Are Hospital Bills Getting Costlier?

Hospitalisation costs are rising steadily as a result of medical inflation. Though medical science is advancing with great speed and has developed cutting-edge cures, the underlying costs cannot be ignored.

GST on Hospital Bill | Bajaj Markets

5% GST On Hospital Room Rent and Its Impact On Your Bill

24 feb 2022
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Are Hospital Bills Getting Costlier?

A report titled ‘Key indicators of social consumption in India: Health’ recorded data between July 2017 and June 2018. It discusses the average cost of hospitalisation in India on a per-day basis. While the cost in a government hospital was reported to be Rs.4452, in a private hospital, it shot up to Rs.31,845. 

 

Other sources put the cost at Rs.5797 in rural areas and Rs.8882 in urban areas in 2004. 

 

This is the average per-day cost. Imagine the hospital bill for extended hospitalisations!

 

Given these figures, it is clear that hospital bills are getting costlier. If medical inflation wasn’t enough, the GST Council has also introduced a 5% GST on hospital room rent, adding to the expenses. 

 

According to the newly introduced GST rules on hospital rooms, hospitals costing Rs.5000 and more would be subject to an additional 5% GST. For instance, if the cost of the room is Rs.6000, you would have to pay Rs.6300, including the 5% GST on the hospital bill.

Should You Be Worried About The 5% GST On Your Hospital Room Rent?

The 5% GST levy is applicable on rooms costing more than Rs.5000. Furthermore, in the case of ICU admissions, the GST is not applicable. So, you should worry about the 5% GST only if you are hospitalised, and the room rent is more than Rs.5000. If the rent is lower, your bills would also be lower since GST would not apply.

 

Moreover, if you are covered under a health insurance plan, you do not have to worry about the additional hospital room rent GST. Your health insurance policy covers the room rent, GST included. So, the tax liability of the GST would also be borne by the health insurance company sparing you the financial burden.

 

However, if the actual room rent exceeds the covered room rent, there’s a cause for worry. This is because if you exceed the sub-limit on the room rent allowed under the policy, the insurance company pays a proportional part of the claim while you bear the remaining. In such cases, a part of the GST would fall on your head.

 

Let’s simplify with an example –

 

No room rent limit

Room rent limit of 1% of the sum insured

Sum insured 

Rs.5 lakhs 

Rs.5 lakhs

Allowed room rent limit

None. You can claim the actual room rent.

1% of Rs.5 lakhs = Rs.5000

Actual room rent

Rs.6000

Rs.6000

Period of hospitalisation

5 days

5 days

GST

5% of Rs.6000 = Rs.300/day

5% of Rs.6000 = Rs.300/day

Total hospital rent

Rs.6300 * 5 = Rs.31,500

Rs.6300 * 5 = Rs.31,500

Coverage allowed 

Rs.31,500

Rs.31500/Rs.6300 * Rs.5000

= Rs.25,000

Out-of-pocket expense 

Nil

Rs.31,500 – Rs.25,000

= Rs.6500

 

So, if you have a health insurance plan which has no room rent limit, you need not worry about the GST imposition. The health plan would cover the room rent up to the sum insured even if the rent is increased due to GST on hospital rooms inclusion.

 

However, if you have no health insurance plan or if your plan covers room rent up to a limit, you might have to worry about the additional GST imposition. The added GST would increase your outgo and make the medical bills all the more expensive. 

Conclusion

The imposition of GST on hospital room rent has become effective from 1st July 2022. This added expense is out of your control. However, if you invest in a comprehensive health insurance plan without any sub-limits on room rent, you needn’t bother about the imposed GST. Your health insurance policy would take care of the tax on healthcare facilities and pay it along with the claim amount so that your finances are spared.

 

So, invest in a suitable health plan and forget the worries of the additional GST on healthcare services.

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FAQs on Hospital Room Rent GST

  • ✔️Would there be different impacts of GST imposition for cashless and reimbursement claims?

    No, GST would apply in a similar manner for both cashless and reimbursement claims. The only difference would be that in cashless claims, the insurer would directly pay the additional GST with the medical bills. However, in the case of reimbursement, you would have to pay the additional GST and then get it reimbursed from the insurer.

  • ✔️What is the GST rate for ICU room rent?

    No GST is applicable on ICU room rent.

  • ✔️Can I claim an Input Tax Credit on GST on hospital room rent?

    No, you cannot claim an Input Tax Credit on the GST paid for the hospital room rent, with or without a health insurance plan.