Room Rent Feature in Health Insurance Policies: All that You Need to Know

Kavya purchased a health insurance policy from her family friend, who happens to be a health insurance agent. She felt secure knowing she had coverage for medical expenses and that the family friend would help her if she needed it.

Unfortunately, a few years later, she was unexpectedly admitted to a hospital for a minor surgery. She chose a comfortable private room, assuming the health insurance policy would cover the costs.

However, to her surprise, at the time of discharge, she found out that the insurer imposed a 20% copayment!

Imagine being admitted to a hospital and choosing a comfortable room for your stay, only to find out later that your health insurance policy doesn't cover the entire cost of that room.

This is precisely what you can avoid by reading this article.

Best Health Insurance Policies without Room Rent Restrictions

What is Room Rent Restriction in Health Insurance?

As the name suggests, a room rent restriction is a limit up to which insurers pay for your room if you get hospitalised. This limit is usually a fixed sum or a percentage of the cover amount. Any expense that exceeds this limit must be borne by you, the policyholder.

Let’s understand this better with an example:

You have a health insurance policy with a room rent limit of ₹3,000 per day, but you’re unaware of it. Unfortunately, you had to get hospitalised and opt for a private room that costs ₹5,000 per day. Since your insurance policy only covers up to ₹3,000 per day, you will have to pay the remaining ₹2,000 out of your own pocket for each day of your stay.

For instance, if your hospitalisation lasts for five days, you need to pay ₹2,000 (the excess amount) multiplied by 5 days, resulting in an out-of-pocket expense of ₹10,000 for the room rent.

But if you think this is the only additional expense, boy oh boy, do we have a surprise for you!

When you’re hospitalised, there are expenses other than the actual treatment and room rent. You need to undergo various tests, check-ups, doctor consultations, etc. Most of these prices vary according to the room you pick.

So, apart from the actual room rent, you need to pay a pro-rated amount for all the treatments and check-ups availed in the room. This can significantly increase your out-of-pocket expenses.

Apart from this, another aspect you should be aware of is that there are different types of room rent restrictions. Here are some of the most common types of room rent restrictions found in health insurance policies in India.

Types of Room Rent Limits in Health Insurance

1. No Room Rent Restriction: With the best health insurance policies, the insurers do not impose any caps on the room rent charges. Needless to say, this is the best choice for any policyholder.
2. Room Rent Cap on Specific Room Types: Insurers often put a nominal cap on their room rent coverage feature by removing a single room type. This means you can opt for any type of room except those explicitly restricted.
3. Copayment on Room Rent: In this case, the room rent charges are shared between the policyholder and the insurance provider in a pre-decided ratio in the insurance policy.
4. Room Rent with Capping: The health insurance provider caps room rent charges. This can either be a percentage of the cover amount or a specific amount mentioned in the policy. If your chosen room demands a charge higher than the capped amount, you will be liable to pay the excess amount.

Opting for a good health insurance policy with the least restrictions is essential. This starts by comparing various policies and understanding their pros and cons. Now, let’s look at some of the advantages and disadvantages of room rent limits in health insurance.

Pros & Cons of Room Rent Limits in Your Health Insurance Plan

When it comes to any financial instrument, checking its benefits and drawbacks ensures you have the entire picture and are not being mis-sold. Here are the advantages of room rent limits in a health insurance policy:

Advantages of Room Rent Limits in Your Health Insurance Plan

1. Keeps the premium low: Having a room rent limit keeps the premium low. So, for the budget-conscious person, this leads to lower upfront premiums. However, keep in mind that if you exceed the room rent limit, if you’re ever hospitalised, you need to pay a significantly higher amount than that you saved with the lower premium.
2. Reduces overall costs: Several hospital charges, such as doctor fees, nursing fees, and even the cost of medical procedures, are linked to the type of room chosen. Opting for a room that costs within this limit will lead to a lower overall hospital bill. This will ensure that there is a higher cover amount for any future hospitalisations in the same policy year.

