How To Tackle Medical Inflation Through Your Health Coverage Decisions

There are regular reports about various inflation figures, and while most of these are tackled through the budget that is prepared by a family, there is one aspect of inflation that needs a different approach. This is medical inflation and it requires that, over a period of time, the individual has a health insurance cover that is sufficient to meet the expenses that may arise on the treatment of several illnesses.

The relationship between medical inflation and the need for a specific limit in the health cover needs to be understood and tackled in an effective manner.

Medical inflation is the rise in the prices related to medical treatment that a person will face in the country.

There are various aspects related to medical inflation that need to be considered. On one side, there is the rise in the prices of medicine, but along with this there is also the cost of hospitalisation that needs to be considered. The various charges that are levied by hospitals, along with the tests and other costs, can turn out to be quite a significant figure. While the inflation figure might not exactly capture the expense that the individual might face, because then each person would have a specific need, it will give a vital indication to the individual.

Recent reports put the medical inflation at around 14%, which is far higher than the normal inflation.

The impact of inflation is that it erodes the value of money and this makes everything very expensive. This means that some service that you would have earlier got for less, now costs far more than what it was some time ago. The impact of this on your health insurance has to be considered, as what happens here is that if you were having a cover of say Rs 2 lakh several years earlier, then this same amount would be highly inadequate at this point of time. So, to get a similar kind of service you might require a cover of Rs 4 lakh now, or even higher.

This clearly shows how you need to ensure that the health insurance cover also rises over a period of time.

One of the things that need to be done is to act proactively to raise the insurance cover at regular time intervals. If this is not done then the mistake will be realised only when there is a claim, but by that time it might just be too late to do anything. This is why it is essential that every 2 to 3 years there is a check that is made on the amount of the health insurance cover and whether this is adequate. There are two important things that can be done to increase the cover effectively. One is that there is a need to look at the no claim bonus that might be available on the policy, because this amount can slowly climb up to 50% of the base cover that is taken on the policy. If this is done, then this would ensure that there is a rise in the cover that is taking place.

The second thing is that one need not raise the cover just through a base figure increase. This can be done easily through the taking of a policy that is a top up policy, or a super top up cover. This will ensure that while the cover amount is rising the cost is still under control, because ultimately what is needed is the required limit to meet higher expenses and the top up policy will get this at a lower cost.

Arnav Pandya is founder of Moneyeduschool.