What is a Group Health Insurance Plan?
A Group Health Insurance Plan is a type of health insurance plan which insures a common group of people under a single health insurance plan. It pays for the hospitalisation expenses of the Insured employees and even the pre and post -hospitalisation expenses.
A Group Health Insurance Policy is also known as a GMC Policy or a Group Medical Insurance Policy.
Usually, a company or employer purchases a Group Medical Insurance Policy for its employees.
One advantage of group health insurance policy is that the features of group health insurance policy can be customised by the employer as per the budget and requirements of the company.
Factors like Room Rent Capping, Co-Payment Clause in GMC Policy, Pre-Existing Disease Coverage and Waiting Periods can be customised to suit the requirements and the budget of the employees and employees.
Hence, understanding the features of a Group Health Insurance Policy can enable an employer to choose appropriate Group Health Insurance Coverages that best suits the needs of their employees.
This article will explain one of the key features in a Group Health Insurance Policy: Room Rent Limits
What is Room Rent Capping in Group Health Insurance Policy?
Group Health Insurance Plans come with Room Rent Capping Limits which are generally specified as a percentage of Sum Insured and are applicable on a per day basis. The Room Rent Limit in a GMC Policy can be different for Normal and ICU Rooms as well.
For example: A Group Health Insurance Plan with a Room Rent Capping of 1% and 2 % of Sum Insured per day for Normal and ICU Rooms respectively will reimburse the Insured only upto a maximum room rent limit of 1% and 2% of Sum Insured for Normal and ICU Rooms) as specified in the plan. Any room rent expenses over and above the room rent limit will have to be borne by the Insured himself.
Another important point to note is that Group Mediclaim Policy for Employees also has a proportionate deduction clause which means that in case the room rent expenses exceed the room rent limit as specified in the Group Medical Insurance Policy, then all the other expenses will also be deducted on a pro-rata basis as the room rent expenses.
Hence, the Room Rent Capping Limit in a Group Health Insurance Policy not only impacts the reimbursement for the room rent incurred in the event of a hospitalisation, but also other hospitalisation expenses that are reimbursed by the GMC Policy.
The workings of Room Rent Limit in a GMC Policy can be better explained by means of an example.
Consider an employee insured under a Group Health Insurance Policy with a Sum Insured of Rs2 lakhs and a Room Rent Capping of 1% of Sum Insured per day. The insured employee gets admitted in a hospital an incurs the following expenses for 5 days:
| Medical Expenses | Amount |
| Room Rent Expenses (5 days) | Rs50,000 |
| Surgery Cost | Rs1,00,000 |
| Doctor Visit Charges | Rs20,000 |
| Reports | Rs10,000 |
| Total Expenses | Rs1,80,000 |
The employee’s Group Health Insurance Plan had a room rent capping limit of 1% of Sum Insured (Rs2 lakhs) per day, which meant that the employee was eligible to be reimbursed only Rs2,000 per day (1% of Sum Insured of Rs2 lakhs) towards room rent expenses under his GMC Policy.
However, his room rent expenses were Rs50,000 for 5 days, that is, Rs10,000 per day.
In such a case, the employee’s Group Medical Insurance Policy will reimburse only Rs2,000 per day towards room rent expenses while the additional expense of Rs8,000 per day will have to be borne by the Insured himself.
Additionally, since the Group Medical Insurance Policy had a proportionate deduction clause, all the other expenses would also be paid on a pro rata basis as the room rent expenses
Reimbursed Expenses = Room rent limit / Actual Room rent = 2000/10000 = 20%
Hence in our above example, the insured employee will be reimbursed only 20% of all the expenses incurred and 80% of the incurred expenses will be deducted by the group health insurance company.
