The room rent limit in your health insurance policy limits more than the room rent!
Are you aware of the room rent limit of your health insurance policy?
Most insurance policies, especially corporate or group policies, have such limits.
The room rent limit is frequently linked to the Sum Assured (SA) on your health insurance policy.
Room rent is typically limited to 1% of SA per day for standard rooms and 2% of SA per day for ICU.
However, the room rent limit has far-reaching implications.
Let’s look at an example:
Shri Roomrent Limited (RRL) purchases a health insurance policy with a daily room rent cap of 1% of the SA. He selects a Sum Assured of Rs. 5,00,000.
The insurance company will pay a maximum of ₹ 5,000/- per day as room rent during hospitalisation.
If the hospital’s room rent is higher, RRL must pay the difference.
Unfortunately, Shri RRL is hospitalised and has to choose a room at ₹ 10,000/- per day since no other beds are available in the hospital.
Shri RRL is mentally prepared for the insurer to settle his claim entirely at the time of his discharge, except for the room charges, for which they will pay only ₹ 5,000 per day. He is prepared to pay the balance of the room charges.
Shri RRL is hospitalised for three days and has to go through surgery.
The hospital presents a bill of ₹ 3,00,000/- (Room charges: 30,000, Surgery cost: 2,34,000, Consultation charges: 6,000/-, Tests: 15,000/- Medicines: 15,000/-).
RRL anticipates that his claim will be approved for a settlement of ₹ 2,85,000/- (50% of room charges and 100% of other costs).
However, at the time of discharge, he is shocked to learn that the insurance company has approved a settlement of only ₹ 1,57,500/-( 50% of all charges except medicine cost).
He only then realised that the room rent cap also proportionately limits the acceptable claim amount for all associated hospital charges.
The associated charges include all services that the hospital provides.
Bottom line: Always select a health insurance policy without a room rent limit.
If the premium amount is a concern, choose a policy with a lower Sum Assured without a room rent limit rather than a policy with a higher Sum Assured with a room rent limit
You can supplement the lower cover with a super top-up plan.