5% GST on Hospital Room Rent: Who Will Feel the Pinch?

Posted on: Oct 10, 2022 | | Written by:

5% GST on Hospital Room Rent: Who Will Feel the Pinch?

Published on October 07, 2022. EST READ TIME: 3 minutes

While you should buy medicalinsurance with adequate coverage, skippingthe terms and conditions can cost you heavily. That is because some of these keep changing with time according to the latest regulations or might be mentioned only in the fine print. Not being aware of the entire scope of inclusions and exclusions can cost you dearly when filing for a health insuranceclaim. For example, did you know that according to a recent decision by the GST (Goods and Services Tax) Council, 5% GST will be levied on hospital room rent costing over INR 5000 per day? What does that mean for you? Read on to know more.

Who Will Pay the GST?

The recently introduced 5% GST on hospital room rent above INR 5000 per day shall be paid by the insurance company along with other hospitalisation expenses. This means, the claim amount raised by the policyholder, will include GST charges. So, there will be no direct impact on you, the insured person, if the policy has no capping on the room rent.But it will affect those who have opted for room rent sub-limits in their medical insurance policy. In sub-limits, you need to pay a portion of the room rent which will include the GST amount. However, note that the GST is applicable only for non-ICU rooms.

If you opt for cashless facility, the insurer will need to pay the GST and get it claimed from the government. In case you are opting for reimbursement claims, it will be reimbursed by the insurance provider.

Will Premiums Go Up?

Room rent accounts for 15-20% of the overall hospital bill. WithGST, the overall claims cost for the insurance provider will go up, and hence, there’s a probability that the premium on your health insurance policy will go up too.

What Should Policyholders Do?

If your medical insurancepolicy has a capping on room rent or co-pay clause, you need to pay a portion of the claim amount from your own pocket. The premium is less in case of co-payment or room rent capping. So, if your budget permits, it’s better to port or buy health insurance that does not have any capping on room rent. You should also read the terms and conditions of the policy carefully to ensure that the insurer does not charge any additional expenses for room rent or co-payments.

Conclusion

While the GST charges may not impact medical insurance policyholder directly, when the overall claim amount increases, the insurance provider will increase the premium accordingly. So, if you are a new customer, it is advisable that you buy a health insurance policy without any sub-limits. Also, before buying health insurance, read the policy document carefully and go through the terms and conditions well.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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