5% GST on rent for hospital rooms: what impact will this have on health insurance policyholders?

The 47th meeting of the GST Board in June 2022 capped GST at 5% applicable on room rent (excluding intensive care) exceeding Rs 5,000 per day per patient charged by a hospital.

When a person is hospitalized, one has the option of choosing different types of rooms – single private room, twin room, suite room, etc. The room rental charges per day for each are different and vary from hospital to hospital. Under some health insurance policies, insurers cover only part of the room rent or cap it (depending on the selected sum insured).

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

“Under the new guidelines, a 5% GST will be imposed on rent for hospital rooms above Rs 5,000 for non-ICU rooms. This will lead to an overall increase in the cost of hospitalization in cases where the chosen room per day is above Rs 5,000,” Dr Sudha Reddy, Head of Health and Travel at Digit Insurance, told FE.

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Who will pay the GST?

Since applicable hospital charges are usually borne by the insurer, GST charges will also be paid by the insurance company and there will be no direct impact on the insured when settling the claim. claim, according to Dr. Reddy.

Rising premiums?

Dr Reddy said that if the GST leads to an increase in the overall cost of claims for insurers, there could be a likelihood that health insurance premiums will increase in the near future.

What should policyholders do?

Some health insurance policies have a ceiling on the hospital room rent. This capping could be on the basis of a moderating ticket, where the insured is required to bear part of the rent of the room from his own pocket or on the basis of the allocation of certain types of room only for hospitalization .

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In the event of a co-payment, the insured may have to bear part of the cost of the room rental, including the amount of GST.

“To negate such a scenario, it is advisable to opt for a health insurance policy that has no ceiling on the room rent. Always read the policy document carefully to ensure that no additional payments are being charged by the insurer for room rent or any other type of co-payments and additional deductions,” Dr Reddy said. .

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