Hence the reimbursed amount in each category will look like this:
| Medical Expenses | Reimbursed Amount |
| Room Rent Expenses (5 days) | Rs10,000 |
| Surgery Cost | Rs20,000 |
| Doctor Visit Charges | Rs4,000 |
| Reports | Rs2,000 |
| Total Expenses | Rs36,000 |
The total amount reimbursed will therefore be Rs36,000 which is determined by proportionate deduction clause in the GMC Policy. Hence, the Room Rent Capping Limit impacts not only the rent amount to be reimbursed but also the other medical costs.
How to choose the right Room Rent Limit for a Group Health Insurance Policy?
Choosing an adequate room rent limit under a Group Mediclaim Policy is extremely important as that will determine the deduction for all the other expenses incurred during hospitalisation.
Inadequate Room Rent Capping Limits are one of the leading reasons for claims being settled for a lower amount.
The employer should be aware of the room rents in leading hospitals near the company and then choose an appropriate limit. Generally, hospitals in Tier-1 Cities and Metros charge between 8,000 to Rs15,000 towards room rent expenses while this figure is in the range of Rs5,000 to Rs10,000 in Tier-2 and Tier-3 cities.
Additionally, Room Rent Limit also depends on the Sum Insured of the Group Health Insurance Policy.
For Example, a Room Rent Capping of 2% of Sum Insured of Rs1 lakhs results in the employee being eligible to claim only Rs2,000 per day towards room rent expenses while if the Sum Insured is Rs5 lakhs, the employee becomes eligible to claim Rs10,000 per day towards room rent expenses.
All these factors should be kept in mind while choosing a room rent limit in a Group Mediclaim Policy for employees.
Get a Group Health Insurance Policy with no Room Rent Capping!
This article explains the importance of choosing appropriate Room Rent Limits in a GMC Policy. A low room rent limit might result in employees not being reimbursed adequately while a high room rent limit results in higher premiums.
Hence, the employer needs to select the right room rent limit based on the kind of hospitals their employees visit (Tier1, Tier 2 etc.,) and the Sum Insured amount.
Today, Group Health Insurance Policy for Small Businesses is an integral part of employee benefits and an excellent tool to attract talented employees. Additionally, there are multiple tax benefits of a Group Health Insurance Policy which make a GMC Policy a no-brainer for most organisations.
Qian is an experienced insurance broker for group health insurance policies and has partnerships with top group health insurance companies in India. Our team can assure you of competitive group health insurance quotes with no room rent capping and dedicated claims settlement.
You can reach out to us at insurance@qian.co.in or call us on 022-22044989. We would be glad to assist you.
- Group Health Insurance Policy for Employees
- What is Group Health insurance?
- What is an Employee Group Health Insurance Policy?
- What does a Group Health Insurance Policy cover?
- What is not covered under a Group Health Insurance Policy?
- How is a Group Health Insurance Policy different than an Individual Health Insurance Plan?
- What are the Key Features of a Group Health Insurance Policy?
- What are the add-on covers available under a Group Health Insurance Policy?
- What is the impact of Room Rent Limit on the claim amount payable under the Group Health Insurance Policy?
- Should employers opt for a Pre-Existing Disease Coverage from Day 1 in Group Medical Insurance Policy for employees?
- Does a Group Medical Insurance Policy provide Maternity Benefits?
- What are Waiting Periods under a Group Health Insurance Policy?
- What are the benefits of Group Health Insurance Policy for Employers?
- What are the benefits of Group Health Insurance Policy for Employees?
- Why should you purchase an Employee Group Health Insurance Policy for your organisation?
- How many employees do you need to purchase a Group Health Insurance Policy?
- Who is eligible for Group Health Insurance for Employees?
- Are Employer Group Health Insurance premiums Tax-Deductible?
- How much does a Group Health Insurance Policy Cost?
- Which are the leading Group Health Insurance Companies in India?
- How to purchase a Group Health Insurance Policy?
- What are the Documents required to make a claim under a Corporate Health Insurance Policy?
- Why should I Purchase a Group Health Insurance Policy through an Insurance Broker?
- Compare Plans from 20+ Group Health Insurance Companies and choose the Best Group Health Insurance Policy in India with Qian!
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