How the limit of hospital room rent affects your insurance claim



  • In case of hospitalization, your insurance claim will be decided on the basis of rent charged for hospital rooms

It is very important to understand the limits on a hospital room rent approved in your health insurance policy since this will be one of the main reasons for insurers to decide on your claim. In case you opt for a hospital room (there are several types, including a general ward which you share with others, or a private room, or even a deluxe room, etc) that comes with a higher rent than the eligible amount, you will have to pay additional room rent for the number of days that you are hospitalized. Moreover, the insurer could also proportionately reduce other related expenses such as ICU (intensive care unit) charges or doctors’ fees when settlle the claim. This means that you may have to bear the differential amount, not just for the room rent butalso for associated hospital expenses.

Mayank Kale, founder and CEO of Loop Health, said, “The definition of room rent is the cost of the room per night, including nursing charges. Cap on room rent plays a big role in deciding the total amount an insurance company would pay for the treatment of a patient with a valid health insurance policy. The reason is that if one chooses a room of a higher rent than what is capped by the insurer, the increase in expenses due to the higher-priced room is also deemed unpayable by the insurance company."

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Room rent limit: Health insurance policies typically cap room rent at 1-2% of the sum insured. However, in some policies, the room rent is capped based on an absolute amount. For instance, if your sum insured is 5 lakh and the room rent cap is 1% of the sum insured, you can take a room in a hospital that costs 5,000 a day. If the room rent limit is an absolute amount, you will have to check the same in the policy document.

Vivek Narain, health insurance specialist, SANA Insurance Brokers Pvt. Ltd, said, “Room rent charges in health insurance means the expense incurred for boarding in a hospital for more than 24 hours due to medical reasons. Most health insurance policies typically have a ceiling limit or cap on the maximum amount of such expenses you can claim from the insurer. This room rent limit varies across plans and insurance companies."

Kale said, “This room rent limit applies to one particular period of hospitalization and does not affect your claim the next time you are hospitalized."

Proportionate deduction: The proportionate deduction clause in health insurance allows the insurer to deduct the proportionate amount in all associated treatment costs in the same ratio of room rent limit exceeded. For instance, an insurer might permit 4,000 as room rent for one day as per your policy. In case the patient takes a semi-deluxe room that costs 3,000, the rental cap does not apply. But if the patient decides to occupy a deluxe room for 5,000. which is beyond the policy cap, then the extra 1,000 will not be paid by the insurer. Besides, there will be a proportionate deduction of 25% on all expenses on account of a higher-priced room.

(Proportionate Deductions applied on other expenses = Excess of room rent paid/Actual room rent limit as per policy *100)

For example, for a deluxe room that costs 5,000, the doctor consultation fee could be 1,000 but the insurer will consider only 750 for claim settlement. Similarly, such deductions will apply to all other expenses, including medicines, tests and surgery, if the room rent is high.

Prolonged hospitalization: Often, patients ignore the room rent charges levied during hospitalization. In case the medical procedure demands a prolonged stay in the hospital, the room rent charges may compound to a substantial amount if you have opted for higher room rent than that approved in your policy. In such a case, you might have to shell out extra money from your pocket until you are discharged from the hospital.

For instance, Agra-based retired army officer Vijay Pandey recently got hospitalized for a knee replacement surgery. He was hospitalized for 3 days and chose a hospital room with a rent of 5,000 per day, against his insurance policy limit of 4,000 per day. He, however, miscalculated that the insurer would bear 5,000 per day, and that he would bear the difference in charges—of 1,000 per day for three days. However, this concept of room rent didn’t work as per Pandey’s calculation.

Pandey didn’t know that all the treatment costs were associated with the room rent charges. He wasn’t also aware that insurers apply the principle of proportionate deductions if the room rent limit was raised. Hence, he had to pay not just 3,000 extra for the three days of hospitalization but also an extra amount on account of the proportionate deduction of around 25% on overall expenses that increased due to a higher-priced room.

Mint Take

If you have a health insurance policy and are planning to get hospitalized for more than a day based on your medical condition, you should make sure that the cost of the room does not exceed the room rent limit. Besides, it would help if you also ask the hospital to disclose the room charges and nursing charges to know the actual room rent before the hospitalization.

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