What is Room rent limit in health insurance?
Your health insurance policy provides you with a comprehensive coverage. Thus, when choosing a health insurance plan, you might make sure to choose a plan with the maximum possible coverage features. But, do you ever stop and look at the sub-limits in some such features?
Many coverage benefits under a health plan have sub-limits. Sub-limits limit the extent of coverage allowed under the benefit. Room rent limit is one such common sub-limit found in many health insurance plans. Do you understand what it is and how it impacts your health insurance claim settlement?
What is room rent limit?
The limit imposed on the coverage of boarding expenses or room rent of the hospital is called room rent limit. The limit is either expressed as an absolute amount or as a percentage of the Sum Insured. For instance, if the allowed room rent limit in your health plan is Rs.5000, your plan would cover your boarding expenses up to Rs.5000. However, if the limit is expressed as 2% of the Sum Insured and the chosen Sum Insured is Rs.5 lakhs, your room rent limit is Rs.10, 000.
How it affects your claim?
Your entire health insurance claim for in-patient hospitalization would depend on the room rent limit of the plan. Not only would the coverage be capped for the room rent, other treatment costs and doctor’s/surgeon’s fees would also depend on the room rent limit if you go overboard. Finding it difficult to grasp? Let’s understand with the help of an example.
Suppose, you buy a health plan with a Sum Insured of Rs.5 lakhs where the room rent limit is 1% of the Sum Insured. This means that your actual room rent limit is Rs.5000. If you are hospitalized and choose to be admitted in a room whose rent is below Rs.5000, you can claim for all the actual expenses incurred on hospitalization. Supposing your hospital bill looks like this:
Doctor’s consultation fee
You can get compensation for Rs.2.9 lakhs as in-patient hospitalization if the room you are admitted has a rent below Rs.5000. If, on the other hand, you choose a better room where the rent is Rs.7500, what would happen to the claim?
The claim would be reduced in proportion in which the room rent exceeds the allowed limit. In the above table, the expenses would be calculated as follows:
The expense incurred * (allowed room rent / actual room rent)
So, let’s see what the allowed expenses would look like:
Rs.50,000 * 5000/7500 = Rs.33,333
Rs.2 lakhs * 5000/7500 = Rs.133,333
Rs.10,000 * 5000/7500 = Rs.6667
Rs.20,000 = Rs.13,333
Doctor’s consultation fee
Rs.10,000 = Rs.6667
Total claim payable
As against the earlier claim of Rs.2.9 lakhs, you get a claim of only Rs.193, 333 if your actual room rent is higher than the allowable limit.
Is such reduction in claim fair?
Actually, it is. A room having a higher rent also has higher treatment costs associated with it. In the same hospital, the charge structure varies according to the room selected. Funny, yet true! If the doctor’s fee in a normal room is Rs.1000 per visit, the same doctor’s same fee would increase to Rs.2000 or more if a private AC room is selected. Since hospitals impose their charges based on room selection, it is only fair that insurance companies pay a proportionate claim for expensive rooms.
Impact of room rent limit on policy selection
While most health insurance policies impose a sub-limit on room rents, there are many policies which have no sub-limits. In other plans, you might find allowance of a single private AC room. Since the room rent limit impacts your claim, you should be careful when choosing a health insurance plan. Look at the room rent limit of various health plans before finalizing one. Find out the average room rent of your preferred hospital and the room in which you are likely to avail treatments. Then select a plan where the sub-limit is a little higher (for a safe margin) than the average room rent you found out. If possible, choose a plan with no sub-limits. The premiums might be a tad higher but you would be ensured of full claim settlement.
Room rent limit, though ignored, is a very important point in your health plan which you should understand clearly. After all, it affects your claim settlement and determines whether your pockets would face the music or your health plan would do the needful in a claim. So, be careful when you buy a plan.