What does room rent in health insurance policy mean?

In health insurance policies, room rent means amount charged by hospital towards room and boarding expenses including nursing and other associated medical expenses. In simple terms, room rent is the amount charged by the hospital for per day stay at the hospital.

Why is room rent important in health insurance policy?

Room rent is an important part of health insurance policy. The limit on room rent in health insurance policy determines the claim amount which will be paid by the insurance company.  While policies without room rent limit are desirable, one must always check if their health insurance policy have room rent limit.

 Room rent limit in health insurance or Mediclaim policies are of three types, fixed amount or percentage of sum insured or a combination of both.

The example of room rent capping limit in health insurance:

1. Fixed room rent limit- Fixed upper cap of room rent limit e.g. Rs. 5000/night
2. Percentage of Sum Insured – 10% of Sum Insured which means in a health insurance policy of 5 Lacs Sum Insured the room rent limit would be Rs. 5000/night
3. Combination room rent limit – Combination of above two type of room rent limit. Percentage of Base Sum Insured with a maximum upper limit of Rs. 7,500. In such case, a policy with 5 Lac cover would have room rent limit of Rs. 5,000/ night while a policy with 10 Lac cover would have room rent limit of Rs. 7,500/night

Important points to remember for room rent limit in health insurance policy.

If there is a room rent limit, it impacts total admissible claim amount, if the insured person stays in a room with higher cost than the allowed room rent limit in that particular health insurance or Mediclaim policy. The insurance claims are deducted on pro-rata basis as per the room rent limit and the actual room rent charge. Let’s understand this with an example.

Case – There is room rent limit of Rs. 5,000 in the policy. The hospitalization duration was 2 days and the insured person stayed in a room with per day rent of Rs. 10,000. The bill amount was Rs. 1 Lac.

Claim paid in above scenario would be 50% of the bill amount i.e. Rs. 50,000 since 50% deduction would be applied on total claim. You must not forget that it’s not only the extra amount for the room rent is deducted from the bill but pro rata deduction is applied on the whole hospital bill.

Check list for buying health insurance policy:

1. Don’t buy health insurance policy with room rent limit.
2. If there is room rent limit in the health insurance policy, don’t stay in hospital room with per day charges higher that allowed room rent limit in the health insurance policy.