Relying solely on corporate health insurance plan can impact your finances

Supplement it with a retail plan with adequate sum insured, and no room rent or disease-wise capping

A recent study of over 2,000 corporate health insurance policies by PolicyBazaar found that they come with a number of limitations. While an employer-provided cover can serve as a valuable first line of defence, employees should not rely on it alone.

Key deficiencies

Room rent capping: The Policybazaar.com study found that 12 per cent policies impose a room rent cap equivalent to 1 per cent of sum insured, while another 48 per cent limit the room rent at Rs 5,000 per night.

If a corporate policy offers a sum insured of Rs 3 lakh and imposes a room rent cap of 1 per cent, the maximum room rent allowed would be only Rs 3,000 per night, insufficient for securing a single, air-conditioned room in a top-tier hospital in a metro.

Imagine that a person’s corporate cover allows him maximum room rent of Rs 5,000 per night, but she opts for a room that costs Rs 10,000. Says Yashish Dahiya, co-founder, PolicyBazaar.com, “The room rent cap is 50 per cent of the actual rent in this case. The fallacy most people commit is to think they will only have to pay the balance Rs 5,000 out of their own pocket. In reality, the insurer will apply proportionate deduction and pay only 50 per cent of the overall bill.”

Limited sum insured: The study found that 26 per cent of policies offer a sum insured of only Rs 1-2 lakh, while another 48 per cent provide coverage worth Rs 3-4 lakh. Corporates do so to curtail their premium cost. However, a sum insured of up to Rs 4 lakh can prove inadequate in case of a serious ailment.

Co-payment: Many policies come with a 10-20 per cent co-payment requirement. This means the customer has to pay 10 (or 20, as the case may be) per cent of the bill out of his pocket, with the insurer paying the balance 90 per cent.

Sub-limit for cataract: Corporate covers also come with a sub-limit, typically Rs 25,000, for cataract. With the rise of less-invasive procedures, however, treatment costs can go up to Rs 1.5-2 lakh.  

Robotic surgery: It ensures greater precision in surgical procedures, but corporate health insurance plans may not fully cover such surgeries.

Reduced members covered: Corporate policies are reducing the breadth of coverage. “Most only cover the employee and his immediate dependants, like spouse and children. Older dependants -- like parents and in-laws -- are not covered as doing so drives up the premium,” says Apaar Kasliwal, executive director, PolicyBoss.com.

Transient cover: Corporate health insurance is contingent on one's employment with a company. Job changes (to a company that doesn’t offer this cover), layoffs, or starting one’s own venture can result in loss of coverage.

Benefit of PED coverage

Corporate plans do have their merits. The employee doesn’t bear the premium cost. Says Kasliwal, “Corporate plans cover pre-existing diseases (PEDs) from day one, without a waiting period.”

Notwithstanding the limited sum insured, these policies can take care of shorter-duration hospitalisations for non-serious ailments.

Don’t delay purchase of retail policy

Postponing the purchase of a retail policy until retirement, as many do, can prove risky. “At 58-60, you may have a few chronic ailments due to which insurers may not offer you a policy,” says Dahiya. Even if they do, the policy may have a limited sum insured, or come with a waiting period for PEDs.

The retail policy must have adequate sum insured so that it is able to cope with India’s 12-15 per cent healthcare inflation. “Buy as much sum insured as your pocket allows. Health insurance premiums don’t increase proportionately with the sum insured,” says Dahiya.

Kasliwal suggests purchasing a minimum base cover of Rs 10 lakh and supplementing it with a super top-up.

Retail plan: Must-have features

Avoid policies with room rent capping or disease-wise sub-limits. “Families with young children should have a policy with an OPD cover. HNIs, who may want to go abroad to get a serious ailment treated, may opt for a policy that offers global coverage,” says Dahiya.

Kasliwal suggests choosing a policy whose cashless network includes hospitals in your vicinity.