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What happens when you exceed the room rent limit of your health insurance?

If the room rent limit is not sufficient in your health insurance policy, it will cost you more on claims in the form of proportionate deduction..

Room rent limit is a very important factor while choosing your health insurance policy. A lot about this factor has been written widely by a lot of people. So, we are writing down the gist of important things a customer should consider about room rent limit while purchasing a health insurance policy.

Room Rent usually includes the rent, nursing charges and the fees related to the Resident Medical Officer (RMO).

Room Rent limits are imposed in three different ways,

  1. Percentage of Sum Insured : The room rent limit is fixed as 1% or 2% of Sum Insured per day. Suppose, your SI is 2,00,000/- and room rent limit is 1%, then the limit in value is Rs.2,000/- per day. Usually, the limit on ICU charges are double the normal (ie., 2% or 4% of SI) per day.
  2. Category of Rooms: Here the room rent limit is specified as the highest eligible category of room. If the maximum limit is prescribed as ‘Single Private Room’, you can opt for lower room categories, but not the categories costing higher than that. There are categories like ‘Suite’ room, ‘Twin sharing room’, etc., specified by multi-speciality hospitals.
  3. No Limits is another option. In this case, you are free to choose any room category as per availability, but, in certain Insurers’ plans, this is applicable subject to a maximum per day limit of Rs.8,000/- or Rs.10,000/- or so.

What will happen if you choose or forced to choose higher than this limit?

You are more likely to get in to a situation of being forced to choose a higher room rent category than the allowed limit. In most cases, the hospitals are likely to say that they don’t have vacant bed within your limits, which will leave you with the choice of a higher category room. In such cases, you will have to suffer a ‘Proportionate Deduction’ during claim settlement.

Proportionate Deduction:

Proportionate deduction clause in health insurance policy will allow the insurer to deduct proportionate amount in all associated treatment charges in the same ratio of room rent limit exceeded. This is better explained with an example.

Suppose, you choose a room rent of Rs. 4,000/- per day, against a limit of Rs.3000/- per day as per your policy, then usually all the treatment charges are also considered to be associated with the room rent charges. So, if your overall treatment bill is Rs.1,00,000/-, the claim settlement is expected to be approximately Rs.75,000/- after proportionate deduction. If your room rent limit is Rs.4,000/-, there won’t be any deductions on the associated treatment charges.

What you should do?

Today, in any hospital, the minimum room rent charges are above Rs.2,000/- per day and usually for a medium to above comfortable room, it could cost up to Rs.5000/- per day. While choosing your health insurance plan, choose by the following priority,

  1. Go for plans that do not have any cap or limit on room rent.
  2. If not, look out for single private room as maximum applicable limit.
  3. In case of Room Rent being a percentage of SI, go for a limit of at least Rs.5,000/- based on your Sum Insured.

The above is suggested because the likelihood of availability of lower category rooms in hospitals is low and based on emergency, you will be forced to choose a higher category room and end up paying the difference from your pocket.

IRDA appointed panel is considering changes to this now

IRDA is in the process of standardising health insurance plans and one of the specific areas attended to is the Proportionate Deduction. The panel set up by IRDA, as a part of standardising covers, is looking at categorising associated and non-associated charges depending on whether they can be charged differentially based on category of rooms. In other words, the panel has mooted to remove certain charges like costs of implants & medical devices and costs related to investigations as non-associated costs as they are not charged differentially based on room category.

This initiative is likely to bring a lot of clarity to claim settlement process and comfort to policyholders if implemented successfully.