Advisor's Tip: Know All About Room Rent in Your Health Insurance Policy

A health insurance policy is your ticket to financial security in times of medical emergency. Buying a health insurance plan relieves your stress on medical costs in the event of treatment or emergency. However, many people purchase a health insurance plan without understanding the key element i.e. Room Rent limits in a health insurance plan. Room Rent though it may sound simple in reality, it impacts health insurance claim settlement. 

Some health insurance plans have sub-limits defined in the policy; however, not many people are aware that many features under a health insurance plan come with sub-limit. For instance, room rent comes with a sub-limit under a health insurance policy, and probably not many people know how the sub-limit works on room rent. Read on to know all about room rent functionality in your health insurance policy.

What is a Sub-limit?

A sub-limit as the name suggests is a restriction put by an insurance provider. This restriction is put depending upon the extent of the sum insured. Room rent is one of the most common features under sub-limit. The sub-limit determines the room rent allowed under a health insurance plan. 

What is Room Rent?

Room Rent as the name suggests is the rent charged for the per day bed and/or room charges by the hospital. Some health insurance providers impose a room rent limit on the insured for every hospitalisation, based on the type of policy and the type of room and facilities chosen. A room rent limit is a limit imposed by the health insurance provider on rent coverage determined as a certain percentage of the sum insured or as a certain specific amount. 

Example: 
You have a sum insured of INR 4 Lakhs, the health insurance companies usually charge room rent limit as a certain specific amount i.e. INR 3,000 or as a certain percentage i.e. 1% of the sum insured. However, the room rent limit can be specified in various types. Let us see the various types of room rent limits specified under a health insurance plan.

• Room Rent Limit Specified with Sub-limit
  As seen above, under this type, the room rent limit is specified as a specific percentage of the sum insured or specific amount i.e. a certain sub-limit is imposed on the health insurance coverage. 
  So, claims till INR 3,000 for a particular hospitalisation would be admitted without any clause. However, if the charge for a room is more than INR 3,000, that amount is not paid by the insurer.
   
• Room Rent Limit without Sub-limit
  Few of the leading health insurance providers offer this exciting feature where they do not impose any restriction as a room rent limit. Insured has the freedom to choose the room type as per their choice and need.
   
• Room Rent Limit Specified with Room Type
  Some health insurance providers choose to offer the sub-limit by specifying the type of room the insured can avail. The insurer offers choices like a private room, twin-sharing room, general ward, etc. as a part of the room rent limit.
   
• Room Rent Limit Specified with Co-payment: 
  Co-payment is a feature wherein the customer and the insurance provider together bear the expenses. Under this feature, the health insurance provider specifies the room rent limit any additional expenses related to the same has to be paid by the patient.

Thus, if you are planning to buy a health insurance plan to safeguard yourself and your loved ones in times of medical emergencies, it is recommended to go through all the terms and conditions of the plan, especially room rent limits closely. 

How does a Room Rent Limit Affect Your Claim?

The room rent limit is one of the determining factors that affects the health insurance claim settlement. This is because the sub-limit of the room rent will cap the coverage related to treatment cost, doctor fees, consultants’ fees, etc. Let us understand how the room rent sub-limit affects the health insurance claim. 

This is because all expenses like cost of surgery, doctor’s consultation, ICU charges, etc. are all linked to the room rent cost. For the same treatment, if you have opted for a single room, then the cost of surgery, doctor’s consultation, etc. would be charged higher as compared to the double bed. So, mostly the entire bill is paid proportionately if the bed charges exceed the room rent limit of your health insurance plan. Only the cost of medicines is not linked as that doesn’t change in comparison with the type of room selected.

Suppose the following is your hospital treatment cost bill

In the above scenario, let’s assume your room rent limit is INR 5,000 per day and if you avail the hospital room within the admitted price range, you are eligible to receive actual expenses however on the other hand if you choose a room having rent more than the admitted range, for example, INR 7,500 per day then this decision would affect your claim in the following manner.

For a thumb-rule, the claim amount will change in proportion to exceeding the room rent limit. The insurance provider will calculate the expenses as – the actual expense incurred * (permissible room rent charges / actual room rent).

So, the claim for the above-stated example shall be calculated as under:

Thus, in this manner, if your room rent exceeds the permissible limit then your claim amount reduces in proportion to exceeding room rent limit. 

Conclusion

Room Rent is an important feature of the health insurance policy that you must understand in order to purchase the best insurance plan. After all, the room rent limit affects your health insurance claim. Thus, the new-age insurance plans without any limit on room rent is a good option, even if that comes at any additional cost, as there is no proportionate deduction based on room rent limit.