Understanding Room limits in health Insurance

Room rent plays an important role in claim settlement of Health Insurance in India. The amount of claim which will be settled by an Insurance company depends on the type of the room opted and the room type eligibility. 

The hospital cost also varies with the room opted. If someone opts for a single room , hospital bills are lower and if someone goes for a suite room, the bill increases by a big amount. This is the reason the insurance company settles the claim on the basis of the room opted.

Majority of the policies in India have a room limit like some xyz% of sum insured, single room or any room except suites or deluxe. In these cases, the claim settlement varies but if someone opts for a good policy without any room limit, then the claim settlement doesn't depend on the opted room. 

In policies with a room limit, if the opted room is higher than the eligible room then the insurance company applies a concept of Proportionate deduction (very common in PSU's and smaller Insurance companies) where they deduct a percentage of claims from the entire bill and that percentage is the ratio of excess room charge over eligibility by room opted.

 For example - 

Room eligibility was 4000 Rs 

Room opted for 10000 Rs  

Ratio of deduction will be 6000/10000 = 60% 

Bill of 3,00,000 will be settled for approximately = 3,00,000 *(1-60%) = approx. 1,20,000 Rs

Proportionate deduction doesn't sound that dangerous, but it takes away a major chunk of bill amount when a claim comes. This is very common specially in PSU and other lower premium policies. Very few people know about it and they only become aware once a claim has come in the family. 

I personally feel this concept is perfect as it is based on the concept of higher the sum insured, the better room you get. If someone wants to opt for a suite room, he/she has to opt for a good health insurance with a higher sum insured. This concept had controlled the loss ratio of the companies too as eligibility was as per your budget but with introduction of Big private players this concept has started becoming redundant.

Also be very careful, there are companies like HDFC ERGO which do not have a room limit but when someone goes for a cashless claim settlement, suite room cashless is not given in majority of the cases a they have agreement with the hospitals only for a single room. Very few Insurance advisors have the approval for suite room cashless.

Do revisit your health insurance for this room limit and if you are buying a new health Insurance , pay attention to this clause specifically along with others.

For more doubts / queries , please feel free to reach out to us on eaststarinsurance@gmail.com