Home / Money / Personal Finance /  To avoid last-minute surprises, be mindful of room rent limit in health insurance

Before buying a health insurance policy, make sure that you understand how the room rent limit works as it may reduce your claim substantially.

Say, a policyholder’s daily room rent limit is 2,000 per day, but he gets admitted to a room that costs 4,000 a day. In such a case, the insurance policy will only pay 50% of the claimed amount. Insurance companies are well within their rights to reduce the claim on a “pro rata" basis.

ROOM RENT LIMITS

The limit imposed on the coverage of boarding expenses or room rent of the hospital is called the room rent limit. Health insurance policies, typically, cap room rent in the range of 1-2% of the sum insured. So if your sum insured is 2 lakh and the room rent is 1%, you will be eligible to take a room that costs 2,000 a day. In some cases, the room rent limit is an absolute amount.

All the costs that a hospital charges you are linked to the room rent. As your room rent changes, so does the cost of treatment. For example, for a room that costs 4,000, if the doctor consultation fee is 1,000, it would be 600-700 for a room with a rent of 2,000. Similarly, all other charges, including for medicines, tests and surgery, will be more for the room with the higher room rent.

IMPACT on CLAIMS

If you are eligible for a 2,000 room but opt for the 4,000 one, the insurer will settle the claim partially. The insurer doesn’t compare the costs of each charge in two different rooms but will reduce the total bill on a pro-rata basis. So if you are eligible for a room that costs 1,000, but opt for a room that costs 2,000, 3,000 or 4,000, your claim will be reduced to 50%, 33% and 25%, respectively, of the total bill.

know the rules

While as a policyholder, you may feel that there is only a marginal difference in the costs of medicine or tests for different room categories, insurers are well within their rights to reduce the claim amount. This is one way for the insurers to ensure that hospitals don’t overcharge a customer.

Since hospitals impose their charges based on room selection, insurance companies pay a proportionate claim for expensive rooms. It is the responsibility of the policyholder to understand the terms and conditions if their policies cap the room rent.

WHAT YOU SHOULD DO

Typically, policies with a higher sum insured— 5 lakh or more—don’t have a room rent limit. If you are taking an individual policy, ideally opt for a 10 lakh cover. In case of family floater, take a cover of 15 lakh. In any case, when you buy a policy do read the documents carefully to ensure the room rent is not capped.

In case you are taking a policy with a lower sum insured, check how the sub-limits and the co-payment clause will affect your claim. Don’t forget to check what all the policy covers by looking at the exclusions carefully.

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