With healthcare costs rising so fast, people have begun to realize the importance of health insurance in their insurance portfolios. When you are young and healthy, the premium for health insurance plans is lower.
For instance, for a family of 4 (self, spouse and two children), you will get many options under Rs 20,000 for Sum Insured of Rs 10 lacs (eldest member: 35 years). You don’t mind since it is not a serious hit on your pockets. Moreover, the cover is more than 50 times the annual premium.
What about your parents? Do they have health insurance? Health insurance, as a product, has gained acceptance only recently.
I don’t have numbers to back my claim. However, from my interactions with clients, most from my parents’ generation rely on employer cover for their hospital expenses. As I understand, government employees can rely on that health cover even after retirement. Parents of many of us fall in the same category. Personal health insurance does not have much penetration in people above 55 or 60.
One of the deterrents is the high premium. Health insurance premium increases with age. Moreover, as you grow older, you are quite likely to have contracted an illness, which might increase your premium even further or cause the insurance company to decline to issue the plan altogether.
For instance, premium of Apollo Munich Optima Restore health insurance plans for an old couple (60,60) for Sum Insured of Rs 10 lacs is Rs 40,297. Premium for ICICI Lombard IHealth plan is Rs 43,694 per annum. And this premium is for a healthy individual. If your parents have a medical condition, this premium is likely to shoot up even further. At that age, there are a very few who are completely fit (at least from the perspective of an insurance company).
Once your parents retire (and even before that), the responsibility of providing good healthcare is yours. Some of them can take care of their hospital bills well into retirement. For others, it is not unfair to rely on their children to take care of such expenses. So, what are you planning to do?
In this post, I will look into some of the health insurance strategies you can use to ensure that your parents have access to quality healthcare services.
Purchase a Comprehensive health insurance plan for your parents
This is perhaps the most expensive but is also the simplest choice. You can purchase a separate health plan for them or include them in your family floater plan. Including them in your family floater is not advisable since the premium for family floater plans depends on the age of the eldest member. Hence, the premium for the entire family will shoot up.
Must Read: Individual Health Insurance vs. Family Floater Plan
You will save money by purchasing a separate plan for your parents (and not including them in your family floater). Whether you purchase a family floater for the two of them (mother and father) or two separate individual plans depends on their health condition. If one of them has had an illness which is likely to increase the premium, you may find it economical to purchase two separate individual plans for your mother and father.
You can also opt for a plan with co-payment option. With co-payment option, you have to share part hospitalization costs. In fact, some insurers insist on co-payment for fresh issuance beyond a certain age. The premium for plans with co-payment option is likely to be lower.
Must Read: How Room Rent sub-limit affects your Health Insurance claim?
Let your parents use your employer health cover
Not many will have this privilege. Some employers do cover parents under the group health cover. If your parents are not covered under any other plan, you can keep the employer health plan for them.
Purchase a personal health plan for yourself (self, spouse and children). Do not exhaust employer cover for your hospitalization claims. Make those claims under your personal health cover. Only when you exhaust your personal cover, claim under the employer cover. Even though you will lose out on no-claim bonus, it is a small price to pay to ensure quality healthcare for your parents.
Leave the employer cover for your parents.
Point to Note: Employer cover may not exactly be in your hand. You have to live with what your employer offers.
Must Read: Why you cannot rely on Group Health Cover by your employer?
Purchase Super-Top and Top-up plans
These plans cover your hospitalization expenses over a certain threshold (deductible). Under super top-up plans, threshold has to exceed over the entire policy year. On the other hand, under top-up, the threshold must be breached in a single hospitalization.
Must Read: Top-up and Super Top-up plans
Since the insurance company pays only once the threshold is breached, the premium for such plans is also lower. For instance, Optima Super for an old couple (60, 60) (Sum Insured: Rs 10 lacs, Deductible: Rs 3 lacs) will cost Rs 22,476. This is almost half the cost of comprehensive plan. But the first Rs 3 lacs have to come from your pocket.
A top-up plan (or a super top-up plan) can limit your liability. For instance, you purchase a super top-up for 10 lacs with a deductible of Rs 3 lacs. For the first Rs 3 lacs, you will have to manage on your own. For the expenses in excess of Rs 3 lacs (up to Rs 13 lacs), the insurance company will cover. So, your liability is limited to Rs 3 lacs. This can add a bit of predictability to your finances.
