Understanding Proportionate Deductions: How Hospital Room Choice Impacts Your Health Insurance Claim

When it comes to health insurance, room rent is more than a choice. It decides how much of your hospital bill is covered by the health insurance company. You may have a Rs 20 lakh health cover, and your hospital bill may be Rs 7.5 lakh, but that does not mean that you will get the entire amount covered by your insurance policy. This is because your policy comes with room rent limits.

You may think that if your room rent cap is Rs 10,000 and you stay in a room with a tariff of Rs 12,000, then you pay Rs 10,000 extra if your hospital stay is five days. However, that is not the case.

Proportional deductions intend to help control the cost of hospitalisation. The costs of treatment, such as doctor fees, diagnostic tests, surgery costs, etc., are usually linked to the room category opted for. The expenses go up when a patient chooses a higher room category.

“If a patient chooses a room above the limit allowed in the policy, the insurer does not just restrict the payout to the extra rent. In such cases, the insurer recalculates the whole hospital bill in proportion to the difference between the room rent allowed under the policy and the higher rent actually chosen. This way, the additional cost of treatment linked to a costlier room is also partly borne by the patient. This control in claim costs is expected to help keep premiums in control,” says Hari Radhakrishnan, an expert at the Insurance Brokers Association of India (IBAI).

As a result, more patients end up going to hospitals that offer rooms at lower, more affordable rates.

Policies have different coverage specifics regarding room rent. Some offer single private rooms, some have single rooms, some have room rent capping in absolute rupee amount or as a percentage of the sum insured. Depending on the budget, one can choose the category.

Room Rent Caps: The Hidden Clause In Health Insurance

“The people should clearly understand the room eligibility criteria as per the insurance policy. In a hospital, there can be multiple room categories ranging from a basic single-bed ward to private single rooms with an additional bed for a bystander and deluxe rooms with extra space as well as cable TV and other facilities,” says Radhakrishnan.

Before availing of the room category at the time of hospitalisation, the eligibility should be checked. The insurer may mean the lowest room category when he says single room. If the insured opts for a higher category room, he will be subject to a proportionate deduction as the treatment costs increase on average by 20 per cent to 30 per cent with the category going up.