Why corporate health insurance is not good enough?

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Most of the organizations tend to provide health insurance to its employees through a Corporate Health Plan or Group insurance scheme and as a consequence most of the employees rest in peace as they feel secured and hope that in the event of any medical emergency the health insurance provided by employer will bail them out.  We will highlight below few pros and cons of the health insurance provided by the employer and finally conclude what is prudent with respect to ”Corporate health plan” and ”Personal health plan”

Pros (Merits) of a Corporate Health Plan:

  1. There is no ‘’Waiting Period’’ :

Normally when any individual applies for a health policy there is a waiting period of up to 2 years or more for pre-existing diseases, certain specified medical conditions and maternity benefits. This means that during this period if there is a hospitalization arising out of pre-existing diseases or specified medical conditions or maternity related complications, it won’t be covered under the policy until the completion of waiting period of 2 years or more as specified in the policy document

  1. Pre-existing diseases are covered :

In the normal circumstances when any individual applies for a health policy, the insured has to  specify their  existing illness or diseases and hence those are covered only after the waiting period of 2 years or more as specified in the policy document

  1. No medical check-up is required :

Normally when any individual applies for a health insurance policy, the service provider conducts the medical check-up of the insured and looking at the reports and risk involved, the health insurance policy is issued

  1. Employer pays the premium :

Normally when any individual applies for a health insurance policy, the premium is paid by the insured

Cons (Demerits) of a Corporate Health Plan:

  1. Sum insured is too less

Corporate health plan usually covers anywhere between 3 lacs – 5 lacs and hence in the event of hospitalization cost beyond that needs to be paid by the insured

  1. Provides coverage for minimum 24 hrs of hospitalization

Normally the corporate health plan covers the medical cost if the hospitalization is for 24 hrs or more. We know as a matter of fact that due to advancement in the medical field there could be a reduced time with respect to admission to surgery to discharge on the same day and hence it may  not qualify to be covered in the corporate health plan

  1. Co-Payment clause

There are corporate health plans which may have co-payment clause which means that a certain percentage of the medical bill has to be paid by the insured which could range from 20% -40%

  1. No Life time renewal

Corporate health plans do not have life time renewal which means the corporate health plan cannot be renewed every year for lifetime by the wish of the insured. The validity of the  corporate health plan is limited to the time you are in service. The moment you leave the job and the employment ends, the health plan is terminated automatically

  1. Room rent capping

Under corporate health plan the permissible room rent limit may be pre-defined. Hence during hospitalization if you opt for room which has higher tariff than the pre-defined limit, then you as the insured may have to foot the difference

  1. Doesn’t have a reset benefit

Corporate Health Plan may not have the reset benefit while the personal health insurance plans most certainly have the reset benefit. Reset benefit implies that if your sum insured is utilized completely for the treatment of a particular illness during the financial year, the service provider shall reset the sum insured by 100% which could be used for other illnesses during the same financial year

  1. May not cover critical illness

Corporate Health plans may not be covering critical illnesses such as cancer

  1. Grey Period :

This refers to the period i.e.  The last day of the old organization and joining day of the new organization. This is the period when you and your family may be without coverage and in the event any hospitalization occurs during this period it could be painful. Many corporate health plans may not cover you immediately on joining but after a little gap of 15 days to 3 months which we need to be aware of

  1. Company shut down

In the event of the company shut down, by default the employee’s loose employment and consequently loose the corporate health plan eligibility

  1. Layoffs :

In the unfortunate event of layoffs by the company, the employees may stand to lose the eligibility of corporate health plan

11. Post Retirement scenario :

On retirement the corporate health insurance plan may cease to be in force and hence you may have to then apply for a personal health insurance policy to protect against the medical uncertainty. At this time of post retirement you may find it hard to get the new health policy and in the event you get  the premium may be way too expensive

Conclusion:

Having read the pros and cons above, you may have reached the sensible conclusion that while the corporate health plan may have few advantages such as No waiting period , coverage of pre-existing diseases and no medical check-up but at large the personal health insurance policy could be undisputedly more meaningful and serving the purpose. The corporate health plan at best should be looked as a secondary option.

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