World Health Day: Is Your Retirement Health Insurance Enough?

As life expectancy increases, so does the cost of medicine. Medical insurance is for most retirees a safety net that covers high-cost medical bills and helps ease expenses. More and more seniors are finding, however, that their coverage is insufficient for their future needs. With medical inflation, policy caps, and out-of-pocket costs, is your medical insurance truly sufficient for retirement?

The Healthcare Cost of Retirement

Medical expenses in retirement can be unpredictable, but they will always be more than one can pay. Since senior citizens' health insurance premium prices increase with age, they may still not cover essential treatments. According to a study by Acko, India's medical inflation in 2024 was between 15 to 20 per cent, a steep rise over the previous year (10 to 12 per cent), which is greater than the growth of most healthcare coverage. What this suggests is that a policy bought years ago may be inadequate today.

Take, for instance, a Rs 5 lakh health insurance cover for a retiree. In case of a major surgery or a prolonged stay in the hospital, the cost could easily exceed this. They are forced to cough up from their own pocket or rely on top-up policies, if and when they become available. Again, out-patient treatments (unless you get an OPD coverage), and home healthcare(unless you get an add-on)are not usually covered in traditional policies, adding to the cost.

What Standard Health Insurance Doesn't Cover

The standard senior citizen health insurance policy covers hospitalisation, operations, and pre-and post-hospitalisation expenditures for some things. There are significant exclusions:

• Pre-existing diseases: Most policies include long waiting periods (up to 3 years) before including coverage of pre-existing diseases.

• Home healthcare: As a person grows older, many people require home nursing or long-term physiotherapy that basic policies do not cover.

• OPD and diagnostic tests: Check-ups, dental care, and some diagnostic tests typically require special plans or money being paid directly. While some health covers might include OPD cover by default, some do not. Check the terms and conditions beforehand will help you ensure that you do not miss out on such an important addition to the health insurance.

The Rising Cost of Health Insurance Premiums

Senior citizens' health insurance rates continue to increase, increasing with age. According to IRDAI data published in 2020-21, policies for those over the age of 60 can cost around Rs 33,914 annually, depending on cover and conditions. Some insurers even go so far as to stop selling new policies at a certain age, thereby limiting choices for individuals looking to continue coverage in their old age.

To offset rising costs, retirees might consider top-up or super top-up policies, which take over after the basic amount covered runs out. While costlier than increasing basic coverage, these policies also need to be selected judiciously to meet individual medical needs.

Alternative Sources to Supplement Health Coverage

Given the nature of standard health insurance, retirees will have to explore alternative sources of meeting their healthcare needs:

• Top-up and Super Top-up Plans: Inexpensive ways of enhancing cover without having to pay out high premium charges for a base plan.

• Critical Illness Insurance: You pay a lump sum upon occurrence of severe illnesses like cancer, stroke, or heart disease, to pay for expenses other than hospitalisation.

• Wellness and Preventive Care Plans: There are some insurers who offer packages inclusive of regular check-ups, consultations with physicians, and alternative treatments, which will help detect the disease and treatment at an early stage.

• Building a Medical Emergency Fund: Maintaining a corpus for medical expenses separately can act as a buffer for out-of-pocket expenses in case of any treatments.

Planning Ahead for a Secure Retirement

Retirees should update their health insurance coverage every year to ensure it remains in line with medical inflation and their evolving healthcare needs. Additionally, choosing policies with lifetime renewability, no co-payment clauses, and full coverage can provide more protection in the long run.

On the upcoming World Health Day, on April 7, 2025, it's not a bad idea to take a look at whether your health coverage in retirement is indeed adequate. As the cost of healthcare continues to rise, depending solely on past coverage may prove expensive. Reviewing policies, researching top-ups, and saving funds for medical crises can mean that retirement is not just peaceful but financially secure as well.