Point to Note: Super top-up plans are unlikely to be cashless plans. Hence, you will have to file for reimbursement. You need to have a bigger emergency corpus.
Have sufficient medical emergency corpus
If you have the money to manage quality healthcare without taking a serious hit to your finances, you don’t really need health insurance. Mr. Mukesh Ambani wouldn’t need health insurance, would he?
Same applies to you too. If you can build a substantial medical emergency corpus that can provide the hospital expenses, then you can do without a cover.
However, I wouldn’t recommend you to rely solely on this approach for two reasons.
- How much is enough? 5 lacs, 10 lacs or Rs 15 lacs. Where do you stop?
- The corpus needs to be replenished consistently. If you use entire or part of this corpus in a particular year, you need to replenish it. If you had a corpus of Rs 25 lacs and you used Rs 15 lacs in a particular year, you need to bring the corpus back to original level. Replenishing the corpus is never going to be easy.
Use a mix of these above options
I have discussed many options and it is not either-or. You can even use a mix of options. In fact, you will need a mix of strategies.
Even if you have opted for a comprehensive health plan, you will need a small medical emergency corpus to take care of non-covered expenses. If you think your parents may have to get hospitalized at a non-network hospital, you may need a much bigger medical corpus.
Even if your employer group insurance covers your parents, the coverage amount is typically small and the hospital bill for a prolonged hospitalization or a complex surgery can easily exceed the Sum Insured. You can complement the employer cover by purchasing super top-up plans for your parents. The deductible for super top-up plan can be Sum Insured of your employer plan.
Alternatively, you can use a mix of medical emergency corpus and super-top plan. Have a medical corpus of say Rs 5 lacs. Purchase a super-top plan of Rs 10 lacs with a deductible of Rs 3 lacs. In case any of your parents gets hospitalized, you can pay Rs 3 lacs from your medical corpus and anything above that amount (up to Rs 13 lacs) will be covered by super top-up plan. This limits your liability to Rs 3 lacs per year and you will still have time to replenish emergency corpus.
There is no fixed answer. You have to assess your individual case and medical history of your parents before you finalize strategy.
In you can think of any other health insurance strategies for your parents, do leave your inputs in the comments section.
17 thoughts on “Health Insurance Strategies for your Parents”
I have a query regarding the top up plans. Now as you have mentioned in your post that more often than not senior citizens may get covered under an existing employer insurance (say of mine) or if they are employees of the government then they have insurance covered till the end , however , the quantum insured is definitely on the lower side vis a vis the expected outflow during medical emergencies. Now, if i do purchase a top up plan say the 3:10 that you have mentioned in the post then is it immaterial how the initial 3 comes from say could be from exisitng medical insurance policy
Yes Mahesh. It does not matter where the initial 3 lacs came from. It can be from your pocket and from an existing insurance policy.
Hello Deepesh,
Thank u for a wonderful article.
I am 30yrs old unmarried self-employed professional..I hav a separate 4lacs Mediclaim policy from National Insurance.
Both of my parents r Sr. citizens & my dad pays a premium of total 33,000 for individual separate cover of 3.5lacs each(he gets 10% discount on premium as it is clubbed).My dad claims sec 80d benefit for the premium upto 30,000.
Now I hav suggested him to increase the mediclaim cover to atleast 5lacs each.In this case can I buy the policy for my mother of 5lacs & claim a group discount of 10% & also claim 80d benefit for the premium i am paying for my mother… My father wil then make an individual policy of 5lacs fir himself & claim the total amount in sec 80d.
Can u please advice me what to do? Which wil a better way to approach?
N.B. – I hav plan of marriage within a year & wil include my spouse in my policy…
Hi Biswadeep,
The premium for elderly can shoot through the roof.
You can easily optimize tax benefits. Not a difficult decision.
However, on the health cover part, there is one more option worth exploring which I missed to cover in this post. I am working on a separate post on that topic.
It is about group health insurance covers for account holders of different PSU banks.
These covers are quite cheap. And I have not been able to find any any shortcoming in these covers.
More on this topic in a subsequent post.
HI Deepesh,
I got lot of information from article, thats for writing it.
Query : I am leaving my MNC company and starting my startup.
I want to take insurance for my family.
