5% GST on hospital room rent: How will it impact medical health insurance policyholders?

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The forty seventh GST Council meeting in June 2022 capped the GST at 5% to be applicable on room rent (excluding ICU) exceeding Rs 5000 per day per patient charged by a hospital.

When someone gets hospitalised, one has an option to decide on several types of rooms—single private room, twin sharing, suite room, etc. The per-day room rent charges for every of them are different and vary from hospital to hospital. Under certain medical health insurance policies, insurers only cover a portion of the room rent or have a cap on the identical (depending on the sum insured opted).

Experts say that the 5% GST on hospital room rent will further increase the hospitalisation cost in cases where the hospital room rent is above Rs 5000 for non-ICU rooms.

“Under the brand new guidelines, a 5% GST will likely be imposed on hospital room rent above Rs 5,000 for non-ICU rooms. This may end in an overall increase within the hospitalization cost in cases where the per day room opted is higher than Rs 5,000,” Dr Sudha Reddy, Head – Health and Travel at Digit Insurance, told FE.

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Who pays the GST?

Because the applicable hospitalization costs are typically borne by the insurer, the GST charges, too, will likely be paid by the insurance company and there will likely be no direct impact on the policyholder during claim settlement, in keeping with Dr Reddy.

Premiums to go up?

Dr Reddy said that if the GST results in an increase in overall claims cost for the insurers, there might be a probability of medical health insurance premiums going up within the near future.

What should policyholders do?

Certain medical health insurance policies have a capping on the hospital room rent. This capping might be on the idea of co-payment, where the insured is required to bear a portion of the room rent from his/her own pocket or based on the allowance of only certain sorts of room for hospitalization.

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In cases of co-pay, the insured could have to bear a portion of the room rent cost, including the GST amount.

“To negate such a scenario, it’s advisable to go for a medical health insurance policy that doesn’t have any capping on room rent. One should at all times read the policy document rigorously to make sure no additional payment is being charged by the insurer for room rent or some other form of co-payments and extra deductions,” said Dr Reddy.

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