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

Let’s say you are planning a vacation. For an estimation of the budget, you will be taking into account the travel expenses, food, shopping, and the hotel room rent - right? The 2nd most expensive concern among these is the room rent, and often you browse from one hotel to another, seeking the one with the most affordable rent.

This way, you can make considerable savings, and you are free to spend the residue on your shopping sprees from the local cuisines!

Unfortunately, with hospitalization, you don’t have the luxury of choosing a facility with affordable room rent. Because during a medical emergency, with your life hanging by a thread, you are looking for a medical facility that offers you quality services and customized care for your ailment. You are not exactly in a space to factor in room rent and availability that can be covered under your insurance policy.

However, it is undeniable that hospital room rents take up a considerable portion of your hospital bill. Now, you may argue that you have an excellent health insurance plan that hosts the feature of room rent coverage, which you think will prevent you from having to spend out of your pocket for the charges.

But is this what the room rent feature means in your health insurance policy? Will it really cover all the room rent charges? What happens if you exceed the coverage offered for room rent? Let’s find out!

What is meant by the Room Rent feature in Health Insurance Plans?

The room rent feature in a health insurance plan suggests certain funding (as specified in the policy) kept aside in the offered coverage to fund the room rent charges during hospitalization.

During hospitalization, apart from the conventional charges involved in treatment, medicine, and surgery, you will be looking toward 2 major aspects that demand substantial funding - consumables and room rent charges. Usually, most plans from the best health insurance providers in India offer their policyholders a room rent feature.

The purpose is to ensure that the bill charged by rooms during hospitalization are covered under the total coverage offered in a health insurance policy. However, some plans put a cap on the room rent coverage feature. And this posits some serious financial strain on the policyholder. Hence, the best possible coverage would be a plan with no caps on the room rent.

Why should an ideal health insurance plan have no room rent capping?

Let’s say you are in urgent requirement of a surgical procedure. You have a health insurance plan that offers coverage of INR 10 lakhs and a room rent coverage feature.

However, you have failed to notice a small asterisk in this feature where it says that the coverage is capped at INR 5000/day.

And, unfortunately, for the hospital you have approached, the only available room charges you INR 10000/day.

So, what do you do? Browse for another hospital? That doesn’t seem right!

Your primary concern is getting the best medical care for your current medical condition. So you end up continuing with the treatment in the hospital. And in the end, during discharge end up paying a huge amount (and it's not just the additional room rent charges! It's so much more, as you will learn below).

Hence, the best health insurance policy for 2023 should be the one that comes without any room rent caps so that while you are hospitalized, you are not caught up with the worries of which room is available and if it will be covered by your insurer.

However, let’s say that you avail of a health insurance coverage plan with certain room rent capping. And during your emergency hospitalization, you happen to chance upon a hospital whose only available room exceeds that offered under your coverage.

What kind of financial strain are you looking at in this case? Let’s find out!

How does the room rent limit affect your claim settlement in Health Insurance?

Take, for example, a case where you have met with an accident and approached a hospital with an emergency surgical treatment requirement -

• Coverage offered under your policy: INR 15 lakhs
• Premium: INR 15,000
• Room Rent Limit: INR 10,000/day/hospitalization
• Hospital Room Charge: INR 20,000/day for 8 days = INR 1,60,000
• Other Hospitalization charges: INR 5,00,000
• Hospital Bill Total: INR 6.6 lakhs
• INSURER pays: INR 3.3 Lakh
• You pay: INR 3.3 lakh

Confused? I mean, you do have coverage of INR 15 lakhs, then why is your insurer paying only half of the billed amount?

The logic is that - you took up a room that charges double your capped amount, and will be doling out the residual 50% of the room rent charges out of your pocket. That indicates to your insurer that you will also be able to pay 50% of the entire hospital bill. And hence, the provider is willing to pay only half of the invoiced amount.

So, in the end, you end up paying INR 3.3 lakh despite having coverage of INR 15 lakhs in total.

Thus, when you choose a plan with robust capping and restrictions on the room type and rent, you are looking at a much more serious financial crunch than just paying off the balance of room rent charges. Furthermore, this totally defies the purpose of availing of a health insurance policy meant to safeguard your finances during medical emergencies.

The 2 best ways to avoid this financial strain would be to

• Factor in the room rent restriction feature apart from copayment and disease-wise sub-limits when choosing your health insurance plan.
• Opt for health insurance portability to a plan with no or minimal room rent restriction in case your existing policy deprives you of the perk of no-room rent caps.

With the room rent feature, you might as well be looking at a variation on the types of restrictions across your health insurance policy -

What are the types  of room rent capping in health insurance policies?

1. No Capping on Room Rent: 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 from their coverage.
3. Copayment on Room Rent: In this case, the room rent charges are shared (as per the pre-decided ratio in the insurance policy) between the policyholder and the insurance provider.
4. Room Rent with Capping: The health insurance provider puts a cap on the room rent charges. If your chosen room demands a charge higher than the capped amount, you will be liable to pay the excess amount.
5. Room Rent Waiver Add-on: Some insurance providers are crafting a bespoke experience for health insurance policies. They offer room rent waivers on their plans to do away with the caps on their normal room rent restrictions. However, such add-ons also spike your premium (even if nominally). The best way to go forward with this would be to compare the two -

• The premium of a (plan with room rent restriction + room rent waiver add-on)
• The premium of a plan with no room rent restriction.

Now, choose a plan that best suits your finances.

When you are faced with the chance of facing such crucial financial risks over room rent charges, you do need a proper solution. A solution that ends with you having access to the best possible health insurance plans that would not just cater to your medical requirements but would also support your financial stability.

What are the best health insurance plans with no room rent capping?

The best health insurance policies are not determined just by the room rent capping feature. However, this feature is surely a determining factor in finalizing your plan.

Given below are our top choices for best health insurance plans, based on room rent features (and overall too) -

PS: Care Advantage from the Care brand has no room rent restriction. But Care Plus is still a better plan.

As you can see, among the top 6 policies, 3 come with a nominal restriction feature. However, these 3 still remain among the top choices of insurance policies because the capping that they bring along is nominal.

To know which of these should be your choice of policy, tally the policies on the compare Health insurance tool and schedule a free call with our expert insurance advisors for free.

However, it is also true that for some potential policyholders with pre-existing critical ailments and senior citizen health insurance policies, it might be impossible to avoid room rent restrictions. Under such circumstances, choose a plan that imposes the least room rent restrictions.

Frequently Asked Questions:

1. What is meant by the room rent limit?

The room rent limit in a health insurance policy means the room rent charge limit put in by the insurer up to which they will be offering the funds for coverage. The policyholder pays off the balance if the room rent exceeds this limit.

2.  What is No Room Rent Capping in Health insurance policies?

No room rent capping in a health insurance policy means that a policyholder is free to choose any room type that he/she finds available and/or requires. The insurance provider will provide the entire room coverage, irrespective of the rent charged per day.

3.  What are the benefits of having no room rent capping in your health insurance?

The benefits of having no room rent capping in your health insurance plan are -

• Freedom to choose a room type based on your requirement and availability sans worries about the room rent
• No financial strain over room rent charges despite availing of a health insurance plan.