Out of the various items on a hospital bill, the one that plays a significant role in the final amount is the room rent. Room rents generally vary from hospital to hospital and depend on the care you need. Fortunately, most health insurance policies have a room rent limit, which is the maximum amount your insurer will pay for room rent for a patient covered under the policy. However, it can get tricky to understand how the insurer settles the bill and how room rent is calculated in the claim. Let’s understand how room rent capping affects the hospital bill.
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Room rent refers to the daily charges levied by the hospitals for providing accommodation, which includes the hospital bed and basic utilities. Depending on the type of room you opt to stay in, different amenities such as round-the-clock nursing, meals, and other utilities may be provided, all of which contribute towards the room rent per day.
Room rent varies based on factors such as:
Standard, normal plus, private, or intensive care.
The room rent in Metro cities is generally higher than in other small cities.
A corporate hospital usually charges more than a government hospital charges.
Room rent capping in health insurance is a limit placed on the amount that an insurance company will pay for a hospital room per day during an insured's hospitalisation. This means that if the cost of the room exceeds the cap, the insured will have to pay the difference out of pocket.
The insurance policy documents usually contain all the information related to the room rent cap applicable to the policy. It can either be a specific amount, for example, Rs. 15000, or in percentage, i.e. 3% of the sum insured. It can also be capped at a certain number for each day of hospitalisation.
Consider Mr A bought an Individual health insurance policy with a room rent cap of Rs. 15,000 and Mr B bought an insurance policy with a room rent capped at 3% of the sum insured. The sum insured of Mr B's health insurance policy is Rs. 5 lakhs. Thus, the room rent cap on Mr B's policy is also Rs. 15,000. On the other hand, Mr C’s Individual Health insurance policy has a room rent cap of Rs. 2,000 per day during the hospital stay.
Regardless of how the insurance policy covers the room rent, any additional expenses must be paid out-of-pocket.
Hospital room rent is a major component of treatment costs for any hospitalisation case. Room rent expenses typically vary across cities and hospital types. Here is an overview of average room rent costs per day at hospitals in India:
| Hospital Room Type | Metro Cities (Zone A) | Tier 1 Cities (Zone B) | Other Cities (Zone C) |
| General Ward | ₹1,400 per day | ₹1,200 per day | ₹800 per day |
| Semi-Private (2-3 beds) | ₹4,000 per day | ₹3,000 per day | ₹1,500 per day |
| Private Single Room | ₹5,200 per day | ₹4,800 per day | ₹2,300 per day |
| ICU | ₹8,800 per day | ₹8,400 per day | ₹6,800 per day |
Policies define room rent in different ways based on how the insurer will offer coverage. You can find this information under the terms and conditions of the policy. Coverage for room rent and out-of-pocket expenses will be determined based on these terms.
Let's look at the common ways in which room rent limits are structured:
A fixed percentage of the sum insured is defined as the room rent limit per day. For example, the policy may state the room rent is capped at 1% of the sum insured per day.
So if you have a 5 lakh sum insured policy with a 1% room rent limit, your maximum eligible room rent per day would be 5,000 (1% of 5 lakhs).
The room rent limit is specified by mentioning eligibility for a broad room category such as "single private A/C room" or "shared non-A/C room".
Some policies add qualifiers like "single standard private room" or "lowest category of room rent available in the hospital". This puts additional restrictions.
Sometimes, the limit is defined through two parameters - a fixed amount per day and a percentage of the sum insured. For example:
"Room rent covered to the extent of 1% of sum insured or maximum 4,000 per day, WHICHEVER IS LOWER".
Here, you have to compare both amounts, and the lower figure will apply.
Some premium plans do not impose any capping on room rent and cover your actual expenses for the room category you choose, subject to other terms.
Apart from understanding how the room rent limit is defined, also analyse what is included in it - ward charges, nursing expenses, etc. This will help you evaluate options during hospitalisation.
Different health insurance companies, have their own rules when it comes to room rent and capping. One thing that is common among all health insurance companies is that the rules that apply to the health policy will be clearly mentioned in the policy document. As a policyholder, you need to make an informed choice while selecting the policy with a specific type of room rent. Here are the common types of room rent capping for your reference.
Many health insurance policies have no cap on room rent. The policyholders are free to select the room type as per their requirements and comfort.
Co-payment is sharing the payment made to the hospital for your stay. Co-payment or co-pay on room rent means you as a policyholder will bear the room rent and related expenses together with the insurance company.
Insurance companies often put a cap on the amount of room rent a policyholder can claim. Beyond this limit, the insurance company will not bear the related expenses.
The policyholder is given a choice to select a hospital room type as per availability and requirement. If your health insurance policy allows a cap on a certain room type then you have two options. Either, choose a room type that fits inside the room rent limit or bear the additional expenses by selecting a room that costs more than the room rent limit.
