Recently GST Council decided to levy 5% GST on hospital rooms where per day room rent is over Rs. 5000. However, intensive care units are excluded from such a tax.
Here, the question arises, will the insurance company cover such tax? If yes, then will it also affect the premium?
The good news is, insurers are likely to treat the taxes on room rent as a part of the total medical bill. The insurer will reimburse you for the GST paid. Also, in the case of cashless claims, GST will be directly paid by the insurer.
Will It Affect the Premium too?
Usually, room rent is 15-20% of the total hospital bill. Due to GST, the cost of the room rent will be increased and as a result, the overall cost of hospitalization will rise. This will lead to a rise in the cost of claims for the insurer. Therefore, 5% GST on room rent will likely increase the premium of health insurance policies in the near future.
Also, insurance companies pay a proportionate amount of the hospital bills in case of a sub-limit on room rent (room rent capping). GST on room rent will proportionately reduce the claim amount. As a result, the remaining expenses will be paid out of the policyholder’s pocket.
For instance, a policyholder has taken a health cover of Rs. 5 lakh and the sub-limit of the room rent is 1% of the sum assured. At the time of claim, the hospital bill came out to be Rs. 2 lakh. But the policyholder was hospitalized in a room with a daily rent of Rs. 6000 including 5% GST, which is more than the sub-limit. The company reimbursed only Rs. 1.7 lakh due to the sub-limit clause. Therefore, the policyholder will pay Rs. 30,000 out of his pocket.
In addition to this, there are people who prefer separate single hospital rooms. They do not prefer shared rooms. This will not only increase the room rent, but also the overall hospitalization cost (including higher GST).
Therefore, it is advisable, to buy a health insurance policy with no capping on room rent. If you already have a health insurance policy with a sub-limit on room rent, then port to a health insurance policy with no capping room rent.
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