After staying at a hospital for treatment, the patient has to pay a bill. This hospital bill consists of services that are availed during stay and treatment. If you notice, there are various items on the bill and one of the most important is the room rent. When a person is covered under Health Insurance, the bill is settled by the insurer and how room rent is calculated in the claim can be tricky for a few of us. This article sheds light on what is room rent capping and how it affects the hospital bill.
What is Room Rent Capping in Health Insurance?
Capping or a “cap” on something refers to its limit. Talking about the room rent capping in health insurance, it is the limit up to which your insurance company will bear the room rent. If you decide to stay in a hospital room that costs more than the cap, you will have to bear the additional money during the claim settlement.
The insurance company mentions the room rent cap in a health insurance policy document for your reference. It can either be a specific amount, for example, Rs. 15000, or in percentage, i.e. 3% of the sum insured. It can also be capped at a certain number for each day of hospitalization.
Consider, Mr A bought an Individual Health insurance policy with a room rent cap of Rs. 15,000 and Mr B bought an insurance policy with a room rent capped at 3% of the sum insured. The sum insured of Mr B’s health insurance policy is Rs. 5 lakhs. Thus, the room rent cap on Mr B’s policy is also Rs. 15,000.
On the other hand, Mr C’s Individual Health insurance policy has a room rent cap of Rs. 2,000 per day during the hospital stay.
Types of Room Rent Limit In Health Insurance Coverage:
Different health insurance companies have their own rules when it comes to room rent and capping. One thing that is common among all health insurance companies is that the rules that apply to the health policy will be clearly mentioned in the policy document. As a policyholder, you need to make an informed choice while selecting the policy with a specific type of room rent. Here are the common types of room rent capping for your reference:
- No Capping on Room Rent: Many health insurance policies have no cap on room rent. The policyholders are free to select the room type as per their requirements and comfort.
- Co-payment on Room Rent: Co-payment is sharing the payment made to the hospital for your stay. Co-payment or co-pay on room rent means you as a policyholder will bear the room rent and related expenses together with the insurance company.
- Room Rent with Capping: Insurance companies often put a cap on the amount of room rent a policyholder can claim. Beyond this limit, the insurance company will not bear the related expenses.
- Room Rent Cap on Specific Room Types: The policyholder is given a choice to select a hospital room type as per availability and requirement. If your health insurance policy allows a cap on a certain room type then you have two options. Either, choose a room type that fits inside the room rent limit or bear the additional expenses by selecting a room that costs more than the room rent limit.
- Room Rent Waiver Add-on: As the name suggests, the Room Rent Waiver add-on can be bought with an insurance policy that has room rent capping. But the limit will be waved off under this add-on.
How Room Rent Limit Affects Your Overall Health Insurance Claim?
While calculating the claim amount, the insurance company will consider the room rent and applicable capping as the main component. The claim amount will increase or decrease based on the fact that you choose to stay in a room that was under or over the room rent cap. Let’s understand how room rent capping will affect your overall claim amount through an example:
Consider Mr John has bought a health insurance policy of Rs. 5 lakhs that has a room rent cap of 1% of the sum insured. After a few years of buying the policy, he had to be hospitalized for Hip Replacement Surgery. His hospital stay was going to be 5-days long, and now he had to choose a room.
His insurance policy allowed him a room that cost Rs. 5,000 per day, however, he chose to stay at one that was worth Rs. 8,000 per day. He did quick math and concluded that the insurance company will bear Rs. 5,000 per day, and he will bear the difference of Rs. 3,000 per day for 5 days.
|Mr John’s Hospital Bill||Rs.|
|Room Rent Charges||Rs. 40,000|
|Cost of Hip Replacement Surgery||Rs. 1,75,000|
|Doctor Visits||Rs. 30,000|
However, the concept of Room Rent does not work as Mr John calculated. It works on the principle of proportionate deductions. It is calculated as the percentage of room rent allowed upon actual room rent.
|Proportionate Deductions = Room Rent Allowed / Actual Room Rent * 100|
The insurance company will pay Mr John’s claim as per the following table:
|Claim Amount Calculations||Rs.|
|Room rent allowed||Rs. 25,000|
|Cost of Hip Replacement Surgery (62.5%)||Rs. 1,09,375|
|Doctor Visits (62.5%)||Rs. 18,750|
|Tests (62.5%)||Rs. 18,750|
|Medicines (non-associated expense)||Rs. 25,000|
|Claim amount||Rs. 19,6875|
Note: Non-associated expenses mean items like medicines as they are sold on MRP. Hence, no deductions. However, based on the room you select, other charges like doctor visits also vary. Due to this, the differential price structure is proportionately deducted.
Since the percentage difference in the room rent limit and the actual room rent is 62.5%, his overall bill will also be affected by 62.5% for applicable items. He has to bear approximately Rs. 1,03,125 from his pocket excluding other deductions.
The Solution to Room Rent Capping:
There are two scenarios related to your health insurance policy:
- You are already covered under a policy with room rent capping: In this case, you can consider changing your health insurance plan or switching to a different insurance company altogether. This can be done by porting the current plan to one without any room rent capping. If you want to continue with the current plan, then consider upgrading the sum insured of your health insurance policy. This will increase the limit on room rent capping and give you space to choose a room of your liking without affecting the claim amount much.
- You are looking for a new health insurance policy: Be sure to go through all the documents related to the plan to get clarity on room rent capping. If you don’t find the information on any of the documents, then we recommend you to get in touch with the insurance company and ask them if your plan has this clause.
The concept behind room rent is not common knowledge and policyholders feel cheated when they receive a low claim amount. This is where the importance of reading the policy document, the fine print, and the terms and conditions is highlighted. Someone who is not familiar with health insurance may have many questions related to things like room rent, co-pay, sub-limits, etc. and the insurance company will readily solve those queries when asked.
ACKO urges you to get your doubts clarified before signing the policy document. In case you receive a lower claim amount, you will know the exact reason behind that claim settlement. Rather you can be prepared for such situations if you are aware of the different concepts of health insurance.