Last Updated on December 29, 2021 at 4:50 pm
This is how I lost Rs. 24,000 on my health insurance claim due to the presence of room rent sub-limits. However, having a policy without such sub-limits is not a bed of roses either. Readers may recall that my mother had ear surgery in Dec 2018 but I thought I got away with the sub-limit clause in her United India Gold Policy when I discussed practical problems with such sub-limits. That was not to be.
Update to ITR2,3 e-filing: A couple of days back I had pointed out that those with Equity LTCG should wait for revised ITR forms. They are now available with the following note: In case of long term capital gains (LTCG) arising on sale of equity shares or unit of equity oriented fund or unit of business trust on which STT is paid, separate computation of capital gains should be made for each scrip or units of mutual fund sold during the year and aggregated amount should be provided in item No. B4 (ITR 2)/B5( ITR 3) (in case of residents) or item No. B7 (ITR 2)/B8(ITR3)(in case of non-residents). The Utility has been updated and relevant validation rules are relaxed. Please download the latest utility available under Downloads. The updated utility of ITR-5 for the same change will be available shortly.
Before we begin, some context is in order. This Rs. 24,000 (24,571 to be exact) lost represents 22.3% of the total expenses for the surgery. This is not a crib or a rant post. I was aware of these limitations and would only like to present factual evidence of how room rent sub-limits work. Also since the way hospitals operate has changed significantly in the last decade or so, it has become quite difficult to operate with such a policy.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
For the particular case that you shall see below, the reasons given by the TPA (third party claim settlement agency) for applying the room rent sub-limit is, in my opinion (explained below), wrong and I have contested it both with the TPA and the insurer.
Also please take note of the timeline. The surgery was done in the last few days of Dec 2018. The claim was sent for processing within about 15 days and the money was paid in April 2018. I did not receive any intimation and only by chance realized that the money was sent. It has been a month since I complained about this 24K and I am yet to receive even an acknowledgment from the TPA and only an acknowledgment from the insurer.
Moral 1: If you think you do not need money for hospitalization expenses because you have “health cover” then you are delusional. Moral 2: Getting money via reimbursement can take time!
What is a room rent sub-limit clause in a health insurance policy?
This essentially means that the cost of the daily room rent and daily ICU rent and associated expenses will be capped at 1% of sum insured (room rent) and 2% of the sum insured (ICU rent). The problem is that the following charges depend on the room and ICU rent -extract from United India Gold policy wordings
- Nursing Care, RMO charges, IV Fluids/Blood Transfusion/Injection administration charges, and similar expenses. Surgeon, Anaesthetist, Medical Practitioner, Consultants, Specialists Fees.
- Anaesthetist, Blood, Oxygen, Operation Theatre Charges, surgical appliances, Medicines & Drugs, Dialysis, Chemotherapy, Radiotherapy, cost of Artificial Limbs, cost of prosthetic devices implanted during surgical procedure like Pacemaker, orthopaedic implants, infra cardiac valve replacements, vascular stents, relevant laboratory diagnostic tests, X-ray and such similar expenses that are medically necessary
That is practically everything else (aside from medicines and implants)!!
Example of how room rent sub-limit works
My mother’s policy has a sum insured of Rs. 5.5 Lakh. The room rent was Rs. 5,500 a day = 1% of the sum insured and as per allowed limits as per the policy document. The TPA, however, applied the clause stating:
ROOM RENT RESTRICTED TO RS. 5000/DAY FOR THIS AILMENT
There is no such mention of this in the policy wordings and is wrong IMO (and hence I have taken this up with them). The illustration below shows all the different categories where the room rent sub-limit clause applies.
Notice how doctors fee, medicines, investigations and even OT charges are linked to the room rent! This logic is bizarre but is typically how hospitals operate too.
Leave alone my situation. In general, it has become difficult to use a policy with such sub-limits because hospital room rents have rapidly increased as they have become corporate institutions part of the hospitality sector.
On the other hand, if we opt for private insurers who do not have such sub-limits (possibly because they need to increase market share), then the grass is not greener. Private players front load the premium for pre-existing conditions. They often also permanently exclude such conditions.
This can be tricky because they can always argue that any hospitalization is related tot he excluded condition and reject claims. So we will have to be ready to fight it out with them (with enough money to pay for the hospital stay first!!)
This is the reason why I feel buying a health insurance policy is the most difficult decision in personal finance!
I do not know if I will get back this money, that matters little. I have the bigger problem of increasing room rents to worry about!
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 7000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 2,500 investors and advisors use this!
Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)