Room Rent Limits and Proportionate Deduction In Health Insurance

There are several essential points listed in the terms and conditions section of your health insurance policy document. One such condition is the room rent limit. You may have taken sufficient health insurance cover, but if it comes with room rent limits, you may never really be able to use the entire coverage. Wondering why?

We’ll find out - in this article. First, let’s understand the meaning of room rent and room rent limits in health insurance .

Let’s dive right in!

What Is Room Rent?

Room rent is the per-day bed or room charges that you are required to pay when you get admitted to a hospital.

The rent majorly depends on the type of room you choose. For instance, the rent for a luxury or private AC room will be more than the rent for a private non-AC room.

What Is A Room Rent Limit?

A room rent limit is the limit up to which your health insurance will cover the per-day hospital room charges.

Types Of Room Rent Limits

Room rent limits are of two types -

• Category Limits

  Here, the insurer will specify the hospital room categories that are covered under the policy. You can opt for a room that costs lower than the category specified - but not higher.

  For instance, the insurer mentions the room category limit as ‘private room’. So, in this case, if you opt for a deluxe or a luxury room, you'll have to bear a major portion of the hospital bill out of your pocket.

• Financial Limits

  Here, the insurance company will determine a fixed limit - which is usually a percentage of the policy sum insured. And, while you can choose any room category as per your preference, the rent of the room must be within the financial limit specified by the insurer.

  For instance, you have a health insurance policy with a sum insured of Rs. 3 Lakhs. If the room rent limit is 1% of the sum insured, you can get coverage for the room rent up to Rs. 3000 per day.

How Do Room Rent Limits Impact Your Health Insurance Claim?

If you pick a room with a rent that is more than what you’re eligible for, insurers won’t only deduct the difference in room charge but will also proportionately deduct all associated expenses.

For instance, say Nia is eligible for a room with rent of Rs. 2000. But, she opts for a room that has a rent of Rs. 4000. Here, she’ll have to pay the additional room charges, i.e., Rs. 2000 (4000 - 2000) as well as 50% of all associated medical expenses out of her pocket.

Which Expenses Are Proportionately Deductible?

All hospital expenses will be subject to proportionate deduction except -

• Cost Of Diagnostic Tests
• Cost of Pharmacy
• Cost of Implants & Medical Devices

How Does Proportionate Deduction Work?

Let’s understand with the help of Ankit’s example.

Ankit is covered under a health insurance plan of Rs. 5,00,000. A room rent limit of 1% is applicable under his policy. This means he’s eligible for a per-day room rent of Rs. 5000.

A few months later, he undergoes hospitalisation for a day. He opts for a room with a rent of, say, Rs. 10,000. His total hospital bill amounts to Rs. 50,000. Out of this, the cost of diagnostic tests is Rs. 5000.

Let’s see how the insurer will pay the claim.

• Deduction 1: Difference In The Room Rent

Difference in Ankit’s Room Rent = Rs. 5000 (10,000 - 5000)

• Deduction 2: Proportionate Deduction For All Associated Costs

Proportionate deduction = (Room rent eligible / Room rent availed) * 100

Proportionate deduction = (5000 / 10,000) * 100
= 0.5 * 100
= 50%

So, the insurance company will proportionately deduct all associated expenses by 50%.

Associated expenses = Rs. 40,000

(Hospital Bill Rs. 50,000 - Room Rent INR 5000 - Cost of Diagnostic Test Rs. 5000)

Associated expenses will be proportionately deducted by 50%

So, 50% of Rs. 40,000 = 20,000.

• Total Claim Payable = Rs. 25,000

(Hospital bill Rs. 50,000 - Additional room rent charges Rs. 5000 - Proportionate deduction Rs. 20,000)

So, the insurance company will only pay a claim of Rs. 25,000. Ankit will have to pay the remaining Rs. 25,000 out of his pocket. Had Ankit chosen a room with a rent within the limit of Rs. 5000, the insurer would not have deducted the associated expenses proportionately. And, they would have paid the entire claim of Rs. 50,000.

So, you can see how room rent limits can severely impact how you claim under your health insurance policy. This is why, as far as possible, you must always buy a policy without room rent limits.

So, you can see how room rent limits can severely impact how you claim under your health insurance policy. This is why, as far as possible, you must always buy a policy without room rent limits.

What Can You Do If You Have A Health Insurance Policy With Room Rent Limits?

If you’re currently covered under a policy that has a room rent limit, you can port it to a policy without such a limit. You can also -

• Buy A Super Topup With A Low Deductible And No Room Rent Related Cap

  A Super Top Up gets activated when your hospitalisation expenses surpass the deductible. So, if you buy a Super Topup with the lowest available deductible, it will get triggered quickly in the event of a claim. This way, the impact of proportionate deductions can be kept to a minimum.

• Opt For The Hospital Cash Feature

  This feature will provide a daily cash benefit for each day you’re hospitalised. The daily cash benefit paid under this feature can be a great way to make up for some part of the deductions.

• Purchase A Critical Illness Plan

  In case you’re diagnosed with a serious illness mentioned in the policy document, this plan will pay a fixed amount of money. Now, say, you’re hospitalised for the treatment of the same illness. In this case, the critical illness insurance payout you receive can be used to offset the proportionate deductions.

This brings us to the end of the article. Hope this article helped you gain enough clarity on how room rent limits can impact your health insurance claim.