Defining Room Rent & ICU limits In Group Health Insurance
When buying a group health insurance policy, apart from the sum insured, there are other aspects too that an employer must consider. One of the important aspects to consider before making a purchase decision is to check the room rent & ICU limits in group health insurance. Both of these can increase your employee’s out-of-pocket expenses despite them being a part of your organization’s group health insurance policy.Read more
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Understanding Room Rent & ICU Limit in Group Health Insurance
As the term suggests, the limit on room rent and ICU is the capping or limit imposed on the coverage of the room occupied by the insured. When an employee gets admitted to the hospital, there are various categories of rooms for him to choose from at different rates. When the employer offers a group health insurance plan, it usually mentions the limit on room rent and ICU an employee can select in the hospital. The room rent & ICU limit in group health insurance is typically calculated as a percentage of the sum insured and are applicable on a per-day basis. The room rent & ICU limits are considered a sub-limit in insurance, that is, an extra limit imposed on a policy.
Let us consider the below example:
Akshay works for a company that offers group health insurance with a sub-limit on room rent and ICU limit. When Akshay got admitted to a hospital for four days, he decided to engage a room that costs Rs 5,000 per day. His group insurance provides him sum insured of Rs 3 lakhs. The room rent limit on this policy is applicable at 1%. Hence, the room rent limit is thus calculated as Rs 3,000 per day (3,00,000 x 1%) and Rs 12,000 for four days. Due to the room rent limit clause, the insurer is liable to pay up to the limit of Rs 12,000. The additional expenses on room rent (the difference of Rs 8,000) must be borne by Akshay.
Choosing the Right Room Rent & ICU Limits for a Group Health Insurance Policy
Selecting an adequate room rent and ICU limit under a group insurance plan is vital as it determines the deduction for other costs incurred during hospitalization. An inadequate room rent limit is one of the major reasons for claims getting settled at a lower amount. There are primarily two factors that need to be considered while choosing the right limits.
Room rents of the network of hospitals chosen
The employer must know the average room rent in the network of hospitals chosen. The type of hospital, whether Tier 1 or Tier 2 will attract different room rents. Similarly, the locality or the area of the hospital also matters to identify the room rent. The employer should then select the appropriate limit.
Sum insured of the insurance policy
As mentioned in the example above, the sum insured plays a significant role in calculating room rent limits. For instance, Rs 3,00,000 sum insured with a 1% limit will have a daily room rent limit of Rs 3,000 and a Rs 5,00,000 sum insured at the same rate will attract a room rent limit of Rs 5,000.
Hence, the employer must consider these two factors before selecting a room rent limit. Additionally, there is an option of choosing a no-capping room rent in group health insurance.
Buying a group insurance plan with comprehensive coverage is the key so your employees are never underinsured. Hence, as an employer, you should always choose a plan with either no limit on room rent or a higher room rent limit. Also, in any of the cases, the insured (employee) should be made well aware of the limitations in advance to avoid any disappointments.
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