Limit on room rent caps health claims too

If you exceed the room rent limit, the insurer will settle the claim proportionately

Sub-limits in a health insurance policy limit the liability of an insurer to the extent specified in the policy. Sub-limit on room rent is a critical clause buried in the policy wordings that needs to be given special attention.

Health insurance policies cover expenses incurred on room rent on hospitalisation of the policyholder. But even today, many insurers allow only a fixed percentage of the SI (sum insured) to be claimed under room rent.

If you exceed the limit allowed for room rent, you will have to pay for the portion of the room rent that is not covered and a portion of the final bill in the same proportion (to the extent to which your room bill exceeds the limit allowed).

Here, we explain how caps on room rent work in health plans and products that follow this practice.

Current scenario

Based on the type of room you occupy and its cost, the billing for consultation/surgeon fees and other amenities you use at the hospital also increase/decrease.

There are a number of products in the market today that have done away with room rent limit. For instance, the core policies of most health insurers such as Royal Sundaram Lifeline, Max Bupa Health Companion and Apollo Munich Optima Restore have no cap on room rent.

Room rent limit, however, is not completely gone, says Vaidyanathan Ramani, Head Product and Innovation, Policybazaar.com. It is held back in one form or the other.

For instance, in Iffco-Tokio’s Individual Health Protector Policy, there is no room rent cap in respect of sum insured over ₹5 lakh. But for SI less than ₹5 lakh, room rent limits are applicable. For class A cities (including NCR, Pune, Mumbai, Bengaluru and Hyderabad) there is a limit of 1.75 per cent of SI on per day basis or actual room rent, whichever is less. Similarly, in the Silver plan of Bajaj Allianz’s Health Guard Policy, room rent allowed is 1 per cent of SI opted.

So, it is important to understand the features, sub-limits and co-payment terms of a health policy before opting for one.

How does it work?

If you exceed your room rent limit of the policy, the insurance company will settle your final claim on the policy also only on a proportionate basis.

Consider Joe’s case for better understanding. He has a health insurance policy of ₹3 lakh with a room rent limit of ₹3,000 per day. On hospitalisation, the hospital offers him a room for ₹4,000 per day. So Joe will get only ₹3,000 per day from his health insurer; the balance ₹1,000 per day has to be borne by him. Finally, if the total medical bill comes to ₹3 lakh, he would be paid only ₹2,25,000 (in the ratio of room rent eligible-to-actual room rent) by the insurance company.

“When the room rent exceeds the limit under your policy, the total admissible claim, that is, the total eligible claim too gets reduced. This is because the insurance company assumes a proportionate increase in other charges as well,” says Ravi Vishwanath, ED and CEO, Reliance Health Insurance.

It is always better to go with a no sub-limit plan. But this will always be more expensive than one with the cap.

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