How to face healthcare cost inflation head-on with health Insurance?

Inflation, by definition, means the general increase in prices of products and services, and the overall fall in the value of money. While a moderate amount of annual inflation is considered good for the economy, the bitter truth is that healthcare inflation almost always outpaces the general inflation. In fact, India, which is known to experience a general inflation of about 6-7 percent, that in the field of healthcare is as high as 15%.

Health Care Inflation and Insurance

You may now be wondering, what does this have to do with your health insurance? Well, the answer lies in the coverage your personal health insurance offers. For instance, if a policy purchased by you today offers a coverage of Rs. 10 lakhs, what will it offer after 7 years? The answer is same - A coverage of Rs. 10 lakh. But considering the inflation, will it be enough?

To bring things into perspective, if a surgical procedure costs about Rs. 5 lakhs today, considering an annual inflation of 15%, 7 years from now the same procedure will need you to shell out somewhere in excess of Rs. 13 lakhs! Now isn’t that astounding?

While your policy will help cover the major chunk, i.e. Rs. 10 lakh of your expenses, but you will still need to shell out a significant sum of Rs. 3 lakhs from your pocket. 

Importance of Adequate Health Care Cover

The example stated above may seem discouraging to a few of us, and might even make us question, whether buying a health insurance is worth. But the fact of the matter is that health insurance is extremely important and must be purchased at all costs.

No matter what your financial status, buying health insurance ensures that you do not have to shell out huge sums of money at the time when a medical emergency hits you. It also ensures that yoursavings are kept intact, even in difficult times thus giving you financial security. Moreover, it saves you from having to pay humongous medical bills at any given point in time, simply by paying manageable sums of money in the form of premiums.

In order to understand, whether a plan offers adequate cover or not, it is recommended that you consider the actual costs of medical procedures/surgeries in your city or region. To do so, you can get in touch with your family physician or even an insurance agent.

In addition, draw a rough estimate for these costs in the near future (preferably up to 10 years), considering at least 10 to 15 percent inflation. This will help you get a better insight regarding (un)expected medical expenses in the future so that you can be well prepared.

Striking a Balance

Now that we’re aware of the fact that Health Care Cover is a necessity and Health Care Insurance is a reality, we need to find a balance between the two so that we’re able to maintain our financial security, even in the wake of rising costs. So how exactly should we go about doing that? While there’s no single way to deal with this issue, taking multiple steps in the right direction can help you stay secure. So, let us take a look at these steps.

1. Buy a health insurance plan, even if your employer covers your medical expenses. Here. The key is to invest in an insurance scheme that covers you for alifetime. There are numerous such plans available in the market. If you look carefully, it is more than likely that you’ll find a plan that best suits your needs.

Again, make sure your cover adjusts to the expected inflation in healthcare expenses.To this end, you can either opt for a top-up or invest in a plan that facilitates an in the amount of cover for every year that you do not file a claim. These are essentially the most financially efficient policies that you can find.

2. Invest in a separate policy that covers critical illnesses such as heart ailments, tumours and cancer amongst others. This will not only help you claim a lump-sum amount of money at the time of need but will also offset your loss in income (if required).

3. Build an emergency medical fund. No matter the number of policies you purchase, it is always advisable to have an additional fund, which you can use. It will ensure that even if a part of your expenses is not covered, you will still be able to come out of the emergency without burning a hole in your pocket.

That being said, it is more than important for you to adopt a healthy lifestyle. Right from getting enough exercise to being more mindful ofyour eating habits, you should do everything in your power to stay fit. After all, even when you’re well prepared to face any medical emergencies, it is best that they stay away from you and your loved ones.