Many
health insurance policies, specially the policies from PSU/Govt. Health
Insurance Companies, and most of the Group Policies (The health insurance
through your employer or Bank Policies) have limits on room rent (mostly @ 1%
of Sum Inured). The limit basically puts a cap on the per day room rent you can
claim, linked mostly to the sum insured (total coverage) you are entitled
to. This may sound like
an innocuous little restriction that will, at worst, shave off a few thousand
rupees of your claim for hospitalization expenses.
But it is actually not so. Here is an example that will illustrate the huge
impact of this clause. Let's say you have a mediclaim policy of
Rs 3 lakh from a company that has a clause restricting room rents to 1% of the
sum insured. This means the room rent limit applicable to you is Rs 3,000 per
day.
Now, if you have to undergo a two-day stay in a hospital for a procedure
(let's assume an angioplasty) that has the following costs:
- General Ward: Room rent Rs 1,000 per day plus all other eligible expenses - Rs 73,000 (total expenses are Rs 75,000 - room rent Rs 2,000 plus Rs 73,000 )
- Twin sharing room: Room rent Rs 3,500 per day plus all other eligible expenses - Rs 2,43,000 (total expenses are Rs 2,50,000 - room rent Rs 7,000 plus Rs 2,43,000)
- Single room: Room rent Rs 6,000 per day plus all other eligible expenses - Rs 3, 88,000 (total expenses are Rs 4,00,000 - room rent Rs 12,000 plus Rs 3,88,000 ).
What will be the amount you will be reimbursed if
you decide to get the procedure done in a twin sharing room? It will cost you
Rs 2, 50,000 (which is well within the policy limit of Rs 3 lakh) but how much
will the insurance company reimburse you? If you are like most people, you
would have answered Rs 2, 49,000 i.e. Costs of Rs 2, 43,000 incurred in the
twin room combined with maximum room rent of Rs 6,000.
If this answer had been correct, then this
restriction may not have such significant impact. Unfortunately the correct
answer is Rs 79,000 only. A small fine print tucked away in the insurance
policy states that the room rent restriction means that all expenses other than
room rent will also be restricted based on what you would have incurred had you
stayed in a room that you were entitled to.
As per the article, here's how the
claim will be paid.
Charge
|
Billed
|
Eligible
|
Total for 2 Days
|
Calculation
|
Room Rent
|
Rs. 3500
|
Rs. 3000
|
Rs. 6000
|
As per limit
|
Package
|
Rs. 243000
|
Rs. 208286
|
Rs. 73000
|
Nearest Eligible Room Charge
|
|
|
Rs. 211286
|
Rs. 79000
|
|
In our opinion, here's how your
health insurance company will pay claims, when you choose a hospital room, with
rent higher than eligible under your health insurance policy.
1. Where the Insurance Company
or TPA has access to your hospital's tariff:
Most
Hospitals have fixed tariffs or rate charts for all rooms. Bills generated are
according to these tariffs. If the Insurance Company has access to the tariff
chart, it will pay all charges as per the tariff for the eligible room rent
category. In the above case, if there was a room of Rs. 3000 available, all
charges would be paid as per the tariff. If there is no such eligible room in
the limit available, the claim would be computed and paid proportionately
(calculation below). So for instance, if in the above example, a room was
available for Rs. 3000, the entire claim would be paid as per the tariff of the
Rs. 3000 room. In case, where a Rs. 3000 room is unavailable, the charges under
the claim would be paid proportionately as explained below.
2. Where the Insurance Company
or TPA does not have access to your hospital's tariff:
If Insurance companies do not have
access to the hospital tariff, the insurance company would pay all other
charges proportionate to the room rent eligible, as mentioned above. So if your
room eligibility is Rs. 2000 and you opt for a Rs. 4000 room, you will pay 50% of
all expenses.
In short, if you look at it, in most
cases, the claim would be paid proportionately, and not as per the nearest but
lower available room rent tariff, which is fair for both parties (Insurance
Companies and Customers)
To explain in the same example,
here's how, in our opinion, the claim would actually be paid.
Charge
|
Billed
|
Eligible
|
Total for 2 days
|
Calculation
|
Room Rent
|
Rs. 3500
|
Rs. 3000
|
Rs. 7000
|
As per limit
|
Package
|
Rs. 243000
|
Rs. 208286
|
Rs. 208286
|
Rs. 243000 X 3000 / 3500
|
|
|
Rs. 211286
|
Rs. 215286
|
|
An Exception
Now,
there is an exception to this calculation only if it is explicitly
mentioned in the policy wordings (terms and conditions) that the payment of
claim for Room and other charges would be made as per the nearest eligible
room.
What should you do?
But what about the general public,
who are not looking at abusing such benefits, what should they do about this
- Go through the policy
wordings of your health insurance policy, to check whether it has such a
clause. Ask your health insurance advisor. If you have such a policy, you
can look at porting the same to a better product.
- If you are young family,
and looking for a policy, go for a policy, which does not have room rent
limits.
- If you have an existing
policy, or don’t have a choice of a no room rent limit policy, go for a
High Sum Insured. In the long term with Room Rents increasing and Room
Rent limits remaining the same, one would witness deduction in claims due
to the proportionate clause.
- If upgrade is not
possible, create building a fund to bridge this gap in the cover you
perceived and you really have.
- Finally, before deciding
a room, in the hospital:
- Go for packages, which
are as per your room eligibility.
- If there are no
suitable packages, negotiate with the hospital or treating doctor,
explaining them how you would get proportionate deductions. In most
cases, there would be a solution available.