What nobody tells you about corporate health insurance
Do you have a health insurance policy? “No, I don’t need it; my office has given me one.” If this is what your response is then beware — especially if you have no idea about what all your office insurance covers. Corporate insurance cannot be a solution to your health insurance needs. You must have an individual health insurance policy or a family floater policy covering all your members. There are multiple reasons why. We explain you some:
What if you lose your job?
The corporate world could be mean. A lot of people – who lost their jobs during COVID-19 pandemic — learned it hard way. Losing a job, and that too during a health crisis. Had you gotten hospitalised when out of the job, you would have borne all health expenses on your own. So, remember that the day your employment with your employer terminates, you will be out of insurance. This holds true even when you resign from the job. You will be uninsured for the period between joining a new place and the last day in the old office.
You have been loyal to your employer. You worked there till you retired. Now what? Your employer will not give you lifetime health insurance coverage. Only an individual or a family floater policy may insure you for the lifetime. If you think you will buy a health policy when you turn 60, think again! At the age 60, it is not a matter of choice but availability. Health insurance companies are not bound to accept your policy proposal. If their underwriting process finds you ineligible for the coverage, they will decline your request. Moreover, the policy premium will be quite steep even if they do accept the proposal and will have waiting period for pre-existing disease. If you buy a health policy when you are already young, you may continue it at a cheaper premium for the lifetime while waiting period for pre-existing diseases will have gotten over.
Insurance coverage not enough
The corporate does not give you a choice to hike your insurance cover. It comes with a standard cover, typically Rs 2-5 lakh per employee, which you have to accept. What if you incur more than what your employer provides? It will come to pinch your pockets. How much health insurance do you need? It depends on in which city you reside. You need to figure out the average medical cost in key hospitals nearby.
You lose out on No-Claim Bonus
Do we have to tell you that medical inflation is much more than the average inflation in the economy? The insurance cover that you choose today may not be sufficient after 10 years. Your employer is not going to hike the health cover. An individual health policy, however, comes with a no-claim bonus clause. At no extra cost, if you have not made any claim in a year, your policy cover will increase. This is called no-claim bonus. For example, if you have bought a policy with Rs 5 lakh cover and you don’t make any claims in initial years, your policy cover may rise up to 100-200 per cent going by the health insurer and the policy you have chosen.
One size fits all
As explained above, the corporate insurance is a standard cover. You cannot customise it. Such covers often have many limitations. For example, there could be a limit on room rent. So, if you have taken a private room of say Rs 8000 per day, the corporate insurance may only cover Rs 3000-5000 per day. Similarly, there could be a co-payment clause that says some percentage of the medical bill the insured has to bear herself before the medical policy comes into picture. This could be 20-30 per cent of the medical bill. Moreover, your employer may or may not cover your family members in the health policy.
Corporate insurance a perquisite, not a right
Your employer is not bound to give you a health cover. It can anytime change office policies and withdraw the health cover. In case your company stops paying the premium, you will be out of cover, although your employer will not face any legal ramifications.
Corporate insurance is an attractive prerequisite. It has its benefits. You don’t have to go for medical tests and all diseases are covered from the day one. But, it can still not be your primary cover. Every individual needs to have a comprehensive health insurance policy while corporate insurance may act as a cushion to your health insurance needs.
While tax should not be the primary reason for you to buy a health insurance policy, it indeed is a great secondary benefit. On corporate health insurance since your employer is paying the premium on your behalf, you are not eligible to claim tax deduction against the same. Even if it charges some extra amount for you to enhance your health cover or include your parents and children in the same, you still can’t claim tax deductions. That said, why not take a regular health policy! You can claim a deduction up to Rs 25,000 for the insurance of self, spouse, and dependent children under section 80-D of the Income-Tax Act. An additional deduction of Rs 25,000 is available for the insurance of parents if they are less than 60 years of age, and Rs 50,000 if they are aged above 60.