Definition
Proportionate Deduction
Proportionate deduction reduces a health claim across all associated charges when the patient occupies a room costing more than the policy's room-rent limit.
Because doctor fees, nursing, diagnostics and other charges in Indian hospitals are often pegged to the room category, choosing a room above the policy's cap means the insurer scales down not just the room charge but most other bill components in the same proportion.
The result can be a far bigger shortfall than the simple room-rent excess, catching many policyholders by surprise. IRDAI has moved to curb proportionate deductions on certain charges, but the cleanest protection is buying a policy with no room-rent capping. Procedures with packaged rates are usually exempt from proportionate deduction.
Related terms
- Room-Rent CappingRoom-rent capping limits the daily hospital room charge a health policy will pay, often as a percentage of the sum insured.
- Sub-LimitA sub-limit is a cap within a health policy on the amount payable for a specific treatment, procedure or expense category, regardless of the overall sum insured.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.