Room Rent Capping and ICU None

What does it mean by ‘capping’ in a health insurance policy?

Capping in health insurance refers to the limit, which is usually a percentage, up to which the insurance company settles claims for various hospital expenses. It is the limit been set for an insured. In accordance with the limit, the policyholder can avail coverage benefits of the sum insured.

Why is capping necessary?

• Capping helps in restriction of payable amounts for room-rent, doctor’s consultation fee and it decides upon the claim basis particular diseases or illnesses.
• Therefore, different types of claims have different types of payability upon the overall sum insured. This means that expenses based on specific diseases would be paid under a capped amount which is decided at the time of policy inception.
• Well, capping also depends upon the health insurance plan opted at the time of inception.  Due to capping, the claim ratio is controlled.
• Like, the claim amount will be paid within the capped amount directed in the policy and not as per any random cost made by the hospital during hospitalization.

What are the types of capping?

Types of capping under health insurance plans are as such:

• Room-Rent Capping, room-rent capping is one of the very main parameters impacting the treatment cost. In a Health insurance policy, room rent refers to the cost of accommodation during the hospitalization charged by the hospital. Room rent is often capped by the insurance directly or indirectly. As per policy, in it, out of the sum insured either a percentage or an amount is decided as room rent. According to the category of a class of room/room-rent claims are made for the hospital services. For example, if a person has a policy with an insurance company where room-rent capping is decided in the policy say 1% of the sum insured per day and if the sum insured is 3,00,000 and the total room rent charge will be 12,000 for 4 days.
• Co-payment capping: As per policy terms or plan opted at the time of policy inception consisted of the feature of co-payment. As we know that it is applied during the claim, either in the form of some percentage or a fixed amount is decided, like mentioned above. Co-payment applies upon the claim whether it is cashless or reimbursement claim. To make you understand better there is an example, assume, if any policy has a capping of co-payment in percentages like 5%,10%,15%, or 20% then the payable amount by the insurer will be after deducting the capped amount.
• Capping upon Maternity Cost: Maternity is normally not covered in a retail health policy and has a waiting period of 9 months. Some policies even have a 3-year waiting period or lesser. Whereas, a group health policy will allow claims from Day-1 of the policy inception, which is not possible in a retail health policy. The logic is that from the date of inception of the policy, the retail insurer wouldn’t be able to make good business if the waiting period is deducted. Therefore, maternity coverage is not possible from day-1. 9 month waiting period means that if there comes a claim of maternity in this period it will not be covered. However, for the group health insurance wherever we pay an extra loading on the premium – this 9-month waiting period is waived off. Although, standard limits for C-section and Normal/natural deliveries are not specified and vary depending on the specific T&C of your Policy.  Normal costs are always lesser as hospitalization is limited to 1-2 days only. But as C-section deliveries are those where there is surgery involved in the delivery process, hospitalization increases, and the capped amount is used more as compared to the normal delivery.
• Capping basis Diseases and Illnesses: Disease-wise capping means that only the capped or restricted amount will be paid through the claim for diseases and illnesses. Diseases and illnesses are not specified and vary depending upon the specific T&C of the policy of your company. Like some insurers might consider the claim of hernia, whereas, some might not. But some standard health insurance policies have some disease/ illnesses covered by default in the policy plan. Like cataracts, calculus, piles, and others. (the list of diseases covered in the health insurance plan).

How does capping work in a health insurance policy?

The capping amount or percentage is decided at the time of inception of the policy. Then there are certain types of capping such as room-rent capping, disease/illness wise capping, and at the time of claim, capping will be applied as per room-rent capping. Like, if as per policy room rent is capped at 1% of the sum insured per day for a normal room and 2% of the sum insured for ICU and the total sum insured is 3 lakhs per person then 3K will per day’s room cost which can be availed for normal room rent and 6k for ICU per day.

What is the impact of capping?

The impact of capping is that it reduces the cost of premium in the health insurance policy and also maintains the claim ratio in the insurance policy which so much so benefits the employer as well as the insurer.

What is Room-Rent Capping?

• Room-rent capping is one of the very main parameters impacting the treatment cost. In a health insurance policy, room rent refers to the cost of accommodation during the hospitalization, charged by the hospital.
• Room rent is often capped by the insurance directly or indirectly. As per policy, in it, out of the sum insured either a percentage or an amount is decided as room rent.
• According to the category of a class of room, the room-rent claims are made for the hospital services.
• For example, if a person has a policy with an insurance company where room-rent capping is decided in the policy say 1% of the sum insured per day and if the sum insured is 3,00,000. Then, the total room rent charge will be 12,000 for 4 days.

What does it mean by sub-limit upon a room-rent?

The choice of room taken has a bearing on the overall treatment cost. The cost of the procedure has a limit that is decided by the room category. These limits are referred to as sub-limits upon a room-rent. The cost of the procedure at a general ward will differ from the cost of the procedure in a single room.

What can happen if you ignore the room-rent clause?

Most people are unaware of the consequences of the clause of room-rent and they tend to understand it only when an actual claim arises. When a certain claim isn’t reimbursed fully due to room rent sub-limits, the unpaid expenses have to be borne by the insured status.

How to avoid sub-limits?

One should avail of the portability facility announced by IRDA and to migrate to an insurance plan which offers policies without any sub-limits. Most of the private companies are offering policies without sub-limits while all PSU companies are still having sub-limits to their policies.

Why is the clause of room rent so important in a health insurance policy and why should you have knowledge of it?

1. Room rent is one of the key components impacting the overall treatment cost. In a Health insurance policy, room rent refers to the cost of accommodation during the hospitalization charged by the hospital.
2. Room rent is often capped by the insurance directly or indirectly.
3. Category of the room also has a bearing on the overall cost of treatment as the hospital procedure packages are devised based on it.

What all is included in the room-rent?

1. Under room-rent, obviously the cost of the room is included, be it the space in a general ward, twin sharing, sharing, single-AC, deluxe room, or suite room.
2. It covers the cost of the ICU (Intensive Care Unit) bed too.
3. Room-rent also includes the RMO charges and nursing charges while the patient is hospitalized.

What is the eligibility for room rent?

The room-rent eligibility depends upon the health insurance plan of the insured. Some insurance plans cap the room rent as a percentage of the sum insured. For example, 1% for normal room and 2% for ICU per day

What type of room(s) is/are available at the hospital?

It is extremely relevant to know the type of rooms available at a hospital. And they can be categorized into two parts:

1. Normal rooms :
2. General Ward
3. Twin Sharing
4. Sharing AC Deluxe Room
5. Single AC Deluxe Room
6. Suite Room.
7. ICU (Intensive Care unit)

Advantages of negotiated room rent in a cashless process?

Room rent is already negotiated between the hospital and the insurance provider. Hence, the insured does not need to negotiate the rates of room in the hospital and can opt for the room within the sub-limits of the health insurance plan and avoid deductions that could happen due to higher room rent.

Will the government hospital’s room rent be payable in my policy?

As per the rules of the Government of India, government hospitals in India do not charge room rent at the hospital. Rather they only charge for medicines and the cost of those medicines too can be covered in the health insurance policy.

Now that you have learned in good detail about room rent and sub-limits to it and how relevant it is knowing that what room rent offers in an insurance plan. You are well equipped to decide which room to opt for by being mindful of the cap in a health insurance plan. Be mindful and reap the benefits of a health insurance plan if needed. Click on the link below and opt for a health insurance plan which gives the option choice to choose your sub-limits.