When you buy a health insurance policy, you need to keep in mind that there are certain sub-limits that exist. These sub-limit are specified coverage limits up to which you will be able to make a claim. Admission in the ICU is a costly affair, and most plans cover ICU charges up to 1% or 2% of your total sum insured. With a higher sum insured you may be able to get more coverage for the ICU charges. There may also be a daily benefit for ICU to manage ICU charges per day, depending on the kind of health insurance plan you have opted for.
An ICU has many types of equipment required to monitor the vitals of a patient which are highly advanced. Furthermore, an ICU has to be extremely sterile for severely ill patients and thus, requires air conditioners and air filtration systems at all times. Some of the ICU equipment include:
Heart rate monitor
Blood pressure monitor
Oxygen level monitoring
In addition to the advanced equipment, the ICU charges also include the cost of senior nurses and doctors. The manual labour costs are significantly high as ICU patients require round-the-clock monitoring and regular checkups throughout the day.
When it comes to certain medical conditions or facilities, health insurance plans have a sub-limit in place which outlines the extent of expenses to be covered by the insurer. The sub-limit applicable to room rent in health insurance also covers ICU charges for intensive medical care.
In simple terms, a room rent clause limits the cost of the room covered under the plan to a certain percentage of the total sum insured. So, if you have a health insurance policy with a coverage of ₹1 lakh, and you have a room rent limit of 2%, then the insurance company will only cover up to ₹2,000 a day towards room rent. As we have seen, ICU rooms can be quite expensive when compared to other hospital rooms. This could result in expenses related to your room exceeding the amount that your policy covers.
How this plays out is a little more complex than it may seem. Let's take the above example. If your room rent comes out to be ₹6,000, your health plan has a room rent limit of 2%, which is ₹2,000 for a sum insured of ₹1 lakh. You may assume that all you have to do is pay ₹4,000 per day for your hospital stay, right? Not quite! The reason you do not pay a flat ₹4,000 per day based on the previous example is that insurance companies take into account what is known as ‘proportionate deduction’.
If you opt for a room that is beyond your daily room limit, then the insurance company will provide coverage based on the proportion of the room rent limit against the total rent paid. Simply put, the formula is:
Coverage Amount = (Room Rent Limit / Room Cost) x Total Cost
This is because the type of room you choose usually determines how much a hospital will charge you i.e, someone in a cheaper room may be charged less for the same treatment than you. So, if you choose a room with higher rent than permitted by your room rent limit, this potentially inflates the cost of treatment to be covered by the insurer.
Let's take an example. You have a cover of ₹5 lakh and a 2% room limit, giving you a rent limit of ₹10,000 a day. If you need to be admitted to an ICU for 5 days with a rent of ₹15,000 per day, the total hospital bill would be ₹2 lakh. However, the amount that the insurance company would be willing to pay is:
Sum paid out = (Room Rent Limit / Room Cost) x Total Cost
= (₹10,000/₹15,000) x ₹2,00,000
Hence, the insurer will pay out about 66% of the total hospital bill. As you can see, the room rent limit is a crucial factor in picking your health insurance policy as it is bound to affect your claim should you require an ICU.
If you are more likely to visit Tier-1 hospitals that have expensive rooms (above ₹6,000 to ₹7,000), then you might want to pick a health insurance policy that simply does not have a room rent limit. This is because if the cost of your room goes beyond the limit, then this will affect your entire claim payout, which could be reduced by a significant amount. Alternatively, if you live in a place that has mostly Tier-2 and Tier-3 hospitals, you could get away with a lower room limit, as the cost of the room is unlikely to be high.
Insurance companies include sub-limits in health insurance policies to reduce the overall medical care expenses. Moreover, these sub-limits are set after considering the average rates charged by various hospitals. Hence, insurance providers are able to secure themselves against fraudulent claims or inflated hospitalisation bills submitted by policyholders.
Although many health plans have sub-limits in place, there are insurance providers offering policies without such a clause. But you must know that insurance plans without a sub-limit clause have a higher premium when compared to policies with a sub-limit. Thus, it is crucial to understand the terms and conditions of your health plan and ensure that the insurance coverage is sufficient. Even though health plans with sub-limits might be more affordable, they may limit your insurance coverage in the long term.
There are three different kinds of sub-limit clauses in health insurance that you must know:
Your room rent capping health insurance incurred during hospitalisation, however, there is a limit applicable. The room rent covered usually falls between 1% - 2% of the sum insured of the insurance policy.
For example, if you have a room rent limit of 2% and a sum insured of ₹1 lakh, the insurer will cover up to ₹2,000 per day towards room rent.
Furthermore, the insurance plan might also have a limit on the type of room covered such as general wards, semi-private rooms, deluxe rooms, etc. Depending on the type of room included in the coverage, other medical expenses may also vary.
Insurance policies might have a sub-limit clause on the coverage for pre and post-hospitalisation. These medical care expenses include the cost incurred for tests and consultations before getting admitted to the hospital and after discharge. Hence, you must check the sub-limit applicable under your policy as you might have to bear the cost exceeding the coverage.
Sub-limit clauses are also applicable in the case of specific health conditions that commonly affect people and pre-planned treatments. These treatments include piles, kidney stones, tonsils, sinus, gallstones, etc. The insurance provider shall only cover a percentage of the total healthcare cost incurred due to the sub-limit clause.
For example, if you have insurance coverage of ₹10 lakh with a sub-limit clause of 50% for certain treatments, then the insurer will not pay out more than ₹5 lakh in the event of a claim.
As sub-limit clauses are decided by the insurance company, you must read the terms and conditions mentioned in the plan. If you opt for a health plan with sub-limits, you cannot change it later and thus, you need to ensure that the coverage is sufficient for you. Go through the features, exclusions, co-payment and deductible clauses to understand the insurance policy better. In case you cannot avoid sub-limits in health insurance, make sure the policy satisfies your requirements. Although insurance without such clauses shall come at a higher premium, the coverage might not be sufficient in the long run.
One thing to note while considering ICU charges in a hospital is that the cost of the room is not directly proportional to the quality of treatment you receive. Furthermore, getting an expensive room may also determine how costly your overall treatment will be and thus, how smooth your health insurance claim process will be.
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You shall find health insurance sub-limit clauses applicable on certain medical treatments, conditions, and pre and post hospitalisation expenses.
Based on the type of sub-limit you exceed, the penalty might vary and you might have to bear out-of-pocket expenses. But this may differ from insurer to insurer.
There are numerous exclusions that are not covered under health insurance plans but they may differ depending on your insurer as well. Read more about diseases not covered under health insurance on our platform!
The best you can do is ensure that the hospital is not overcharging you. That aside, treatment in the ICU is essential, and it is best to make sure you do not try to cut costs here.
Generally, insurance providers might permit up to 2% of the total sum insured per day.