Me(30), wife(28), Mother (50) she has High BP and dad (57) – Diabatic, hearth patient.
Please suggest some policies looking for 3-5L and cash less treatment like my MNC company.
Hi Chinnu,
I offer exact recommendation on professional basis only.
However, I would suggest:
1. Purchase a family floater cover for self and wife.
2. Purchasing cover for your parents may not be very easy because of pre-existing illnesses. Would suggest either try a public sector insurance company or go for PSU bank health insurance.
http://www.personalfinanceplan.in/insurance/psu-bank-health-insurance-can-be-a-boon-for-senior-citizens/
Hi Deepesh,
Is it good to buy health insurance from PSU bank for parents(Senior Citizen 67+ Age)? The premium amount in Canara Bank is very affordable (approx 5000RS – 500000rs coverage).
Please guide.
Dear Deep,
Guess you are talking about PSU bank group health plans.
Suggest you go through the following post. It covers pros and cons.
http://www.personalfinanceplan.in/insurance/psu-bank-health-insurance-can-be-a-boon-for-senior-citizens/
Dear Deepesh,
The 4 Public sector insurers PPN list of hopsitals for bangalore is only around 150 hospitals. Even it doesnot include some of the prominent hospitals.
Can i go for cashless only in hospitals which listed as PPN?
I am surprised to see this no. of hospitals is low when compared with private insurers, why it is like that?
Thanks,
Vivek
To be honest, don’t claim to know the answer.
Private insurers, in any case, do not have much negotiating power (as bulk of business is still through public insurers). Hospitals will negotiate will bigger players only.
If you don’t have negotiating power, you treat everybody the same.
Thanks for the immediate reply like every time. Few more points to clear,
i) In case of Public Insurer, Does Cashless can be availed only in PPN list of hospitals.
ii) Does the TPA need to be opt compulsorily with public insurers to avail the cashless facility.
iii) Public insurers has tie-ups with many TPA’s as listed in their website. So generally how do they choose which TPA has to handle the particular policy holder.
Thanks,
Vivek
Hi Vivek,
1. That’s my understanding too. With others, you have to go for reimbursement.
2. Didn’t get this part. Even private insurers work through TPAs.
3. Don’t know. Could be geography and tie-ups.
For cashless,you don’t have to worry much. Hospital insurance desk takes care of most things.
Thank you and i would like to appreciate to sincerity & dedication.
Thanks Vivek for the kind words!!!
Adding to that above point,
i) If i go with TPA does the network of hospitals covered under that TPA can be availed for cashless?
Dear Sir
I have gone through few articles on this website. I got very useful information on insurance policies which I never came across since last 2-3 years. All articles are so much informative and helpful. You did a great job.
I have some questions here. Please reply them.
1. I am having current employer cover of 3.5 L. I have added my parents and paying premium for them. I want to increase cover for parents. I found that separate health insurance for them costing me nearly 35K for 10L coverage. What you would suggest for this?
2. As you mentioned in one of the articles to get separate health insurance for myself and wife is a good idea. Thanks for that. As it will cost me less due to age factor and I can use employer cover for parents. But still I feel that mount of 3.5 L is less. So If i get super Top Up of 5L (Deductible of 3.5L), how exactly it will work. Is following will be the scenario?
Suppose, Medical bill is of 5 L. Can I claim 3.5 L under mediclaim policy provided by employer and get reimbursement of 1.5L under super top up as I have paid separately for both of them. Is this scenario is similar to that of metioned by you at https://www.personalfinanceplan.in/claiming-from-multiple-health-insurance-plans/ regarding contribution clause?
Kindly reply. I need your guidance as soon as possible. I fpossible pleae do reply on mail too.
Thanks again for wonderful information.
Hi Chandrajeet,
For your parents, you can either purchase an additional base plan or a super top-up plan.
With super top-up plans, please remember a few things.
1. Your employer plan coverage may change.
2. Do not use the employer plan for own use. Leave it for your parents.
3. The terms and conditions for your employer plan and the super-top up plan can be very different, leading to a lot of ocnfusion.
4. Super-top up plan may not be cashless.
Your calculation is correct. However, different terms and conditions can cause problems.
Suggest you go through the following post.
https://www.personalfinanceplan.in/how-claim-is-settled-in-case-of-multiple-health-insurance-plans/