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What makes corporate health insurance insufficient to deal with medical expenses?

Vishal is a family man with spouse and two kids. Although he has not incurred any heavy medical expenses till now, he is confident that in the case of any medical emergency, his employer health insurance would be sufficient to deal with the healthcare costs.

Nevertheless, Vishal is making a mistake by depending only on corporate health insurance to deal with rising medical costs. It is true that his medical expenses may have been negligible so far, the situation would not be same in the future. As Vishal and his wife would enter the 40s and 50s, more health complications will arise in the future and for which there will be a requirement of medical treatment.

There are many people like Vishal who fail to acknowledge that changing lifestyle habits and high medical costs may take a toll on their health and funds. Though, a corporate health cover is a big benefit, but is it sufficient? Let’s find the answer to this question but before that first understand:

What an individual health insurance plan entails?

As the name itself suggests, it is an insurance policy which people buy for themselves or for their family. It comprises both individual and family floater health options.

What a corporate health cover entails?

It is a health insurance policy which is offered by an organization to cover the health of its employees. Besides covering maternity and pre-existing ailments at nominal premium rates, some corporate health policies also cover family members of employees.

Corporate Health insurance Vs Individual Health Insurance

 

Parameters Corporate Health Insurance Individual Health Insurance
Cost Available at free of cost or nominal premium amount Premium can go above Rs 5000 in case of health policy offering Rs 5 lakh coverage
Waiting period All medical conditions are covered from the Day 1 There is a waiting period of say 3 or 4 years before some health conditions are covered
Customization As an organization buys the policy, it is not possible to customize it as per individual needs The policy is bought by an individual and can be customized as per needs
Tax benefits As premiums are paid by an organization, you don’t get tax benefits As premiums are paid by you, you can get tax benefits as per the prevailing tax slabs
No claim bonus If you don’t make any claim in a policy year, you don’t get any No Claim Bonus (NCB) In case of a claim-free year, the policyholder gets No Claim Bonus (NCB)
Convenience All employees get health cover, irrespective of their current health state An individual can be denied the policy due to a variety of reasons like health issue, age, etc.
Applicability It is available as long as you are working in the company It comes with a lifetime coverage

 

What makes corporate health insurance insufficient?

A corporate health cover is insufficient to give comprehensive coverage due to the following reasons:

  • Job change: When you change your job, the health insurance policies offered by the previous employer also comes to an end. The new employer may not offer the cover or may have a lower sum insured. As a result, you may remain uninsured.

Also, if there is a break of 1 or 2 months before you join the new job, then it means that you neither have health cover from the previous employer nor from the new employer. If during this period, any medical emergency arises, you may need to shell out money from your pocket.

  • Start of the new business venture: If one decides to start on his or her startup, then corporate health cover may not be available. In this case, a secondary health insurance cover will help.
  • Cost cutting by the employer: As per the survey conducted by one of the leading insurers a few years ago, most companies are planning to cut benefits given to employees because of increasing premium rates. If your company also decides to cut the coverage, then it can pose serious risks to you.
  • Retirement: Only limited companies offer corporate health insurance plans to their retired employees. During young age, there may be a rise in medical expenses and in the absence of any insurance cover; it may become difficult to manage it.
  • Insufficient coverage for dependents: Though in certain conditions, corporate health policy also covers dependents of the employee, there is a limit on the coverage.

The healthcare costs are rising at an alarming rate in both rural and urban India. According to the survey conducted by the National Sample Survey Office, in the last few years, the medical cost recorded a double-digit pace of growth, outpacing average inflation rate in India. As more and more patients are visiting private clinics and hospitals, they have been faced with high medical bills.

rural vs urban

Source: Livemint.com

Usually, sum assured available under group health insurance is between Rs 2 lakhs and Rs 4 lakhs, which is insufficient to deal with rising medical costs.

What to choose- Corporate or individual health insurance plans?

Group or corporate health insurance plans are the real cost-saver for both the company and employees but individual health insurance policies are certainly a necessity that even those covered by companies can’t afford to ignore. This is mainly; individual health insurance policies allow you to customize the policy as per your needs. You can decide which diseases should be covered— based on your family’s medical condition— how many family members should be covered and what should be sum assured. For instance, HDFC ERGO health insurance policies offer you an option to customize the plan as per your need. You can first choose the policy—individual or family floater— as per your requirement. Then you can customize it with riders to ensure it gives complete protection to you and your family. Lastly, you may find it difficult to get an individual health insurance post-retirement. Also, as your age increases, the premium of a health insurance also rises.

So, instead of relying completely on the employer health insurance policy, it is good to buy an individual health insurance policy to fortify your insurance portfolio. After all, ‘It is health that is real wealth’.

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