Why Is the Room Rent Clause Necessary In GMC

WHY IS THE ROOM-RENT CLAUSE NECESSARY IN GMC?

A very close friend of mine, Rahul had a heart attack three months back. He was rushed to a renowned hospital in Mumbai. He went through an angioplasty and was hospitalized for 5 days. His condition is stable now.

He had a health insurance policy of 3 lakhs. The final hospital bill generated was Rs. 2,57,500. He felt secure. He submitted the claim form to the TPA immediately after his discharge from the hospital. Rahul and his family got a response letter stating that he will only get Rs. 85,000/- as claimed.

The question here arises is, why wasn’t he paid the full amount of the bill, if his sum insured was more than the amount of his hospital bill?

The answer is, Rahul had a policy which had a sub-limit on room rent and he was paid the amount as per the sub-limit of the room, as per his policy’s rules!

What does it mean by sub-limit upon a room-rent ?

The choice of room taken has a bearing on the overall treatment cost. The cost of the procedure has a limit that is decided by the room category. These limits are referred to as sub-limits upon a room-rent. The procedure cost of a general ward will be different from that of a single-room.

Most of the health insurance policies from PSU companies have sub-limits on room-rent. The room rent is restricted to 1% of the sum insured or Rs. 5000/room per day.

Let’s understand how the sub-limit operates in a medical insurance policy through Rahul’s example.

Rahul had a policy with sum-insured of Rs. 3 lakhs, which limited his room rent eligibility to only 3000. He thought that he would be charged only for the difference in room rent of Rs. 500 per day!

He got admitted into a twin sharing room which had rent of Rs. 3,500/day. In order to ensure good post-surgical care, the angioplasty’s cost and other service charges were Rs. 80,000 in a general ward. Rs. 2.4 lakhs in a twin-sharing room and Rs. 3.75 lakhs in a single room. Due to lack of knowledge on room-rent, he preferred a twin sharing room with a rent of 3500.

The bill was Rs. 2,57,500 (2,40, 000 + 17,500 = 2, 57,500). Due to room rent sub limits, he received only Rs. 85,000/- from the insurance company.

What did we understand?

The policy says that, in case of sub-limit under room rent, all expenses other than the room rent will also be restricted based on your limits.

In Rahul’s case, his policy had a defined room-rent of 3000/night and he was not entitled to stay in the twin sharing room with 3500/night. Rahul was entitled to the expense of Rs. 80,000/- for 5 days in a general ward but as he took a room of a higher category than allowed. Hence, all the charges went up due to the category of the room. The insurance company settled the amount of Rs. 85,000/- as against his bill of Rs. 2,57,500/-. Please have a look at the chart below to understand the same.

Type of Room	Room Rent per day	Room rent for 5 days	Cost of surgery and related expenses	Total Hospital bill	Rahul’s eligibility
General Ward	1000	5000	80,000	85,000	85,000
Twin Sharing Room	3500	17500	2,40,000	2,57,500	85000
Single Room	5000	25000	3,75,000	4,00,000	85000

What can happen if you ignore the room-rent clause?

Most of the people are unaware of the consequences of the room rent clause. They tend to understand it only when an actual claim arises. When a certain claim isn’t reimbursed fully due to room rent sub-limits, the unpaid expenses have to be borne by the insured.

 How to avoid sub-limits?

One should avail the portability facility announced by IRDA and to migrate to an insurance plan which offers policies without any sub-limits. Most of the private companies are offering policies without sub-limits while all PSU companies are still having sub-limits to their policies.

Why is the clause of room-rent important in a health insurance policy and why should you have knowledge of it?

1. Room rent is one of the key components impacting the overall treatment cost. In health insurance policy, room rent refers to the cost of accommodation during the hospitalisation charged by the hospital.
2. Room rent is often capped by the insurance directly or indirectly.
3. Category of room also has a bearing on overall cost of treatment as the hospital procedure packages are devised based on it.

What all is included in the room-rent?

1. Under room-rent, the cost of the room is included, a general ward, twin sharing, single-AC, deluxe room or suite room. It covers the cost of the ICU (Intensive Care Unit) bed too.
2. Room-rent also includes the RMO charges and nursing charges while the patient is hospitalised.

What is the eligibility for room rent?

The room-rent eligibility depends upon the health insurance plan of the insured. Some insurance plans cap the room rent as a percentage of the sum insured. For example, 1% for a normal room and 2% for ICU, per day.

What type of rooms are available in the hospital?

It is extremely relevant to know the types of rooms available at a hospital. They can be categorised into two parts:

1. Normal rooms :
   1. General Ward
   2. Twin Sharing
   3. Sharing or Single AC Deluxe Room
   4. Suite Room.

2. ICU (Intensive Care unit)

What are the advantages of negotiating room-rent in a cashless process?

Room-rent is already negotiated between the hospital and insurance provider. Hence, the insured does not need to negotiate the room rates in the hospital. A person can opt for the room within the sub-limits of the health insurance plan and avoid deductions which could happen due to higher room rent.

Will the government hospital’s room-rent be payable in my policy?

As per the rules of the Government of India, government hospitals in India do not charge room-rent at the hospital. Rather they only charge for medicines, and the cost of those medicines too can be covered in the health insurance policy.

Now that you have learnt in detail about room-rent and sub-limits. How relevant it is to know what room rent offers in an insurance plan. You are well equipped to decide which room to opt for by being mindful about the cap in a health insurance plan. Be mindful and reap the benefits of a health insurance plan if needed. Click on the link below and opt for a health insurance plan which gives options to choose your sub-limits.