There is no denying the fact that selecting a health insurance policy is a difficult task. You need to take a lot of factors into consideration before choosing a health insurance policy. One of the most important factors to consider is Room Rent Sub-Limits/ capping/ proportionate charges in health insurance policy. There’re many types of sub-limits in a health insurance policy like capping on the treatment of a particular illness, capping on ICU charges etc.
Let me take an example of sub-limit to make the concept easier for you to understand.
Suppose you’re admitted to a hospital for a certain illness and the sub-limit to cover the disease is 50,000. If the hospital expenses for treating the illness are 65,000, you’ll have to pay an additional 15,000 from your pocket.
The most common example of sub-limits is a health insurance policy with maternity benefits. In this policy, every company has a capping on the coverage of maternity expenses.
The sub-limits in the health insurance policy for a particular illness may not impact you in a significant way. But when it comes to room rent sub-limits/capping, it’s definitely going to have a harder impact. Having said that, let’s first understand what’s Room Rent Sub-Limits/capping in Health Insurance policy.
What Is Room Rent Sub-Limit/ Capping?
Room Rent sub-limit is basically capping on your room rent charges per day. Suppose you’ve taken a health insurance policy for a sum insured of 4 Lakhs. And, the room rent sub-limit mentioned in the policy is 1% of the total sum insured. This simply means that if you’re hospitalized, you can spend only 4,000 per day on a room.
So what? I can pay additional charges of 10,000 from my pocket if I’m hospitalized for 5 days. And, I’ve chosen a room with a rent of 6,000 per day.
No, my dear friend, it’s not that simple. Let’s understand it with the help of an example.
Suppose you’re admitted to the hospital for some illness (for 5 days) and need to undergo a surgery. The hospital gives you an estimate of charges for 2 options – Shared room option having room rent charges of 4,000 per day. And, Single room option having room rent charges of 6,000 per day.
The cost of surgery and other expenses would be around 2 Lakhs if you choose to stay in a shared room. Whereas the cost would be 3 Lakhs if you choose to stay in a single room.
How much difference would you pay if you’ve a health insurance policy of 4 Lakhs with 1% room rent sub-limits? Would it be only 10,000 as explained in the above example? The answer is no.
Assume that you chose the single room option (or you wanted to opt for a shared room but it wasn’t available). Let us see how much extra amount you’d have to pay in this case.
These are called proportionate charges. As you can see, you’ll have to pay a difference of 96,000.
What Are Proportionate Charges in Health Insurance Policy?
Proportionate charges are the charges which would be applicable to every expense in proportion to your room rent limits. (If you’re admitted to the hospital.)
Like in the above table, the surgery cost in a single room is 2.40 Lakhs Rupees. And you’ve a room rent limit of 4,000 although you’ve opted for a room with rent of 6,000. In such a case, you’d be paid only 1.60 Lakhs for the surgery.
Proportionate Charges – Rs. 2,40,000 *(4000/6000) = Rs. 1,60,000
Even if the doctor`s fee is same for the shared room or single room, it would not matter. You’d be paid proportionately if you had chosen a single room.
How Does Room Rent Sub-Limit Impact You?
You may say that “it wouldn’t impact me as I live in a small town. Even a single room costs less than 4,000 per day.” But think of it from a long-term perspective, the health insurance inflation rate is very high throughout the world. A small-town hospital’s single room rent might be costing you only 4,000 now. But it would definitely not cost the same after 10 years. Health insurance policies need to be continued throughout life. Today or tomorrow, the room rent limit will surely impact you.
Though there’s another option of co-payment in health insurance policies where you can pay 10% of the hospital bill if you upgrade to a room other than mentioned in your policy. But you never know how it’ll impact you – whether the co-payment would be higher or paying proportionate charges from your pocket.
What Is The solution?
Normally, PSU companies offer health insurance policies with room rent sub-limits. Most private health insurance companies offer policies without room rent sub-limits.
The best solution is to go with a private health insurance company and choose a policy without room rent limits.
If you’re very particular about going with PSU companies, it’s better to opt for a high sum insured in the policy.
Even if you’ve already taken the policy from a PSU company, there’s no need to be concerned. You can check the option of increasing the cover at the time of the next renewal.
There’s another option of portability where you can port your existing policy to a new non sub-limit plan as well.
Do let me know if you’ve any questions in mind. Till then,