The Room Rent and ICU Limits In Health Insurance

A health insurance policy protects you from incurring out-of-pocket expenses when a medical emergency strikes. Whether you need sudden surgery or a planned hospitalisation, your policy can cover a range of costs throughout your treatment. However, certain sub-limits in your policy can warrant last-minute surprises if overlooked.

Sub-limits are the monetary caps on the amount that your insurer will pay for certain medical expenses. Your room rent and ICU charges are also covered under health insurance, but with certain monetary restrictions or sub-limits.

You should be aware of these monetary caps to have a better understanding of your health insurance coverage and the amount you will have to pay out of pocket. The whole idea of getting health insurance is to eliminate or reduce out-of-pocket medical expenses. So, you must know everything about room rent and ICU sub-limits and make a well-informed policy purchase.

In this blog, we’ll unpack the workings of room rent and ICU limits, outcomes of exceeding those limits, and the various types of caps in your room rent.

How Does Room Rent Capping Work In Health Insurance?

Room rent in health insurance covers the maximum amount the insurer will pay daily for the hospital room the policyholder occupies during the treatment. This is either offered as a fixed amount (for example, Rs. 3,000 per day) or as a percentage of the sum insured (for example, 2% of Rs. 3 lakhs, i.e., Rs. 6,000 per day).

Occasionally, the insurer will levy a dual capping parameter where either a percentage of the sum insured or the fixed amount will be offered depending on whichever is lower.

The ICU charges are also capped at a higher limit in most cases, often as a fixed amount or as a percentage of the sum insured. The capping is usually set keeping in mind the ICU bed charges, equipment usage, nursing charges, etc.

The room rent limit may not seem like a big factor for consideration while buying a health insurance policy. However, it is highly impactful on the final claim settlement amount. Merely opting for a large sum insured amount will not prevent you from paying out of pocket, but getting a decent limit on room rent and ICU is a good way to reduce the burden on out-of-pocket medical costs.

Let’s understand this using a real-life scenario:

Assume you get a health insurance policy worth Rs. 3 lakhs and a room rent limit of 1% of the sum insured, setting your daily room rent limit at Rs. 3,000. Now, let’s suppose you get a room that costs Rs. 4,000 per day, and your total hospitalisation bill comes to Rs. 2 lakhs. You may think that it will entirely get covered in your health insurance, barring a few thousand rupees that you may have to pay out-of-pocket for exceeding the room rent limit. 

Except you’re wrong. Your claim will be settled with a deduction proportionate to your room rent limit. 

This brings us to the next segment, where we explain to you the effects of exceeding your room rent limit and how proportionate deduction works.

Also, read: How to Choose the Right Room Rent Limit in Health Insurance?

What Happens If You Exceed Your Room Rent Limit?

As mentioned earlier, exceeding the room rent limit has consequences that result in the policyholder having to pay a certain portion of the medical bill. So, the amount that is paid out of pocket is the proportionate deduction. Now you may be wondering why the insurer does not cover the entire medical bill, barring the excess amount of the room rent.

Proportionate deduction is applied only when the policyholder exceeds the limit, and it is an avoidable expense. It is the insurer’s way of preventing the policyholders from taking an unnecessarily expensive room category and shifting the cost to the claims.

Understanding Proportionate Deductions

Proportionate deduction (PD) reduces your claim amount when you exceed your room rent limit. It is calculated as a percentage of the excess amount and is applied to all associated medical expenses. The formula for PD is:

Proportionate Deduction = (Room Rent Allowed / Actual Room Rent) * 100

So, if your room rent limit is Rs. 4,000 per day but your actual room rent is Rs. 5,000 and your total medical bill is Rs. 2 lakhs, then your insurer will only bear 80% of the cost, and the remaining 20% will be borne by you. This will bring your out-of-pocket expense to Rs. 40,000. 

Calculation – 4,000/5,000 = 0.8, and the percentage is 0.8 x 100 = 80%

Recommended Read: What is a Grace Period in Health Insurance?

Average Costs of Hospital Rooms and ICU Charges in India

In order to realistically assess and manage your room rent cap, you should be aware of the average room rent and ICU charges for different room types in India:

• General Ward: Rs. 1,000 – Rs. 3,000 per day
• Semi-Private Room: Rs. 1,500 – Rs. 5,000 per day
• Private Single Room: Rs. 2,500 – Rs. 6,000 per day
• ICU: Rs. 8,000 – Rs. 15,000 per day

These prices may vary depending on the hospital and the location, so you can evaluate the average room rent in your city and opt for a judicial coverage. Some insurers also provide health insurance policies without a room rent cap at a higher premium. You can opt for those for better flexibility.

