The number of customer complaints against health insurance companies has increased because of confusion regarding the room rent sub-limit feature in health insurance policies.
Health insurance policies come with an overload of fine print and certain aspects need to be examined in detail before buying a policy. One such aspect is room rent. It is important to understand the limits on a hospital room rent approved in a health insurance policy as it impacts the settlement claim amount.
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There are several types of rooms, like the general ward which you share with others, a private room, or even a deluxe room that comes with a higher rent. Many policies have a sub-limit cap that allows the holder to spend only a specific amount on the capped service like room rent. So, if your room rent is higher than the eligible amount, you will have to pay the additional room rent and the insurer could also impose a proportional deduction on other related expenses such as doctor’s fee, surgery cost, medicines, etc.
What are sub-limits?
Sub-limits are a specific percentage of the total sum insured that insurance companies will bear for the different hospital expenses. For example, if your sub-limit cap on room rent is 1 percent and the total amount insured is Rs 5 lakh, then you can take a room that costs Rs 5,000 per day.
If the room rent is Rs 6,000 then the extra Rs 1,000 will have to be paid by the policy holder for the number of days the patient is hospitalised. The sub-limit in health insurance, however, does not apply to the whole bill amount. Specific charges like surgery/operation charges, doctor’s fees, medicine cost, nursing expense, and room rent all have different sub-limits applied. Generally, sub-limit cap on room rent is 1-2 percent of the sum insured.
How does room rent sub-limit affect your claim?
Usually, policies contain a ‘proportionate deductible’ clause in health insurance that allows the insurer to deduct a proportionate amount in all associated treatment costs in an equal proportion over and above the room rent limit. Proportional deduction percentage applicable on other expenses = excess of room rent paid / actual room rent limit as per policy *100.
For example, if your sub-limit on room rent allows you to take a Rs 4,000 per day room but you take a deluxe room that costs Rs 5,000 per day, which is beyond the policy cap, then the additional Rs 1,000 will not be paid by the insurer and a proportionate deduction of 25 percent on all expenses will be applied for the higher priced room.
Hence, for the deluxe room that costs Rs 5,000, there may be doctor consultation fee of Rs 1,000 but the insurer will only consider Rs 750 for claim settlement (25 percent deduction). The deduction will be applicable on all other expenses, including medicines, tests and surgeries, etc, if the room rent is higher.
How to avoid deduction?
It is advisable to sort out the connection between the room rent limit and other expenses. In case the expenses and room rent sub-limit is connected, then stick to a room with the rent within the permitted sub-limit, especially in case of prolonged hospitalisation. However, there are health insurance policies available that have no sub-limits on room rent and other expenses.