Supplement your employer's health plan with a sizeable personal cover

Benefits of office policy could be pared; job loss or a switch to entrepreneurship could cause loss of coverage

Employer-sponsored health insurance is a critical element of the benefits package provided to employees. When the coverage is comprehensive and the sum insured is sufficient, it provides protection, and hence peace of mind, to the employee and his family. A recent study by Plum, a health insurance platform, which examined the health insurance policies offered by over 2,500 employers, revealed several gaps in the coverage they provide.

No check-up, no waiting period

Employer-sponsored health insurance offers multiple advantages to employees. One, the burden of paying premiums is on the organisation. “The employer often covers the premiums for the employee, the spouse, and children, which is a valuable benefit for employees,” says Vishal Dhawan, chief financial planner, Plan Ahead Wealth Advisors.

Two, people who have pre-existing diseases are often denied access to a retail health insurance policy. “In an employer-sponsored group plan, there is no health checkup, medical underwriting, or requirement to disclose pre-existing conditions. Therefore, employees get insured regardless of their health condition,” says Kapil Mehta, co-founder & chief executive officer (CEO), SecureNow.

Three, employer-sponsored plans provide day-one coverage for pre-existing diseases (PEDs). “Individual plans typically have a waiting period for PEDs before coverage begins,” says Abhishek Poddar, co-founder and CEO, Plum. This waiting period can range from two years to four years in these policies.

Four, in many cases, employer-sponsored plans also cover parents. Since elderly parents tend to have several pre-existing conditions, they find it difficult to buy a retail health insurance cover. Their child’s employer-provided cover is the only health insurance they have.

And five, employer-sponsored plans often include maternity benefits, which may not be covered by personal health insurance plans.

Benefits can be reduced

Employer-sponsored health plans have shortcomings that employees need to be aware of. These policies are typically renewed annually. Whether or not the employer renews the policy is not guaranteed.

The premium of the policy changes based on the company’s claims history. “If there are high claims, the insurer may increase the premium, leading the company to cut back on benefits or not renew the policy altogether,” says Mehta.

These factors can create uncertainty for employees (especially of younger, smaller companies) dependent on their employer-sponsored policy for coverage.

Many companies only cover the employee. According to the Plum study, 30 per cent of organisations don’t extend benefits to their employees’ families. And 75 per cent don’t extend benefits to their employees’ parents. “It is critical that organisations offer insurance benefits to parents, even if the employees themselves have to bear a part of the cost burden,” says Poddar.

Sum insured may be inadequate

According to the Plum study, the median sum insured offered by employers is Rs 3 lakh. This amount would prove grossly inadequate if a person falls prey to a critical illness.

The Plum study also found that only 56 per cent of employers offer maternity benefits. Today, a normal delivery can cost Rs 60,000 to Rs 80,000. A Caesarean-section can cost a lakh or more. “These costs can impose a substantial burden on younger couples in the early part of their careers,” says Dhawan.

According to experts, offering this benefit would aid in attracting and retaining younger, especially women, employees. Many employers, however, avoid giving this benefit because of the cost involved. “Insurance companies typically increase the premium by around 20 per cent for providing the maternity benefit,” says Rahul M Mishra, co-founder & director, Policy Ensure.

Buy a personal cover

All employees should supplement the employer-sponsored health cover with a personal cover. “Employees may lose their jobs, as was witnessed during the pandemic, and more recently, amid the crisis in the US technology sector,” says Mishra.

Employees may also change their jobs, and the company they move to may not offer health insurance, or may offer one with curtailed benefits. Those who decide to become entrepreneurs would also lose access to an employer-sponsored cover. Remember that buying a personal cover becomes more difficult after the mid-40s.

Perfect fit: How much personal cover should you buy?

. The amount of sum insured you buy should be dictated by the type of hospital you are likely to go to for treatment, the room type you prefer, and your city of residence

. For a family of three, you should buy a floater policy with a sum insured of Rs 10-15 lakh if you live in a smaller city, and Rs 20 lakh or above if you live in a metro

. This should be supplemented with a super-top up cover of Rs 50 lakh to take care of critical ailments

. Senior citizens, should, in addition also have a health corpus to meet ancillary costs