How Govt-Sponsored Health Insurance Plan Helpful

While the PM-JAY certainly benefits and offers a guard against health uncertainties, it’s better to continue the existing insurance plans. Also through top-up covers enjoying higher coverage for minimal incremental costs

The announcement by Government of India (GoI) in the extension of health insurance (PM-JAY) benefit to all Indian citizens over 70 years, regardless of their income, is a step towards universal health coverage. This expansion could benefit about 4.5Cr families including 6cr senior citizens by providing free health insurance of up to 5L per family. Ayushman Bharat is an attempt to move from segmented approach of health service delivery to a more comprehensive need-based care. This caters across the spectrum of the system i.e., covers primary, secondary and tertiary care.

The new developments include an additional cover of Rs5 lakh for those already covered under the scheme announced in 2018. Moreover, the top-up cover is purely for the senior citizens of the families under coverage and that is exclusively dedicated to the senior members without sharing with other family members. Also, those senior citizens already benefiting under various public health insurance schemes like Central Govt Health Scheme (CGHS) have the option to either continue their current scheme or opt in for the PM-JAY. The coverage also includes those citizens covered by private health insurance policies.

The major benefit in this plan is the zero premium to be paid to avail this scheme. Usually, the premiums of the health insurance policies escalate as the age increases at times turning prohibitively expensive. Now, with the PM-JAY, elderly citizens would be at least covered till 5L without any direct cost to them. Also, the scheme doesn’t differentiate basis on income or previous insurance status making eligible for all 70 and over to be avail free coverage.

Another critical benefit is the coverage of pre-existing illnesses or diseases under this scheme. Eligible members could benefit from full coverage irrespective of current or past health issues making this the most attractive feature and forming a safety net to that extent to all elderly. Also, there are no co-pay clause i.e., the members don’t need to share the burden of the expenses making it completely free.

Generally, an affordable health insurance policy for the elderly comes with a co-pay clause i.e., they need to share a percentage of the overall claim amount to avail the insurance coverage. This is not applicable in PM-JAY. So, with all these benefits, the question now arises if one should continue their own health insurance policies? While I’ve highlight the benefits, there’re certain shortcomings that could disallow to completely replace your existing insurance plans. Though PM-JAY doesn’t reduce the quality of treatment, the type of facilities one could avail under this scheme is reduced. The admitted would be clubbed and limited to general wards in the hospitals while the private health insurances provide you with an array of options that allow higher privacy and comfort during hospitalization.

PM-JAY is still in the expansion and is limited to only the networked hospitals. As this scheme doesn’t have any reimbursement facility, the patient must find for only the networked hospital to get the treatment done. This limits the patients the option or choice to pick hospital or doctor of their choice. Moreover, with the recent developments by the Insurance Regulatory and Development Authority of India (IRDAI), provision of cashless facility for all policyholders irrespective of network or non-network is a boon to the patients.

Also, PM-JAY, to provide benefit to the larger masses could stipulate to strict tariff i.e., price controls set by the central govt. This may not match or dilute the standard offering of a hospital thus getting a under par facility. Furthermore, delayed payments could hamper the hospitals to reduce priority over other patients dealing with private insurers. This may not be a general practice but a business reality.

So, while the PM-JAY certainly benefits and offers a guard against health uncertainties, it’s better to continue the existing insurance plans. Also, recommend securing through top-up covers enjoying higher coverage for minimal incremental costs. Thus the PM-JAY could become a complementary benefit at no extra financial bearing for the individual.

The author is a co-founder of “Wealocity”, a wealth management firm and

could be reached at [email protected]