Health insurance : Understanding Room Rent Limits in Health Insurance

The above plans and premiums are for AED 1,000,000 Sum insured for 1 Adult of 30 Years for Dubai city.

Getting hospitalised for a certain ailment or treatment does not come cheap. While the best medical services you can receive for any given illness are possible when you are admitted to a hospital and stay within the reach of doctors 24x7, it also generates a hefty bill to be paid later. A big part of this bill consists of the room rent and the services that come along with it. This makes room rent benefit one of the most important parts of your health insurance plans. However, the room rent cover of a health insurance plan is often subjected to a lot of limits and sub-limits. If you do not understand these limits, the hospital expenses to be paid out of your pocket will come as a huge surprise. To make sure that you get to utilise your health insurance plan to the fullest, let’s understand the concept of room rent benefit in health insurance plans and the room rent limits in health insurance plans.

What are Limits and Sub-Limits?

Limits and sub-limits of an insurance plan are caps put on all or some of the benefits offered by the plan. These limits decide how much of the total expenses will be covered by the insurance company. Limits can be the capping put on major details of your plan such as the assured sum. Sub-limits are the limits applied to the further sub-parts of the health insurance plan such as pharmaceutical benefits, lab tests, room rent, etc.

What is Room Rent Benefit?

Room rent benefit is simply the benefit that covers your hospital room rent when you are hospitalised for an ailment or surgery. Room rent benefit of your health insurance plan plays an important role when you are choosing hospitalisation services for your visit. Depending on the type of coverage you get from your insurance plan, you can choose from private, semi-private or ward-style hospital rooms, the rent of the room and the additional services that are offered. This is further subjected to the health insurance room rent limit that applies to the room rent benefit of the cover.

Types of Room Rent as Per Limits

Room rent benefits can be segregated as per the types of limits applicable to them. Given below are the types of room rent benefits you can get as per the health insurance room rent limit applicable on them or the lack of thereof:

No Capping: As the term suggests, room rent benefit with no room rent capping in health insurance allows the policyholder to get any type of room regardless of the rent and added facilities like doctor visits. The flexibility of choosing your hospital room is at its peak with this benefit as part of your plan.
Co-Payment Arrangement: If your room rent benefit is subject to the co-payment arrangement of your insurance plan, the expenses of the room rent get divided as per the pre-agreed co-payment percentage. For example, if you have opted for a 10% co-payment arrangement, you will be bearing 10% of the total rent accumulated during your hospitalisation. This also applies to the additional services you take when hospitalised.
Capping on Room Rent: A separate cap could apply to your room rent. This cap could be in a per cent form or as a maximum allowed amount form. For example, with a room rent limit in health insurance of 2%, your insurance provider will pay up to 2% of your total assured sum as a room rent allowance.
Capping as Per Room Types: Many health insurance plans may also have a capping as per the room type. For example, wardrooms may have no limit on the covered expense, but private and semi-private rooms have a 2% health insurance room rent limit. Here, the insurance company will cover the entire expenses, minus the deductibles, for ward-style rooms, but only 2% of the total assured sum is allowed for private and semi-private rooms.
Per Day Capping: This is a dual style room rent capping in health insurance. Your health insurance may have a main cap of 1% of the assured sum and then a per day cap on top of it, say AED 3000. Assume your assured sum is AED 500,000 and the per day room rent cap is AED 3000. Even when your 1% covered room rent comes up to AED 5000, you will only get AED 3000 for each day as the room rent from the insurance company because of the per day health insurance room rent limit.
Room Rent Waiver Add-on: Health insurance plans with room rent waiver add-on allow the policyholder to eliminate the health insurance room rent limit and get coverage for the whole amount.

How Does Health Insurance Room Rent Limit Works?

Let’s understand this with an example. The assured sum of your health insurance plan is AED 500,000. The room rent allowance benefit comes up to 1% of the assured sum. If you choose a room with a rent of AED 4000, the insurance plan will cover the complete cost minus the deductibles, if any. If you choose a room with a rent of AED 8000, you will have to at least pay AED 3000 out of your pocket. The same arrangement will apply to the services that come with hospital rooms, for example, doctor visits, consultations, diagnostic tests, pharmaceuticals, etc. This concept is known as proportionate deductions.

How Does Room Rent Affect the Rest of Services? – The Proportionate Deductions

The price for services like lab tests and medicines remains the same throughout all the types of hospital rooms. Even then, your choice of hospital rooms can affect the expenses for these services covered by insurance companies. This is because of the application of proportionate deductions. This means the same percentage of deductions applies to all the benefits related to your hospital room. Proportionate deductions are calculated as – allowed room rent/actual room rent*100.

Let’s understand this with an example. The room rent for your private ward is AED 5000, the medicines that you received when hospitalised cost AED 1000 and doctor visits cost AED 1200. The room rent allowance from your insurance company is AED 4000. As per the formula mentioned above, your room rent coverage comes up to 80%. This means that out of the total bill of AED 7200 (AED 5000+AED 1000+AED1200), only AED 5760 (AED 4000+AED 800+AED 960) will be covered by the insurance company after proportionate deductions.

What is the Best Possible Way to Go About Capping?

Stick to the Limit: If you have room rent capping in your health insurance, it is best to know the limitations that it presents and then stick to the allowed amount. The reason is simple; you will end up paying more than what you anticipated out of your pocket if you exceed the limit.

Room rent waiver: Another thing you can try is buying a room rent waiver add-on. This add-on eliminates the health insurance room rent limit applied to your room rent allowance benefit and will have the insurance company cover the complete bill, minus any deductibles.

Rethink Your Coverage: You can also switch health insurance plans if you think the current one is not up to the mark. Rethink your insurance needs and find a better-suited plan with the room rent capping in health insurance and sub-limits that suits you and your requirements.

In a Nutshell

Room rent allowance seems like a rather simple benefit offered by health insurance plans. But its multi-fold nature and further implication on other covers of the plan can make things complicated for you. Hence, as a policyholder, it is essential for you to understand how your insurance policy is going to work in the case of a claim. Read the policy wordings carefully and scan the fine print of the documents as well. Talk to your provider if necessary and make sure that you have a firm grasp on the health insurance room rent limit. You can also seek the assistance of Policybazaar UAE financial experts to find the best health insurance plan as per your needs.