What happens when claim from a health insurance policy with room rent limits? Find out the dos and don'ts of policies with room rent limits and get the most out of your health insurance plan.
I am writing this article from a hospital in Bandra, Mumbai. My dad met with an accident recently, and has been hospitalized for the last few days now. Though there are no fractures and he is stable, due to multiple wounds and old age (69 years), doctors have advised hospitalization for a couple of days.
About his Health Plan
My dad is covered with a Rs. 2 Lakhs Health Insurance plan from New India Assurance that he himself bought around 12 years ago (Smart Dad!). Realizing that the cover would be very low, we upped the cover by another 5 Lakhs with a United India Super Top-up policy around 4 years ago (Smart me!)
At the hospital
It was time to choose the hospital room. A twin-shared AC Room would cost Rs. 1750, whereas a private AC room would cost Rs. 3500. The New India policy had a room rent limit of Rs. 2000 per day. Since we were aware of the proportionate deduction, we decided to consider the shared AC Room. I decided to check the shared AC room before deciding. What I noticed is that although the patient bed was equally good in all rooms, the attendant bed was just a piece of plywood in the shared AC room. “S@#t! How am I going to survive 2 nights on this piece of wood?” I ignored my calculative brain which quickly processed the monetary damages of choosing the private room, and decided to the take the private AC room.
To my surprise, while talking to the admission counter, I was told that shared rooms were anyway unavailable, and I had to take the private AC room only. I had estimated the hospital bill to be around Rs. 50-55K. That meant, with a Room eligibility of Rs. 2000, I would have to shell out at around 40-45% of the total costs – which is a loss of Rs. 25000/-
Though I had a sufficient aggregate cover of Rs. 7 Lakhs in place, I realized that I was still at loss of a good amount of money all because of the room rent limit.
Learnings from this episode
Given a choice, do not ever buy a policy with a capping on Room Rent.
1) How Hospitals charges and room rent limits work.
Hospitals charges are different (for the same services) depending on the room type (General, Shared, Private, Deluxe, Super Deluxe etc.) you have chosen. Insurance companies therefore not only deduct the additional room charges over and above your eligibility, but also proportionately deduct all other hospital charges that are linked to the room you have chosen. Room Rent limit can therefore significantly impair your perceived health insurance coverage.
For instance, if the room rent eligibility in your policy is Rs. 4000 per day. In case you opt (or a forced to opt) for a room t hat has a rent of Rs. 6000 per day, all charges except for products with MRP would be proportionately reduced when the claim is paid.
Mr. Unaware was covered with a Health Insurance of Rs. 4 Lakhs Sum Insured with a Room Rent capping of Rs. 4000/- per day. He was recently hospitalized. Mr. Unaware does not like the Rs. 4000 per day Private room, and opts for a deluxe room that is charged at Rs. 8000/- per day.
Final Hospital Bill is as follows:
|Hospital Bill||How much would be paid?||Payable amount explained|
|No. of Days Hospitalized||5 Days|
|Room Charges||Rs. 40000||Rs. 20000||As per eligibility 4000 per day X 5 Days|
|Surgery Costs||Rs. 100000||Rs.50000||Proportionate deduction|
|Doctor Visits||Rs. 5500||Rs. 2750||Proportionate deduction|
|Medical Tests||Rs. 4500||Rs. 2250||Proportionate deduction|
|Medicines||Rs. 10000||Rs. 10000||MRP product, hence no deduction|
|Total||Rs. 1,60,000||Rs. 85,000|
The common understanding is that the deduction will be only on the additional room rent which is Rs. 20,000; but due to the differential price structure that hospitals operate on, Insurance companies deduct all differential charges proportionately, as explained in the above table. In spite of having a Rs. 4 Lakhs health insurance plan, Mr. Unaware gets only Rs. 85000 paid out of the total Rs. 160000 he was billed for, just due to one fine print with regards to Room eligibility capping.
2)You do not choose the hospital or the hospital room
More often than not, you do not choose your hospital or the hospital room. In case of an emergency, you would obviously run to the nearest hospital. If it is a planned hospitalization, the surgeon/doctor could influence the choice. What’s more, you may not have a choice in the room category as well. Like in my case, the Hospital may not have a room available at your eligible room rent limit, and you could be forced to take a room higher than your eligibility.
3) Take into account the inflation
The Room Rent limit could look OK today, but with a reasonable 10% Inflation, a Rs. 5000 Room Rent limit today, which could get you a Private Room in a good hospital, could get devalued in 10 years to Rs. 1928 per day. At Rs. 1928 per day, one would barely get you a Shared Room. In another 10 years, you will not afford even a General Ward!
4) No claim Bonus (NCB) and Room Rent Limits:
Room Rent limit is not linked to your NCB; hence though you may have an increased aggregate cover because of NCB, but since your Room Rent is linked to your base sum insured, it remains constant.
5) Don't depend on your top up policy for what your base policy doesn't pay
You cannot depend on a Top-up for all that your Base Health Insurance policy does not pay for. If you have Room rent capped base policy, and your claim is lower than your deductible/threshold in the Top-up policy, your Top up/Super Top up policy will not kick-in and you could be hit by a large deduction in your claim.
What you should do?
In case you already hold a plan with Room Rent Capping:
Do consider the option of porting to a policy options that has no caps or maybe offers room category capping instead of the one offering room rent limit, Do check if they’re are available at your age/health condition,
In case you want to continue with a policy that has room rent limit, explore options of upgrading the insurance cover to at least Sum Insured of Rs. 8-10 Lakhs. This will protect you against high inflation and impairment of your overall coverage.
In case you are looking at buying a fresh policy, go for policies that cap the room type/category.
This will ensure you have clarity on what kind of room will always be available to you, irrespective of the per day charges.
Health Insurance policies with “No Limits on Room Rent” seem too-good-to-be-true kind of policy.
If the policy is fraught with too many extravagant claims due to the no-limit condition, Insurance companies could face losses, or lose on minimum margins, which would eventually result in hiking up of premiums. I would avoid taking policies with no capping on Room Rent/Category.
The entire experience of being in a hospital is itself very demanding and stressful. Being forced to compromise on a Room lower than your expectations or paying a big deduction on the claim, are both unwanted pain. Ensure you check your existing policy or the plan you are buying for that killer room rent capping that could impair your coverage in the long run.
Would love to hear from you. It would be great if you could share your experiences, inputs, views in the comments below.