Can an Indian Individual Rely on Medical Insurance to Cover All Medical Expenses After Retirement?

When it comes to managing healthcare costs after retirement, relying solely on medical insurance can be problematic. While some forms of insurance, like those provided by the Government of India, state governments, or private banks, may offer substantial coverage, the reality for most individuals is quite different.

Government-Provided Insurance and PSU Policies

For those fortunate enough to have access to Government-Provided Insurance such as the Employees' State Insurance (ESI) and policies from State Bank of India (SBI) or PSU banks, there is a good chance that medical expenses will be significantly covered. Similarly, Army and Railway insurance schemes can offer similar levels of protection.

Private Individual Coverage

However, for private individuals, the situation is less favorable. The average full coverage for medical expenses under private insurance is approximately Rs. 660,000/-. In contrast, the average medical expenses for a single major incident, including testing procedures and a 14-day hospital stay in a Tier 1 city, can amount to Rs. 1,870,000/-. For chronic conditions and ongoing treatment over 5 years, the expense can reach a staggering Rs. 26.80 million/-.

Even with a 80% reimbursement, insurance coverage would only account for approximately 21% to 33% of total medical expenses. Given that India has the lowest insurance-covered treatment among G20 nations, the reliance on insurance alone is insufficient for comprehensive medical coverage.

Solutions and Recommendations

Pre-retirement Planning: It is strongly recommended to have a medical insurance plan in place that complements any employment-based policies. Each couple should save at least between Rs. 15-20 million for post-retirement medical expenses. Regular contributions over a long period, ideally through a mix of equity and debt investments, can provide a stable and growing portfolio.

PensionBox: To empower retirees, PensionBox has been designed to simplify the process of securing your retirement. With PensionBox, you can create a custom pension plan in minutes and track your existing savings effortlessly. The platform offers flexibility, allowing you to contribute as much or as little as you want, whenever you want, with complete control over your plan.

Real-World Experiences and Insurance Coverage Issues

It is important to note that there are several instances where insurance coverage can be heavily restricted. Many insurance policies contain stringent conditions, with companies often refusing reimbursement at the last minute. In some cases, even hospitals have refused to treat cashless policyholders due to these conditions.

Policy Limitations and Complexities

Insurance policies have a range of limitations. For example, hospitalization or daycare treatments are generally covered, but domiciliary hospitalization requires a doctor's approval. However, normal outpatient department (OPD) expenses and medicines prescribed by a doctor are typically not covered. This means that if a person has a chronic condition that requires medication, the expenses related to these would not be reimbursable.

Given these challenges, it is crucial to be aware of the specific limitations in your policy and to plan accordingly for post-retirement medical expenses.

Conclusion

While medical insurance can certainly play a role in managing healthcare costs after retirement, it is not a complete solution. Careful planning and additional savings are essential to ensure comprehensive coverage. By leveraging platforms like PensionBox and understanding the intricacies of your insurance policy, you can better secure your medical future during and after retirement.