Quick read: Public vs Private Hospitalisation Cost in India

Types Of Room Rent Capping In Health Insurance

The room rent capping may vary for health insurance depending on the specific insurer’s terms and policies. Here are some common types of room rent capping structures:

1. Room with Sub-Limit

The room rent sub-limit can be either a fixed amount or a percentage of the sum insured. Exceeding the room rent limit can trigger proportionate deductions. This structure is most suitable for individuals looking for a budget plan offering sufficient coverage at a lower premium.

2. Room without Sub-Limit

Some insurance providers offer health insurance without any capping on the room rent. This ensures the most flexibility for the policyholders at the time of hospitalisation, they can choose any hospital room without worrying about exceeding limits.

The plan is most suitable for individuals who can afford to get health insurance coverage at a slightly higher premium and prefer better peace of mind.

3. Room with Co-Pay

Some health insurance plans come with a co-pay option that lets you predetermine a fixed percentage of the room rent you will share with the insurer. This can help navigate the unprecedented out-of-pocket costs and also places some onus of the decision-making on the policyholder.

This configuration is most suitable for individuals who are willing to make a compromise on the coverage for a slightly lower premium.

Suggested read: Types of Health Insurance in India

Significance of Room Rent Capping In Health Insurance

1. Affects Overall Hospital Expenses

2. Determines Policy Coverage & Benefits

3. Impacts Out-Of-Pocket Expenses

Benefits Of Getting Health Insurance Without Room Rent Capping

A health insurance plan without room rent capping can be highly advantageous and can make your experience hassle-free. So, if you’re buying a new policy or considering an upgrade, here are a few reasons why you should opt for a plan without room rent capping.

1. Freedom to Choose Any Room

You’re not forced to settle for a shared ward or semi-private room just to stay within your policy limits. You can focus on comfort, privacy, and better amenities.

2. No Proportional Deductions

When there’s no room rent cap, there’s no proportional deduction. You get full reimbursement up to the sum insured, regardless of your room type.

3. Better Access to Quality Healthcare

Private hospitals and super-specialty care often cost more. With no capping, you can afford better facilities and faster treatment without worrying about cost limitations.

4. Covers ICU Charges Too

Most plans that don’t cap room rent also provide adequate ICU coverage, ensuring you’re financially protected during emergencies.

Also, read: What is No Claim Bonus in Health Insurance?

How To Avoid Room Rent Capping: Smart Steps For Policyholders

• While taking out a new health insurance policy, you should review your policy documents carefully. You can also enquire about the room rent sub-limit of your health insurance plan with your customer support representative. 

• If you do not have any budgetary restrictions, then opting for a plan without capping can be beneficial. Specially, if you wish to seek treatment in a Tier 1 city or a private hospital, where medical costs are slightly higher.

• If you are an existing policyholder and you are not satisfied with your plan’s sub-limit, then you should consider upgrading to a higher limit or a coverage slab without sub-limits.

• For Group Health Insurance plans, you can request your employer to share the coverage details or get clarification on room rent and ICU limits.

Summing It Up

Room rent capping can affect your health insurance coverage. It can either help you make the most of your coverage or lead to unnecessary expenses incurred over and above your claims. While opting for a room rent sub-limit can lower your premium, having it in a metro city or a Tier 1 city can turn out to be far less effective.

Alternatively, if you opt for a policy without a room rent cap, you can enjoy complete healthcare access without worrying about additional expenses. The only catch in this case is that you might have to pay a higher premium. There are no better choices, only the ones that suit your needs the best when it comes to room rent capping in health insurance. You can choose a low premium plan with a specific cap and adhere to the daily hospitalisation limit, or you can get comprehensive coverage at a higher premium.

About Onsurity

While on the subject of flexible health coverage, we want to quickly introduce you to Onsurity’s comprehensive health and wellness benefits for employees. Onsurity’s group health insurance includes room rent for different categories, nursing care, doctor’s consultation, diagnostic tests, pre- and post-hospitalisation care, wellness benefits, and more.

Additionally, the plan is highly customisable for teams of all sizes and can meet their varied needs. Employers can get their employees enrolled easily on the monthly plan, starting at just Rs. 145 per employee.

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