By Sunil Dhawan
The litmus test of any insurance policy occurs at the time when a claim arises. According to recently published industry data, the number of customer complaints against health insurers has gone up primarily on account of dissatisfaction with claim settlement. The main reason for this relates to sub-limit of room rent - a common feature in health insurance policies. Let's look at the importance of this sub-limit feature, why it remains a problem in claim settlement and how to overcome it.
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What are sub-limits? Sub-limits refer to the extent, usually a percentage of the sum insured, to which the insurer will pay the claim for different hospital expenses. Doctors' fees, surgery/operation charges, nursing expense, medicine cost and room rent, all can have a specific cap called the sub-limit. Irrespective of the sum insured in the policy, the claim for any expense is restricted to the sub limit for that expense. For example, room rent could be capped at 1 per cent of sum insured and hence for a policy of Rs 1 lakh, room rent would be restricted to Rs 1,000.
Importance of room rent sub-limit: As far as claim is concerned, the sub-limit on room-rent is the most important. In most policies with sub limits, the cap on reimbursement of claim for all other medical expenses is linked to the room-rent limit. Therefore, it's better to stick to the room rent limit. If the sum insured in the policy mentioned above is Rs 3 lakh, it is advisable to choose a hospital room with rent equal to 1 per cent of the sum insured i.e. Rs 3,000 or lower.
Impact of exceeding the sub limit: Not sticking to the room rent limit has a negative impact on the total claim settled by the insurer. If one exceeds the room-rent limit, the insurer proportionately reduces the reimbursement sub limits for all other associated medical expenses. Prashant Jhaveri, Head, Products and Strategy, Medi Assist Healthcare Services, says, "Many hospitals have differential billing and room rents based on the room type selected. In case such differential tariffs are applicable, our pro-rata deductions are applied on policies with room rent restrictions." The sub limits for reimbursement of associated medical expenses are reduced in the same proportion as the room-rent exceeds the permissible limit. So, if one exceeds room-rent limit by 33 per cent by opting for a room costing Rs 4,000 per day instead of mandated room costing Rs 3,000 per day, reimbursement sub limits for all other claims also get reduced by an equal percentage. This results in partial payment of the claim and the policyholder has to meet the balance expense from his own pocket. This leads to dissatisfaction and gives rise to customer grievance.
What to do: At the time of hospitalisation, get the linkage between the room-rent limit and other expenses sorted out. Ask the third party administrator available at the hospital or the insurer itself. If the above mentioned link between room rent sub limit and limits of other expenses is applicable , then it's better to stick to a room with rent within the permissible sub limit.
Policies without sub-limits: There are some plans in which there is no sub-limit on any of the medical expenses including room-rent. "Choose policies which do not have a sub limit clause even though they might come with a bit higher premium. The benefits are much higher in such cases", Naval Goel, Founder & CEO, PolicyX.com. Few health insurance plans allows removal of such sub-limits if one pays extra premium. Prashant says , "The sub-limits on policies are priced into the health insurance premiums charged. Hence it is more a matter of one's choice and appetite. One can protect one's freedom to choose room category by getting sub limits removed by paying extra premium. "
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Conclusion: While most health insurance brochures clearly state the various sub-limits but the important 'proportionate reduction' of claim amount clause often gets a mention only in the policy document. Therefore, in order to avoid partial settlement of claim and for a good customer experience it's always better to stick to room-rent sub limit. Alternatively, go for a policy without sub-limits.
Source: Economic Times
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