Can You Depend on the Health Insurance Offered By Your Employer?

The premium for corporate health insurance policy is usually borne by the employer entirely, with coverage extending to the employee, and in certain cases even to dependent family members -- spouse, children, and parents.

Like any other health insurance plan, corporate health insurance offers cashless hospitalisation at the insurer's network hospitals.

Most policies also cover pre-existing conditions and maternity expenses, with some even including complimentary annual health check-ups for employees.

Apart from the benefit to employees, these policies also offer advantages to employers, such as the premium can be claimed as an expense to lower the tax outgo, and due to the larger pool of insured individuals in the policy, the premiums are lower.

Despite the apparent convenience and coverage, becoming complacent and relying solely on employer-provided health insurance is not a prudent move.

Why a Corporate Health Insurance Is Not Sufficient

1. Financial Risks Due to Limited Sum Insured

Depending on your employer, nature of work, and position, most group health insurance plans offer a sum insured ranging from Rs 1.5 lakh to Rs 5 lakh.

You see, the medical inflation rate in India touched 14% in 2024 (the highest in Asia) and is projected to be approximately 13.2% in 2025. The limited sum insured offered by a typical corporate health insurance plan may not be enough in case of if the hospitalisation expenses are high and in case of critical illnesses or accidents.

The coverage gap could force individuals to take funds out of their hard-earned savings or seek loans during times of emergencies.

2. Dependency on Employment

You are eligible for coverage under a corporate health insurance policy as long as you work for the company. On average, an employee stays with a company for four to five years.

Therefore, you are no longer protected by the company's health insurance in case you happen to move jobs, are fired, or must leave for any other reason. This cut-off can be particularly concerning if you or a family member is undergoing treatment or has any pre-existing conditions.

If you switch jobs and your new employer doesn't offer health insurance or provides lesser coverage, you are left exposed to significant risk that could jeopardise your financial well-being.

In some cases, you may have the option to continue with the plan provided by your previous employer, but you'll probably have to pay a much higher premium out of your pocket.

3. Risk of Changing Corporate Policies

Employers have complete control over health insurance policies, as the government does not make it mandatory for corporations to offer it to their staff.

Therefore, there are no legal repercussions if a business decides to discontinue insurance coverage or modify the terms and conditions of the policy.

4. Challenges After Retirement

After you hang your work boots, i.e. retire, in most cases, you cease to have the corporate health insurance cover. Therefore, you will need to buy your individual comprehensive health insurance to optimally cover the risks.

If you keep waiting for too long, say near your retirement to purchase an individual health insurance policy, purchasing health insurance may become a huge challenge: you are often required to undergo medical tests, may have certain pre-existing conditions, and chances of an insurer denying the policy also cannot be ruled out.

Even if you are offered a health insurance policy, it might not cover pre-existing diseases, which are generally the main cause of hospitalisation for elderly patients.

5. Customisation Limits

In most cases, the coverage provided by corporate health insurance is standardised for all employees.

This means that you cannot tailor the policy according to your specific health needs, lifestyle, or family requirements.

6. Dependents May Not Always Be Covered

While some organisations extend health insurance coverage to family members, not all do.

Even when the dependents are covered, the sum insured might be shared among all beneficiaries. This further dilutes the available protection.

7. Co-pay Clauses and Room-rent Limits

There is a co-pay clause in the majority of group health insurance plans. A co-pay is a set sum (either a fixed amount or a percentage of the claim) that an insured person must pay out of pocket as part of a claim.

The co-pay amount is set by the insurance company and varies depending on the medical service.

Let's say you need to see a specialist for a certain ailment, and your coverage specifies a co-pay of Rs 1,000 for a specialist consultation. In this instance, whether or not your deductible is satisfied, you will still be required to pay Rs 1,000 for the specialist consultation.

The room-rent limit on most of these plans is also quite limited. Typically, the insured is responsible for paying between 40% and 60% of the room rent on his/her own.

Depending on how many days you are hospitalised, this amount can be rather significant.

Thus, considering the above limitations, it is in your interest to have a personal individual health insurance policy and not solely depend on the one offered by the employer.

Benefits of an Individual Health Insurance Policy

Investing in an individual policy is crucial to bridge the critical gaps left by a corporate or group health insurance plan.

1. Higher Sum Insured

Individual health insurance policies typically offer higher coverage amounts, ranging from Rs 5 lakh to Rs 1 crore or more.

You can choose a sum insured based on your family size, lifestyle, and potential healthcare needs.

In case you have dependents (spouse, children, or parents), you could consider an adequate family floater health insurance plan.

2. Customised Coverage

With individual plans, you can add riders such as critical illness cover, maternity benefits, and OPD coverage.

Some policies may even cover AYUSH (Ayurveda, Yoga, Unani, Siddha, Homeopathy, and Naturopathy) treatments.

These customisation options help ensure that your policy perfectly aligns with your healthcare requirements and preferences.

3. Wider Network of Hospitals

Corporate health insurance policies may have a restricted hospital network. In contrast, individual policies provide access to a broader network of hospitals.

This means that you can not only receive treatment at your preferred healthcare facility but also have access to specialised treatment centres and expert healthcare providers across the country.

4. Continuity of Coverage

As long as you continue to pay the premiums, individual health insurance provides the coverage, regardless of job changes, retirement, or employment gaps.

In addition, some insurers also offer loyalty bonuses for long-term policyholders, by way of No Claim Bonus (NCB) which increases the sum insured without a corresponding rise in premiums.

5. Tax Benefits

If you opt for the Old Tax Regime, the premium paid for the health insurance policy can be claimed as a deduction under Section 80D of the Income Tax Act, 1961 as follows:

• Up to Rs 25,000 annually for self, spouse, and children (if the insured is a senior citizen, the deduction limit is up to Rs 50,000).

• An additional Rs 50,000 per year for premiums paid for parents aged 60 or above.

To Conclude...

Corporate health insurance is certainly a valuable employee benefit. However, it should not be your only line of protection.

Given the limitations of coverage with corporate health insurance, dependency on employment status, and the ever-rising healthcare costs, a comprehensive individual health insurance policy is much needed.

This way, you not only supplement the benefits of a corporate plan but also ensure continuous protection regardless of job changes or other life transitions.

When choosing an individual or family floater health insurance policy, compare different plans and consider factors such as your age, family medical history, and the average cost of healthcare in your city.

Be thoughtful in your approach.

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This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.