Disadvantages of Room Rent Limits in Your Health Insurance Plan

Here are the disadvantages of room rent limits in a health insurance policy:

1. You cannot select any room you want: Room rent limits can restrict your choice of rooms, forcing you to opt for shared or lower-category rooms, which may not provide the comfort or privacy you need.
2. Increased out-of-pocket expenses: If you choose a room that exceeds the rent limit, you'll have to pay the difference out of your pocket. This can lead to significant expenses, especially during prolonged hospital stays.
3. Composite Expenses: Since various costs are linked to the room type you choose, opting for a more expensive room can result in higher overall hospital bills, further increasing your out-of-pocket expenses.
4. Inconvenient: During an emergency, you might not have the time nor the convenience to choose a room within the specified limit.

Best Health Insurance Policies with No Room Rent Restriction in 2024

Having no room rent restriction is important when selecting a health insurance policy. As discussed above, this ensures you can choose any hospital room without worrying about additional expenses. That said, here are some of the top policies without any room rent restrictions in 2024:

1. HDFC ERGO Optima Secure

HDFC ERGO Optima Secure is a comprehensive health insurance policy that does not impose any room rent restrictions. It covers pre- and post-hospitalisation expenses for 60 and 180 days, respectively, has no copayments, and even covers consumables.

As an insurer, HDFC ERGO has one of the highest CSRs of 97.5%, significantly higher than the industry average of 91%.

Drawbacks: HDFC ERGO policies usually come with higher premiums than similar policies from other insurers.

 2. Aditya Birla Activ One

Aditya Birla Activ One has several variants, all of which offer robust coverage without room rent restrictions. This policy has a cover amount of up to ₹6 crore and 2X coverage from day 1, bringing the effective cover amount to a whopping ₹12 crores. It also includes several wellness benefits, such as discounts on gym memberships, daycare procedures, and AYUSH treatments. The policy also offers health returns and unlimited automatic restoration.

Drawbacks: Activ One has a 10% co-payment clause should you get hospitalised at non-network hospitals. As a relatively new entrant, Aditya Birla's operational and customer service metrics do not yet match those of more established insurers. However, we are hopeful they achieve better numbers in the future!

 3. Care Supreme

Care Supreme, being one of the top policies of Care Insurance, is designed to offer extensive coverage with no room rent restrictions. In line with other comprehensive health insurance policies, it also has no co-payments or disease-wise sub-limits. This policy has a wide range of add-ons and includes benefits such as AYUSH treatment, domiciliary hospitalisation, etc.

For the last three years, Care Insurance’s average CSR has been around 90%, aligning with the industry average.

Drawbacks: Care Supreme has a higher-than-average complaint ratio, which could indicate issues with claims processing and customer service. The policy also includes a four-year waiting period for pre-existing diseases, which is longer than most competitors. However, this can be reduced with an add-on.

4. Niva Bupa ReAssure 2.0

Niva Bupa ReAssure 2.0 is a comprehensive health insurance policy with no room rent restrictions. It has several industry-first features that are not available in other policies. Feel free to take a look at this article for a detailed review of ReAssure 2.0. This plan also includes unique features like Booster Plus, which carries forward the unclaimed amount to the following policy year.

Drawbacks: Niva Bupa has a significantly higher complaint volume than its peers, which might be reflected in its customer service and claims processing. Recent management changes may have impacted the company's operational stability and service quality, and we hope they will be improved soon.

Conclusion

While health insurance plans with room rent limits do come with lower premiums, they can lead to significant out-of-pocket expenses if you choose a room that exceeds the limit or category. Opting for a policy without room rent restrictions gives you more flexibility and peace of mind, ensuring you can focus on recovery without worrying about any expenses.If you still need assistance choosing the right policy, be it health or term insurance, feel free to consult Ditto’s IRDAI-certified insurance advisors for personalised, spam-free advice.