limit, you will have to pay the additional amount out of your pocket. But, how much? Now, that needs a deeper understanding of how additional charges are calculated.
While calculating your claim settlement amount, your insurer first considers the offered and chosen room rents. If you stay in a room with a higher or lower rent as mentioned in the policy document, your claim settlement amount will increase or decrease accordingly. If your room rent is more than the capped amount, the cost of covering other components such as the doctor’s fee or that of the treatment will also vary.
Here’s an example:
Suppose Mr Roshan has a cashless health insurance policy of Rs 5,00,000 with room rent capping of 1% of the assured sum. Now, he must undergo surgery that demands hospitalisation for five days. Accordingly, his room rent limit will be Rs 5,000 per day. However, he chooses to go for a room costing Rs 8,000 per day.
According to Mr Roshan’s calculation, the policy will cover Rs 5,000 per day and he will have to pay an additional amount of Rs 3,000 for each day in the hospital. It means Rs 15,000 for five days of hospitalisation. Let’s say, his total bill is Rs 300,000, which is under the ambit of the sum insured. So, apart from the additional Rs 15,000 for room rent, the remaining amount of Rs 245,000 will be fully covered.
However, this is not how the insurer does the calculation. In case of such exceeding room rent or any other sub-limits (if applicable), the calculations are done based on proportional deductions, which are calculated as:
Proportionate Deductions = (Room Rent Allowed/Actual Room Rent) x 100
= (25,000/40,000) x 100
= 62.5
Following this formula, the proportionate deduction is 62.5%. It means the coverage for other components such as the surgery cost and the doctor’s visits will be 62.5% and not 100% of the costs. This will substantially reduce the claim amount. Thus, Mr Roshan will have to bear the remaining 37.5% of the variable costs of the total bill from his pocket and not just the absolute value of Rs 15,000.
Your health insurance policy may have a high sum assured and come with features such as cashless health insurance benefits, personal accident insurance, and a wide range of inclusions. But, check if it has any sub-limits. It is always better to opt for plans that do not have a sub-limit on the room rent.