Room rent sub-limits in health insurance: How I lost Rs. 24,000

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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.

How I lost Rs. 24,000 due to health insurance room rent sub-limits!

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:


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.
Room Rent Sub limit clause in health insuranceNotice 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!

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About the Author M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the author and owner of  He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management.  He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis. He conducts free money management sessions for corporates  and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)
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  1. Dear Sir,

    I want your blogs without any advertisement, what is the money I have to pay for it.

  2. Hello,
    Even if what insurance company says is correct and room sub limit for this treatment is 5k. Then all amounts should be reduced by 10% considering 5.5 k is 10% more than 5k.

    But as per chart, for room limit (1st record) 1400 should be deducted from 14,710 ? They seem to have deducted 15% (2210 rs) .

    Have you taken up this issue as well ?

  3. I think, my comment was not published.

    As per chart/table given by you, company has deducted more than 10% for all requested charges. E.g. from (line 1) 14710 -> they should have deducted only 1471 rs ?

    Because, difference between 5k and 5.5k is just 10% ?

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