Corporate Health Insurance: Extending Coverage For Parents Is Just Not Enough

Corporate health insurance is often seen as a convenient safety net offered by employers that covers employees and sometimes their families. But is it enough? And more importantly, should you extend this coverage to your parents?

With medical inflation rising at 10-15% annually, according to the National Health Profile (NHP), relying solely on corporate health insurance might not be the smartest financial move. While it can offer basic coverage, the limitations and exclusions can leave you vulnerable to huge out-of-pocket expenses during medical emergencies.

“A lot of people think corporate health insurance is enough, but they often miss that if they switch jobs or retire, they’ll be left without any coverage,” said Vinit Iyer, principal officer and managing director at Prudeno Wealth Advisors, a firm specialising in health insurance. The real dilemma many face, however, is whether to add their parents to the plan—a choice that, while seemingly cost-effective, can come with hidden pitfalls.

Corporate health plans typically come with several limitations: coverage amounts are often lower than required, and policies may exclude treatments for pre-existing conditions or have sub-limits for hospital room rents. While employees might not notice these restrictions when they’re healthy, they become major concerns when faced with a serious illness.

The average medical claim filed by Indian employees was around Rs 1.5 lakh, but many corporate policies cap coverage between Rs 3 lakh and Rs 5 lakh, according to a study by Max Bupa Health Insurance. With rising healthcare costs in India, a single hospital stay could wipe out an entire policy's coverage in one go. "Medical inflation is a real thing," Iyer said. "Even a minor surgery or a few days in the hospital can burn a hole in your pocket. Health insurance today is not just a good-to-have; it’s a must-have to protect your financial well-being from being wiped out due to a medical emergency."

One of the biggest questions many employees face is whether to include their parents in their corporate health insurance plan. While it might seem like a smart move, Iyer advises caution. “Adding parents to your corporate plan can significantly increase your premium, and often, the coverage provided by corporate policies isn’t enough to cover the medical needs of ageing parents,” he said.

Parents, especially those over 60, are likely to require more comprehensive medical attention, which may not be fully covered under a corporate policy. "For parents, it’s usually better to buy a separate, dedicated health insurance policy," Iyer suggests. "This way, you get coverage that's better suited to their specific medical needs without inflating your corporate policy premium unnecessarily." Moreover, purchasing a separate plan early guarantees coverage for pre-existing conditions beyond the waiting period, while maintaining a manageable premium.

Healthcare costs in India have been steadily increasing at a rate of 10-15% annually, according to the National Health Profile (NHP). For instance, the cost of heart surgeries, one of the most common major procedures, ranges from Rs 2.5 lakh to Rs 6 lakh. Without sufficient coverage, out-of-pocket expenses could leave families in financial ruin.

“Don’t just go for the cheapest policy,” Iyer said. “Look at what the policy covers—are there sub-limits? Does it cover daycare treatments? Is there a cap on room rental or coverage for pre-existing conditions after a waiting period? These details matter more than just the premium.”

Given the limitations of corporate policies, more Indians recognize the importance of individual health plans. According to the IRDAI’s 2023 report, the number of individual health policies sold has been steadily increasing at a rate of 8% annually over the last five years. This shift indicates a growing awareness among working professionals to not rely solely on their employer's coverage.

A personal health plan also offers you the flexibility to customise your coverage based on your personal medical history, lifestyle, and future needs. Many plans now provide coverage for critical illnesses, maternity, mental health, and even pre-existing conditions after a certain waiting period, giving you much-needed peace of mind.