Room Rent Limit in Health Insurance

What are Sub-limits?

Sub-limits refer to a specific percentage of the sum insured amount that the insurance company will bear for different hospital expenses. The bill amount is supposed to be paid by the policyholder. It is important to keep in mind that the sub-limit in health insurance does not apply to the whole bill amount. Surgery/operation charges, doctor’s fees, medicine cost, nursing expense, and room rent all have a sub-limit applied cap applied to it. For example, the sub-limit on room rent can be capped at 1% of the sum insured and thus for coverage of Rs 1 Lakh the room-rent will be limited to Rs 1,000.

How Does Room Rent work in Health Insurance Policy?

Room rent is the per-day room or bed charges the hospital charges the patient to pay. With the health insurance policy, the room rent expenses of the policyholder are settled by the insurer.

• Case Study

  If the policyholder's room rent is Rs.2,000 per day then the other charges like a doctor visit, nursing, and other diagnostic charges are respectively to the room rent. Similarly, if the policyholder chooses a private deluxe suite for Rs.8,000 per day then the other medical charges and expenditure increase respectively to the room rent. Thus, it is always advised to purchase the policy with no room-rent sub-limits.

  There are mainly four types of room rent coverage in the health insurance policy.

  • Room rent without sub-limits
  • Room rent with co-payments
  • Room rent without sub-limits as an add-on cover
  • Room rent with specified room types

Importance of Room Rent Sub-limit

The sub-limit on room rent is very important as far as the claim is concerned. In most of the health insurance plans, the limit on reimbursement of the claim for all the other medical cost is related to the room-rent limit. Thus, it is always advised to the policyholder to always stick to the room rent limit. If the health insurance policy sum insured amount is Rs. 3 lakh, then it is advised to select a hospital room with the rent amount equal to 1% of the sum insured i.e. Rs 3,000 per day.

Effect of Exceeding the Sub-limit

Not sticking to the room rent sub-limit has a negative impact on the total claim settled by the insurance company. If the policyholder exceeds the room-rent limit then the insurance company respectively reduced by the reimbursement sub-limits related to the other medical expenses. Based on the room types selected by the insured, different hospitals have different billing and room rent.

The sub-limits for reimbursement of related medical expenses are decreased in the same proportion as the room -rent exceeds the permitted limit. So if the policyholder exceeds the room-rent limit by 33% by choosing a room which cost Rs 4,000 per day instead of choosing the mandate room which cost Rs 3,000 per day, the reimbursement sub-limits for all the other claims also get reduced by an equal percentage. In this case, the insurance company pays the partial payment of the claim and the rest of the balance expenses are needed to be taken care of by the policyholder from his/her pocket. This results into dissatisfaction and customer grievance.

What to Do?

During hospitalization, sort out the connection between the room-rent limit and other expenses. Ask whether the third-party administration is available to the insurer itself or at the hospital. If the other expenses and room rent sub-limit is connected then it is better to stick to a room with the rent within the permitted sub-limit.

Plans without Sub-limits

There are some of the health insurance policies, which do not offer any sub-limit or any other medical expenses including the room-rent. Select the plan, which does not come with the sub-limit clause even though the premium amount of the policy can be higher. The benefits offered by such policies are even higher. Some of the health insurance plans also offer the option to remove the sub-limit clause by paying some extra premium.

The Final Verdict!

Even though most of the health insurance policy clearly states different sub-limits in the brochures, the important equal reduction of the claim amount clause is generally mentioned only in the policy document. Thus, for a good customer experience and to avoid partial settlement of the claim it is always advisable to stock to room rent sub-limit or opts for a health insurance policy without sub-limits.