Thread by @BimaPeBharosa

Why are room rent caps such a big deal?

Most Health Insurers place a limit on the amount you can claim for the rent of a hospital room. Usually, this limit is 1% of the total coverage.

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Example- Mohan's health policy has a Sum Insured of ₹5 Lakhs and the Sub-Limit for hospital room rent is 1%. If Mohan is hospitalized, his insurer will only cover room rent costs up to ₹5000 per day (1% of ₹5 Lakhs).

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If his room costs more than that, he’ll have to pay the difference himself. You may think that doesn’t sound so bad. He'd probably have to shell out a few extra thousands at most, right?

Wrong

Because room rent sub-limits also leads to proportionate deduction

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You see, hospitals follow a differential pricing approach where expenses such as doctor’s fees, anesthesia, and operation theatre charges are different for different categories of rooms. For example, these expenses would be lower for a shared room than a private room.

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If the room you’ve chosen belongs to a higher price category than what your policy covers you for, all these related expenses will be linked to that category of rooms, and your payout will be proportionately reduced. For example-

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Suppose your policy specifies a room rent cap of ₹5000 per day, but your actual rent is ₹10,000. Now, if your total bill comes to ₹3 Lakh, your insurer will only pay you half that amount (₹1.5 Lakh). This is because your room rent limit is half of the actual room rent.

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However, in 2020, the IRDAI decided to clarify what these related expenses were. They issued guidelines that stated that certain costs related to pharmacy, diagnostic tests, and medical devices should not be linked to room rent, and so should not be proportionately reduced

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But in any case, it’s best to get policies with no, or at least higher, limits on room rent.

Does your policy have a cap on room rent?
Find out with Know Your Health Insurance by BimaPe here: bit.ly/3udMs6x

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#BimaPeBharosa #insurance #personalfinance