Concept of Room Rent Limit in Health Insurance

What are Sub-limits in Health Insurance?

Sub-limits refer to a specific percentage of the sum insured amount that the insurance company will bear for different hospital expenses. The remaining amount will have to be borne 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 to it.

For example, the sub-limit on room rent can be capped at 1% of the sum insured and thus for coverage of ₹1 lakh, the room-rent will be limited to ₹1,000.

How Does Room Rent Work in Health Insurance Policy?

Room rent is the per-day room or bed cost that the hospital charges from the patient. 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 ₹2,000 per day then the other charges like a doctor visit, nursing, and other diagnostic charges are added to the room rent. Similarly, if the policyholder chooses a private deluxe suite for ₹8,000 per day then other medical charges and expenditure will increase the room rent. And, if there is a sub-limit set by the insurance company then you will have to pay the difference out of pocket. Therefore, it is always advised to purchase the policy with no room-rent sub-limits so that your insurance provider pays the entire amount.

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 advisable that you stick to the room rent limit.

For instance, if the health insurance policy sum insured amount is ₹3 lakh, then it is advised to select a hospital room with the rent amount equal to 1% of the sum insured i.e. ₹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 health insurance companies in India. If you exceed the room-rent limit then the insurance company will respectively reduce the proportional amount from all related treatment costs. This means that the sub-limits for reimbursement of related medical expenses will be decreased in the same proportion as the room-rent exceeds the permitted limit, which is commonly referred as “Proportionate Deductible”.

So, if you exceeds the room-rent limit by 33% by choosing a room which cost ₹4,000 per day instead of choosing the mandate room which cost ₹3,000 per day, the reimbursement sub-limits for all the other claims will 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 you from your own pocket. This might result into dissatisfaction and customer grievance.What to Do?

During hospitalization, make sure you check whether the proportionate deductible clause is applicable to the room rent limit. If the clause is applicable, 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 set any sub-limit on medical expenses including the room-rent. You must select the health plan which does not come with the sub-limit clause but keep in mind that the premium amount of such policies can be higher. But the benefits offered by such mediclaim policies are even higher. Some of the mediclaim 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 stick to room rent sub-limit or opts for a health insurance policy without sub-limits.

Health insurance companies

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Disclaimer: The list mentioned is according to the alphabetical order of the insurance companies. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website www.irdai.gov.in

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Room Rent Limit in Health Insurance