As the name suggests, the Room Rent Waiver add-on can be bought with an insurance policy that has room rent capping. But the limit will be waved off under this add-on.
While calculating the claim amount, the insurance company will consider the room rent and applicable capping as the main component. The claim amount that the insurer pays out is based on the type of room you choose to stay in and room rent cap defined by the policy. Let's understand how room rent capping will affect your overall claim amount through an example.
Consider Mr John has bought a health insurance policy of Rs. 5 lakhs that has a room rent cap of 1% of the sum insured. After a few years of buying the policy, he had to be hospitalised for Hip Replacement Surgery. His hospital stay was going to be 5-days long, and now he had to choose a room. His hospital bill will be:
| MR JOHN’S HOSPITAL BILL | Cost |
| Room Rent Charges | Rs. 40,000 |
| Cost of Hip Replacement Surgery | Rs. 1,75,000 |
| Doctor Visits | Rs. 30,000 |
| Tests | Rs. 30,000 |
| Medicines | Rs. 25,000 |
| Total | Rs. 3,00,000 |
| CLAIM AMOUNT CALCULATIONS | RS. |
| Room rent allowed | Rs. 25,000 |
| Cost of Hip Replacement Surgery (62.5%) | Rs. 1,09,375 |
| Doctor Visits (62.5%) | Rs. 18,750 |
| Tests (62.5%) | Rs. 18,750 |
| Medicines (non-associated expense) | Rs. 25,000 |
| Claim amount | Rs. 1,96,875 |
When you purchase health insurance, there are two scenarios related to your health insurance policy:
In this case, you can consider changing your health insurance plan or switching to a different insurance company altogether. This can be done by porting the current plan to one without any room rent capping. If you want to continue with the current plan, then consider upgrading the sum insured of your health insurance policy. This will increase the limit on room rent capping and give you space to choose a room of your liking without affecting the claim amount much.
Be sure to go through all the documents related to the plan to get clarity on room rent capping. If you don’t find the information on any of the documents, then we recommend you to get in touch with the insurance company and ask them if your plan has this clause.
Room rent limits are not just about the daily room charges. They can cascade impact other associated expenses, such as doctor's consultation fees, surgery charges, and diagnostic tests, often linked to your chosen room type. So, if your health insurance policy has a room rent limit, the following tips can be helpful:
Increasing your room rent limit is possible by opting for a higher sum insured. However, the room rent cap may still be limited if your insurer pays a fixed amount per day or a percentage of the sum insured.
There is a straightforward rider known as a room rent waiver that many insurers provide. A Room Rent Waiver rider lets you choose a higher room category without affecting your claim, as the insurer covers the full cost. This can lead to a higher premium, especially when you or your loved ones need medical care.
If you compare several insurance companies, you can find an insurance company with a 100% difference in the room rent limit. In that case, transferring insurance to the new provider and receiving health insurance with a raised room rent cap is possible.
To ensure maximum coverage at an affordable price, buy premium plans that do not have room rent caps for hospitalisation.
Here are some advantages of health insurance policies without limits on room rent charges.
With no limits on room rent charges, you can choose any hospital room that meets your needs and budget. This gives you the flexibility to select a room based on your preference, rather than being restricted to a certain type of room.
When you don't have to worry about the cost of the room, you can choose a better quality room that may offer more amenities or facilities. This can help make your hospital stay more comfortable and improve your overall recovery experience.
While it may seem counterintuitive, not having a limit on room rent charges can actually save you money. This is because many hospitals offer discounted packages for patients who opt for a higher category room. By choosing a better room, you may be able to save on other expenses such as medications, diagnostic tests, and other procedures.
Knowing that you have the freedom to choose any room without worrying about the cost can provide peace of mind during a stressful time. This can help you focus on your recovery and not have to worry about financial constraints.
Access to Better Hospitals: By opting for a health insurance policy without limits on room rent charges, you may have access to better hospitals with more advanced facilities and equipment. This can be especially important if you have a serious or complex medical condition that requires specialised care.
The concept behind room rent is not common knowledge, and policyholders feel cheated when they receive a low claim amount. This is where the importance of reading the policy document, the fine print, and the terms and conditions is highlighted. Someone who is not familiar with health insurance may have many questions related to things like room rent, co-pay, sub-limits, etc., and the insurance company will readily answer those queries when asked.
Next time you review a health insurance policy, pay close attention to the room rent capping clauses. Doing so can help you make informed choices and avoid surprises during critical moments.
ACKO urges you to clarify any doubts before signing the policy document. If you receive a lower claim amount, you will know the exact reason behind that claim settlement. Rather you can be prepared for such situations if you are aware of the different health insurance concepts.
Here are some frequently asked questions about Room Rent Capping in Health Insurance.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes. Please go through the applicable policy wordings for updated ACKO-centric content, and before making any insurance-related decisions.
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