Despite buying an adequate health cover, what if you still need to pay a part of the hospital expenses out of your own pocket? Yes, it is very much possible. Your health policy comes with a few restrictions, called sub-limits, imposed by insurance companies. Room rent limit is one such feature which most people overlook while buying a health policy.
What is room rent limit?
It refers to the maximum amount that an insurance policy will cover for room charges in a hospital. So, you will not pay just for your stay during hospitalization. You will pay for all the treatment costs incurred including surgery, doctor visitation charges, as these are linked to room rent. It is thus a significant component of your total hospitalization expenses.
How room rent restrictions work?
Health insurers usually cap room rent, typically, in the range of 1 or 2 per cent of the sum assured. So, for e.g., if your health cover is Rs.3 lakh and the room rent is 1 per cent, you will be eligible to take a room that costs maximum of Rs.3,000 per day. In some cases, room rent limit is an absolute amount, like say, a flat Rs.5000 per day. In certain policies, room rent limits are based on specific room types. For e.g., if you have a sum assured of up to Rs.5 lakh, you will be eligible for a single room compared to a deluxe room which is for higher covers.
So, what happens when the insured exceeds the room rent limit?
Let us understand with the help of an example. Suppose Mr.A has a health cover of Rs.3 lakh. The room rent cap is 1 per cent of sum assured, which is Rs.3,000 per day of rent. He has to undergo a surgery and gets admitted to the hospital for 3 days. Unknowingly, he opts for a room which is priced at Rs.4,000 per day. Total room rent comes to Rs.12,000 (4000*3). So, you will think that he will get Rs.9,000 (75%) as reimbursement and only Rs.3,000 (25%) will go out of his pocket. No, you are mistaken. Proportionate deduction will be imposed on all treatment costs. If the surgery costs, Rs.75,000, then he will get Rs.56,250 as reimbursement, balance Rs.18,750 he will pay from his pocket. Similarly, if doctor visit charges are Rs.6000, he will receive Rs.4,500 only and balance Rs.1,500 he will have to pay. So, despite having Rs.3 lakh cover, Mr.A is paying Rs.20,250 from his pocket!
What you should do?
It is imperative to read the documents carefully and know such restrictions, if any, before selecting a suitable policy. Ideally, you should go for a policy which has no room rent capping. This may come at a slightly additional premium, but it is worth considering if you can afford it. You can optimize your health cover fully with no room rent limits. It would be less stressful during challenging times as you do not need to worry about shelling out treatment expenses from your pocket.
There could be other criteria like no claim bonus, exclusions, waiting period, to consider before choosing a policy. But remember, room rent capping should be one determining factor while shortlisting policy as it hurts the claim.