Is your Employer based Health Insurance Enough?

Everybody wishes to get employment in a good company, not only because of the high salary packages, but also because of the bunch of benefits which are offered with your salary. One of the main benefits which you are offered by a good company is a health insurance policy. It comes as a perquisite attached to your job and that’s the reason why most of the people don’t check out the details of health insurance policy offered by the employers. Just getting a health insurance policy because it comes with your job is like completing the formalities required by your employer. You must check the benefits and limitations of your health insurance policy and then decide whether it is enough for you or not.

The Health insurance policy provided by your employer is available at a very low rate of premium in comparison to an individual health insurance policy. The restriction on employer’s health policy is also very less which allows employees to get a health insurance policy easily. In addition to less restriction, the employer’s health policy also covers some pre-existing disease which is a great advantage for the employees. There is no waiting period in employer’s health policy, it becomes active from the day policy is issued.

Apart from the benefits, there are also some limitations of the employer’s health policy which will make you think again about the need of holding an individual health insurance policy. Let us discuss the limitations which are as follows: –

Amount of Health Insurance Cover

A right amount of cover under your health insurance policy is very much necessary. The amount of cover depends upon your health condition, inflation, the number of people covered and other requirements. A person having chances of critical illness due to medical history of the family may go for a higher cover. But employer’s health policy provides a very limited cover for their employees and which is same for all. Generally it varies between 2-3 lakh. Considering the rising cost of health care, it may not be enough for you.

Number of Persons Covered

Not all but many employer’s health policy covers only the employee. It may not cover your dependents (in some cases they cover children and wife, but exclude parents).  So even after having a health insurance policy, the charges of medical care of your dependents will be paid directly from your pocket. It is very much necessary to cover your dependents (like elderly parents, children, spouse, etc.) because health issues are arising in all ages, regardless of a health condition.

Limited life of Health Insurance Policy

The employer’s health policy depends upon your continuation of the job. Once you quit the job or get fired, your health insurance policy will also be cancelled. You don’t know whether your next company will be providing health insurance or not and even if your next company will be providing a health insurance policy, the terms and condition will be changed (which may not fit into your requirements). You will have no cover during your duration of unemployment and health issues can arise at any point of time. Gaps in health insurance can lead to serious problems.In fact, the premiums charged will be as higher as per your latest age.

Critical illness Cover

The list of critical illnesses covered in the employer’s health policy is very limited in comparison to the individual health plan. You might have to undergo treatment for a critical illness and you will be thinking that your policy will take care of the expense. But while making the claim, you realize that the treatment for your critical illness is not covered under your policy. That will be a big shock for you. The number of critical illnesses covered is decided by the employer and insurer to fulfill basic health requirements not to fulfill every employer’s need.

Co-Pay and Sublimits

Most of the employer’s health policies have a co-pay clause and a sublimit clause on room rent, specific surgeries, ICU charges, etc . If your employer’s health policy is having a co-pay clause, then a certain percentage of the medical expense will have to be paid by you. For example, if your policy has a co-pay clause of 10-90, then 10% of the medical expense will have to be paid by you while 90% will be paid by the insurer. The room rent of the hospital will be paid till a specific amount by the insurer, regardless of your days of hospitalization. So, even if you are hospitalized for 10 days and according to your policy, you have exhausted the amount of room rent in 5 days only, the room rent for next 5 days will be paid directly from your pocket. You have no control on the customization of the health insurance policy offered by your employer. But in case of a health insurance policy taken by you will offer you the option to customize, review and opt for the best health insurance policy as per your specific need and requirement.

Post Retirement Cover

Insurance policy doesn’t get cancelled only if you quit the job or get fired, but it also gets cancelled when you retire. As said earlier, employer’s health policy depends upon the continuation of job, so retirement from the job will terminate your policy. Getting a health insurance policy at an advanced age can be costly and a hectic process. The premium rates offered by the insurer will be very high because of your age and you will have to go through several medical checkups to get the insurance.

It is not necessary that everybody needs an individual health policy apart from their employer’s health policy, it all depends upon your need and requirements. But to know whether it is enough for you or not, you should know its benefits and limitations. The employer’s health policy may be coming as an additional benefit with your salary, but it can act as a life savior when required.

Harjot Singh Narula

Harjot Narula is founder and CEO of ComparePolicy.com, an IRDAI approved insurance web aggregator focussed on selling online insurance for companies. Harjot has more than a decade of experience in software development and has also spent 5 years in US working for the mortgage and risk management industry.

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