How hospital room rent limits affect your insurance claim

Mayank Kale, Founder and CEO, Loop Health said, “The definition of room rent is the cost of the room per night including nursing charges. The cap on room rent plays a big role in deciding the total amount to be paid by an insurance company for the treatment of a patient with a valid health insurance Policy. This is because if one chooses a room on rent higher than what the insurer has prescribed, the increase in expenses on account of the higher priced room is also not considered payable by the insurance company.”

room rent limit: Health insurance policies generally limit room rent at 1-2% of the sum insured. However, in some policies, the room rent is capped on an absolute amount basis. For example, if your sum insured is 5 lakhs and the room rent limit is 1% of the sum insured, you can take a room in the hospital which costs 5,000 a day. If the room rent limit is an absolute amount, you need to check it in the policy document.

Vivek Narayan, Health Insurance Specialist, Sana Insurance Brokers Pvt. Ltd. said, “Room rental charges in health insurance means the expenses incurred for hospital stay for more than 24 hours due to medical reasons. Most health insurance policies generally require the insurer to charge a maximum of such expenses. There is a limit or maximum limit that you can claim from the insurer. This room rent limit varies across plans and insurance companies.”

“This room rent limit applies to a specific period of hospitalization and does not affect your claim for the next hospitalization,” Kale said.

Proportional Deduction: The proportionate deductible clause in health insurance allows the insurer to deduct a proportionate amount in all associated treatment costs in an equal proportion over and above the room rent limit. For example, an insurer may allow 4,000 as room rent for one day as per your policy. If the patient takes a semi-deluxe room which costs 3,000, rental cap is not applicable. But if the patient decides to stay in a deluxe room 5,000 which is beyond the policy cap, then additional 1,000 will not be paid by the insurer. In addition, there will be a proportionate deduction of 25% on all expenses for the higher priced room.

(Proportional deduction applicable on other expenses = Excess of room rent paid / Actual room rent limit as per policy *100)

For example, for a deluxe room that costs 5,000, there may be doctor consultation fee 1,000 but the insurer will only consider 750 for claim settlement. Similarly, such deduction will be applicable on all other expenses, which include medicines, tests and surgeries if the room rent is higher.

Prolonged hospitalization: Often, patients overlook the room rent charges levied during hospitalization. If the medical procedure requires a longer hospital stay, the room rent charges can increase to a larger amount if you have opted for a higher room rent than what is allowed in your policy. In such a situation, you may have to spend extra money from your pocket till you get discharged from the hospital.

For example, Agra-based retired army officer Vijay Pandey was recently hospitalized for knee replacement surgery. He was hospitalized for 3 days and he chose a hospital room with rent of 5,000 per day, against the limit of his insurance policy 4,000 per day. However, he incorrectly calculated that the insurer would bear 5,000 per day, and he shall bear the difference in charges—of 1,000 per day for three days. However, this concept of room rent did not work as per Pandey’s calculations.

What Pandey did not know was that the entire cost of the treatment was linked to the room rent charges. He was also not aware that insurers apply the principle of proportionate deduction if the room rent ceiling is increased. Therefore, he not only had to pay 3,000 extra for three days of hospitalization but an additional amount due to a higher cost of rooms due to a proportionate deduction of about 25% on the total expenses.

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If you have a health insurance policy and you plan to stay hospitalized for more than a day depending on your medical condition, you must ensure that the cost of the room does not exceed the room rent limit . Also, it will help if you ask the hospital to disclose room charges and nursing charges to know the actual room rent before you are admitted to the hospital.