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How to Deal with Rising Health Insurance Premiums

The sedentary lifestyle of majority of the population has led them to contract ailments and diseases like cervical, Diabetes, Arthritis, Obesity etc for which the frequency of their visits to Hospitals and Medical Clinics has risen significantly. The rising demand for medical aids and medicines is causing the inflation in healthcare to go up at an unchecked rate. It is clear that the end users (customers/Patients) only bear the resultant effect of all kinds of inflation (food, education, healthcare); of which Healthcare inflation is the most intimidating as it is said to grow at an alarmingly high rate of 15-18% per year. Consumers suffer by paying heavy premiums for their health cover that is in addition to the higher costs they pay for food, their child's education, car loans, house rent etc.

While medical emergencies are hard to avoid or control, it seems plausible to control the rising healthcare costs through a health insurance and to even control the ever increasing health insurance premiums. The below mentioned factors would prevent you from paying higher amount as premium.

*Decide between Individual health plan and a Family floater plan

Individual health plan is one where only a single person is insured against medical emergencies. Whereas a family floater insures members like husband, wife and kid(s), or one’s parents. Now, suppose a family of 3; Husband (42 years), Wife (40 years) and Child (17 years) want to buy a health insurance. They can either buy a family floater of 3 lakh (costs 9000 a year) or 3 individual policies of 3 lakh (costs 13,000 a year) each.

The family floater surely seems like a good bargain but may as well seem pricey after one considers this scenario, where only family floater is bought:

(I)Assume the wife gets hospitalized due to some illness and the expenses incurred are 2,50,000 This amount will be reimbursed under the family floater plan.

(II)Additionally, in the same year husband gets hospitalized too, the expenses incurred now are 2,00,000. The amount reimbursed would be 50,000 only. The rest would have to be borne as an out of pocket expense, as the cover provided is rupees 3 lakh only

Purchasing individual policy for one member along with family floater would have seemed like a wise decision as the eldest member's age is close to 45. It is the age group with which comes a major probability of contracting disabilities and ailments (Diabetes, Blood pressure, arthritis), which therefore makes an individual health plan for the family member (under consideration) of paramount importance.

Opting for an individual health plan would save the family from spending out of their pocket. It is best to avoid the Rs.4,000 premium difference and opt instead for an individual plan (if the age of the eldest member is above 40). An individual health plan at an older age offers more value for money.

*Try the ‘Health Portability’ option if rising health insurance premiums hurt you:

The rising health premiums have urged IRDA to come up with alternatives like Portability of Health insurance. What is health insurance portability and how it is going to help us in lessening the premiums could be understood through this example.

Mrs Sharma, 45, suffers from diabetes and the same has been listed as a pre-existing disease in her health insurance policy. She has held the policy for two years. On learning about the recent rise in her health premium, she realizes she won't be able to pay the raised premium.

She certainly wants to change to a new insurance company. Unaware of IRDA's Portability move, she contemplated that changing her insurer won’t be of any use as the new one wouldn't provide her cover on pre-existing disease and she would have to wait for another two years to get it covered under the policy.

Mrs Sharma is surprised to know about portability through a friend who describes it as a provision implemented by IRDA that allows the policyholder to switch over to a new insurance service provider under the same terms those exist under the present policy. With this provision, one won't have to worry about losing the waiting period of PED, while going for a new policy.

Please ensure that you port your policy 45 days before the date of renewal. One condition being thata policy would get switched by a similar/same policy with the other insurer for example “basic reimbursement” to a plan similar to/same as “basic reimbursement” with the other insurer.

*Buy health insurance policies at the youngest possible age

Starting and planning early always helps. Studying just a day before the exam may get you passing marks but won't help you make it to the merit list. Same is with a health insurance. Starting at an early age would be beneficial as the premiums to be paid would be low and there won't be any necessary co-payments and the waiting period for the pre-existing diseases shall be quite less as well.

Whereas, buying your first health insurance at the age of 60 or 65 (or at a higher age than now!) won't just make it pricey but would also make it complicated. With various exclusions and necessary co-payments the policy would become difficult to maintain and out of pocket expenses would increase too. Moreover, waiting period on your pre-existing ailments (when a policy is bought at an older age) would be longer (Depending on your age). You certainly can't afford to wait that long, can you? This is why it is really important that you buy your health plan at a young age and make your sunset years comfortable and easy.

*Do take Inflation into account

As stated above, inflation in health insurance is set to increase at an alarmingly high rate with your age. At this rate it is most advisable to purchase health insurance at the earliest possible age and also mandatory to choose a sum insured that doesn't fall short to appropriately cover your healthcare costs, particularly 25-30 years from your current age. The whole purpose of buying a health insurance is defeated if you are unable to benefit from it in your 60s and 70s, the age band when you require medical aid the most.

While taking inflation into account, calculate the amount that you would require some 25 or 30 years later. You can use the below mentioned formula to arrive at a suitable sum insured.

Amount required = Current value x (1 + inflation rate considered) raised to the power of (Tenure)

Refrain from buying health insurance policies with claim holding

Be careful while choosing your health policies as the slightest of leniency on your part could land you in financial trouble. You buy health insurance to protect yourself against unexpected medical emergencies, then why must the insurer raise your next annual premium just because you claimed your policy the previous year. You are paying for it so you ought to use it. Ensure that there is no such clause as claim holding in your policy. Please be vigilant while going through health plans and weed out the ones that come with claim holding clause. Instead buy the plans that are free from such restrictions and solve the sole purpose without emptying your pocket.

Conclusion

Health Insurance is indispensable as medical costs are rising at an uncontrolled rate. The absence of a health cover can surely burn a hole in your pocket. With many lifestyle diseases on the rise (BP, Diabetes, arthritis etc.) health cover is soon going to become an absolute necessity. Insurers are cleverly capitalizing on people's demand for health covers and are looking for reasons to raise premiums. It is therefore the customers’ job to carefully select that health plan which is reasonably priced and imposes bare minimum restrictions on them. Steer clear of policies that have conditions like claim holding, age renewal only till the age of 65, necessary co-payment etc. Enroll for a health plan after watchful consideration and make sure it matches your needs.

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