Where You Live Could Change Health Insurance Costs. Here's How

Health insurance premiums are in direct proportion to the medical costs incurred in a particular city. In cities where there’s advanced medical infrastructure, medical costs tend to be slightly higher, which in turn affects premiums accordingly. 

Cost Variations Between Metro And Tier-2 Cities

“In a tier-2 city, on the other hand, like Jaipur, where medical expenses are lower, health insurance pricing is also done accordingly. Insurers factor in these cost variations to make sure that health insurance pricing remains aligned with the actual healthcare costs incurred in different regions,” says Siddharth Singhal, head of health insurance, Policybazaar. 

Medical inflation directly affects hospital costs, as the rising cost of equipment, medical treatments, and healthcare services leads to overall increased treatment and hospitalisation costs. Hospital charges influence the claim size, which represents the amount insurers pay out for medical treatments. These are all interlinked, and insurers review these factors while determining premiums in different cities.

All these factors have a bearing on costs, besides the factors mentioned above. “Further, there can be specific factors such as the availability of high-end treatments, which may not be available in smaller centres but only in metros. All these get factored into the pricing. The granularity of data is available with the insurance companies who have actuaries who analyse the data for pricing purposes,” says Hari Radhakrishnan, expert, Insurance Brokers Association of India (IBAI). 

Zone-Based Premiums And Coverage Limitations

“Usually, the premiums are zone-based, such as Zones A, B, C, etc. If someone is a resident in Zone A, the premium will be the highest as it is expected that he or she will take treatment at hospitals located in Zone A. However, an insured in Zone C will have a lower premium but can take treatment in hospitals in Zone C only,” says Radhakrisnan. 

If he takes treatment in the Zone A hospital, there can be a co-pay. There is also an option to waive this co-pay by paying an additional premium. One must carefully evaluate one’s treatment needs vis-à-vis the geography of residence and choose premiums accordingly. 

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