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Non Life Insurance - Your mediclaim depends a lot on hospital room rent limits

04-Apr-2012

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Many health insurance policies come with a specific limit on hospital room rents. For example , policies of all four public sector companies have a clause that restricts room rents to 1% of the sum insured or Rs 5,000, whichever is lower. This may sound like an innocuous little restriction that will, at worst, shave off a few thousand rupees of your claim for hospitalisation expenses. But it is actually not so. Here is an example that will illustrate the huge impact of this clause. Let�s say you have a mediclaim policy of Rs 3 lakh from a company that has a clause restricting room rents to 1% of the sum insured.

This means the room rent limit applicable to you is Rs 3,000 per day. Now, if you have to undergo a two-day stay in a hospital for a procedure (let�s assume an angioplasty ) that has the following costs: General Ward: Room rent Rs 1,000 per day plus all other eligible expenses - Rs 73,000 (total expenses are Rs 75,000 - room rent Rs 2,000 plus Rs 73,000 ) Twin sharing room: Room rent Rs 3,500 per day plus all other eligible expenses - Rs 2,43,000 (total expenses are Rs 2,50,000 - room rent Rs 7,000 plus Rs 2,43,000) Single room: Room rent Rs 6,000 per day plus all other eligible expenses - Rs 3,88,000 (total expenses are Rs 4,00,000 - room rent Rs 12,000 plus Rs 3,88,000 ).

Now can you tell me what will be the amount you will be reimbursed if you decide to get the procedure done in a twin sharing room? It will cost you Rs 2,50,000 (which is well within the policy limit of Rs 3 lakh) but how much will the insurance company reimburse you? If you are like most people, you would have answered Rs 2,49,000 i.e. Costs of Rs 2,43,000 incurred in the twin room combined with maximum room rent of Rs 6,000. If this answer had been correct, then this restriction may not have such significant impact. Unfortunately the correct answer is Rs 79,000 only.

A small fine print tucked away in the insurance policy states that the room rent restriction means that all expenses other than room rent will also be restricted based on what you would have incurred had you stayed in a room that you were entitled to. In this specific example the room rent sublimit means that you are not eligible for staying in a twin sharing room. The expenses in the next lower category are only Rs 73,000 which is what you are entitled to plus the room rent incurred subject to the maximum limit which makes it Rs 6,000 (making it a total of Rs 79,000 ).

Very few people actually understand this particular implication of the room rent sub limit and discover it only when they actually make a claim. The pernicious practice of hospitals to charge widely differing costs for the same procedure and exactly the same treatment combined with this fine print in the mediclaim policy makes this a very major restriction. Please remember this limit will remain fixed for years to come even as room rents will keep rising. I have no idea how this restriction will work when even the general ward room rates will become higher than the maximum limit mentioned in this restriction.

If you are out looking to buy a health policy, avoid any policy that has such a restriction. If you already have such a policy, then use the recent portability guidelines to shift to any insurance company that does not have any such restriction. Of course, if you are over 45 years of age, the new companies who do not have such restrictions may not be willing to provide you this cover. In such a case you will have no option but to plan a contingency fund to deal with these extra expenses that are not reimbursable.

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