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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.
Room rent capping in health insurance is a limit placed on the amount that an insurance company will pay for a hospital room per day during a insured's hospitalization. This means that if the cost of the room exceeds the cap, the insured will have to pay the difference out of pocket.
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.
One 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.
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.
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 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.
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.
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.
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.
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
Room Rent Charges
Cost of Hip Replacement Surgery
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
Room rent allowed
Cost of Hip Replacement Surgery (62.5%)
Doctor Visits (62.5%)
Medicines (non-associated expense)
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.
There are two scenarios related to your health insurance policy
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.
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.
Here are some advantages of health insurance policies without limits on room rent charges.
Flexibility: With no limits on room rent charges, you can choose any hospital room that meets your needs and budget. This gives you the flexibility to select a room based on your preference, rather than being restricted to a certain type of room.
Better Facilities: When you don't have to worry about the cost of the room, you can choose a better quality room that may offer more amenities or facilities. This can help make your hospital stay more comfortable and improve your overall recovery experience.
Cost Savings: While it may seem counterintuitive, not having a limit on room rent charges can actually save you money. This is because many hospitals offer discounted packages for patients who opt for a higher category room. By choosing a better room, you may be able to save on other expenses such as medications, diagnostic tests, and other procedures.
Peace of Mind: Knowing that you have the freedom to choose any room without worrying about the cost can provide peace of mind during a stressful time. This can help you focus on your recovery and not have to worry about financial constraints.
Access to Better Hospitals: By opting for a health insurance policy without limits on room rent charges, you may have access to better hospitals with more advanced facilities and equipment. This can be especially important if you have a serious or complex medical condition that requires specialized care.
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.
The limit on the cost of a hospital room that the insurance company will bear up to is the room rent limit in Health insurance. It is usually capped at 1% or 2% per day of the sum insured of the policy. However, do check with your insurer about the capping.
These are health insurance policies that do not have a limit on the room rent. The policyholders can choose a room as per their liking and the insurance company will bear the related costs as per the terms and conditions of the insurance policy.
Room Rent Waiver is an add-on that can be purchased with a health insurance policy. It helps to remove caps on the room rent limit and the policyholders can choose a room as per their comfort.
*Except for exclusions like maternity benefits, undisclosed diseases, etc. Please check policy wordings for more details.
**In case the pre-existing disease surfaces after a policy is issued. However, at the time of claim, if it is found that the policyholder did not disclose any known pre-existing diseases while buying the policy, the claim may get rejected.