Why Corporate Health Insurance Cannot Be Your Primary Safety Net

Corporate health insurance is intended to be used as an employee perk rather than as a safety net for protecting employees when they are at their most vulnerable. Due to rising medical inflation outpacing employer-sponsored plan limits, even basic hospital care can exceed the total amount of money available for annual healthcare expenses under many group health plans.

“Corporate health insurance was never designed to be a primary lifelong safety net. It is an employment-linked benefit with built-in limitations,” says Narendra Bharindwal, president, Insurance Brokers Association of India (IBAI).

Coverage Ends When Your Job Does

Corporate insurance has additional problems because it is only available while a person has a job. “When someone changes jobs, takes a leave of absence, retires, or has a break in their employment, they lose corporate health insurance. Employees do not determine what is covered under their corporate health plan; employers decide on coverage levels, benefits, and which insurance company will provide them coverage based on the amount of money they have to spend each year on employee healthcare,” says Arun Ramamurthy, co-founder, Staywell.Health.

These factors contribute to the overall volatility of the corporate employee healthcare market as it relates to protecting employees over time and providing them with long-term financial protection through predictable, appropriately sized, and non-employment-based health care coverage.

The primary purpose of group insurance is to achieve certain conformity, and as a result, it has numerous structural limitations. “For instance, most group health plans impose 'room-rent’ limitations, which mean that when an insured individual selects a hospital room above the stated limit, the excess costs will be deducted proportionately from the total reimbursement amount, regardless of whether the actual medical services provided are covered,” says Ramamurthy.

Structural Gaps Make Corporate Plans Inadequate

Other examples of structural limitations include exclusions of certain advanced medical treatments, yearly reductions of sub-limits for certain procedures that further reduce the actual benefits paid, and loss of portability and lifetime renewal provisions at crucial transitional periods. As a result of these structural deficiencies, group insurance cannot be considered a complete solution for any individual without additional resources available to fill these gaps.

Three things cannot be guaranteed by any corporate policy: (1) Continuity, or continuity of protection; (2) Control, or the ability to determine how, when, and where your health care will be provided; (3) Lifetime Protection—your insurance remains until you die. “Personal policies stay with you for life, irrespective of job changes, retirement, role transitions, or economic cycles. Corporate policies do not,” says  Bharindwal.

Also, most corporate policies do not offer waiting-period credits, no-claim bonuses, lifetime renewability, or portability. “This means an employee who develops a medical condition while on a corporate plan may find it hard or expensive to buy retail insurance later,” says Bharindwal.

Adding a "Super Top-Up" to your personal base plan adds significant value to the overall cost of health care, giving you an additional financial safety net against escalating costs for health care services due to increasing technological advancements in medicine.