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Understanding the impact of rising Health Insurance Premiums on everyday life

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Modern health insurance has been an essential element of the financial management of many Indians over the last few years. However, a survey done by LocalCircles shows that patients have experienced an alarming hike of 25% in their health insurance premiums in 2024, with the majority being in the 52% bracket. This raw figure is real in terms of its impact on the life of the common man, especially where matters concerning health care, insurance, and the cost of nearly everything are concerned, not to mention economic difficulties in certain parts of the world like a particular country.

In this blog, we’ll discuss how these rising health insurance premiums affect the ordinary Indian, reasons why there has been an increase in the premium and how the ordinary person can go about it.

Understanding the Importance of Health Insurance

Medical insurance is very important in shielding people and families against costs which may be incurred in instances of illnesses. In today’s scenario where the healthcare cost is increasing progressively in India, health insurance is not a luxury but a necessity.

The significance of possessing a comprehensive policy is indisputable, regardless of whether one is looking for individual health insurance for oneself or family health insurance for the entire family. Nevertheless, with premiums increasing, many are raising doubts about the affordability and accessibility of these policies.

Why Health Care Premiums Are Increasing?

The recent general increase in health insurance premiums by 25% is shocking, but what has prompted this action? Several factors contribute to the rising cost of health insurance in India:

1. Increased Healthcare Costs:

It has been noted that Medical costs of treatments, hospitalisation and surgeries have gone up. Today’s hospitals and healthcare providers are charging more for healthcare due to the cost of equipment, technology, and human resources.

2. COVID-19 Effects:

The outbreak of the novel coronavirus has influenced the functionality and operation of the healthcare sector. There has been a sharp rise of claims which have significantly dragged the payout figures of the insurers. To counter the above losses they have increased the premiums.

3. Advancements in Medical Technology:

It is however worth noting that there has been an increase in the quality of healthcare delivery resulting from technological investments in the health sector but this has been accompanied by a corresponding increase in cost. Said increase has also meant that there are more incidences of claims and this has seen the premiums being pushed up.

4. Inflation:

Other causes that have influenced this kind of inflation include general inflation. Several sectors have been pegged with inflation in the cost of living, and rightly so; healthcare and, subsequently, health insurance have not been left behind.

5. Increased Awareness and Penetration:

For this reason, given that more people are taking family health insurance covers especially after the happenings of the COVID-19 pandemic, insurance companies have had to shift premiums to cater to the increasing health insurance clientele.

Impact on Common-Man

The increase in health insurance rates by 25% is a disaster to the common man, especially those from the middle and lower income status. Here's how it affects them:

1. Affordability of Individual Health Insurance

For individuals, especially those with fixed or limited income, this will make it almost impossible for them to afford personal health insurance policies. While some may be in a position to forgo medical insurance altogether and instead pay out of their pocket for bills, others may be forced to remain with the insurance assured and delay or reduce their ability to pay for other basic necessities. This could result in an exposed population and differential access to care with potentially disastrous consequences due to serious illness and injury in an individual with no insurance protection for such an occurrence.

2. Burden on Families

Group policies are drawn for a group; hence, they cover many people and are a bit costly compared to individual policies. For example, if families had to cut their expenses to cover the cost of premiums before the increase of the former by 25%, paying for the same premiums may become a herculean task for them. This may compel some of these families to shed some classes of their insurance or even decrease the amount of coverage they opt for, thus reducing the quality of their health coverage.

3. Increased Out-of-Pocket Expenses

Hence, insurance may be affordable, but increased insurance premiums may mean that some patients will prefer to go for policies that require premiums of higher amounts for coverage but allow them to meet more of the cost, such as deductibles or co-payments. They said such a change would lead to higher costs out of pocket if one loses his/her job and has to pay for an emergency medical situation, which puts a toll on the family.

4. Impact on Retirement Savings

To most people, health insurance forms part of their planning once they reach their retirement age. While premiums might be increasing, people will be compelled to use their retirement funds to pay for coverage, which will lead to their most productive years in jeopardy.

How to navigate the challenge of rising health insurance premiums:

As the costs have begun to increase, it becomes necessary to take measures to effectively bear the expansive costs of health insurance. Here are some strategies:

1. Review and Compare Policies

Another important aspect that relates to the contents of this article is the fact that one should reassess one’s health insurance policy and its specifications at least once a year to compare it to the policies offered by other insurance companies. Because there is competition in the market, you may be able to locate a policy that has comparable coverage for less money. Examine several choices for family health insurance and individual health insurance by using online comparison tools.

2. Opt for Top-Up Plans

If you want to get more coverage, then do not augment the amount insured on your base plan but opt for a super top-up plan. These are normally provided at a cheaper rate than the basic plans and can be used as supplementary ways of boosting your coverage without having to spend a lot of cash on your premium.

3. Leverage Wellness Programs

Some insurers have wellness programs whereby policyholders who practise healthy lifestyles end up enjoying rebates on their premiums. These are programs whose implementation can enable qualified candidates to decrease their premiums and become healthier, too.

4. Consider Higher Deductibles

But if you are financially strong, it will be wise to go for a policy that has a higher-priced deductible. This, of course, will help reduce your premium costs, but it is recommended that you have adequate funds to cover the deductible in the event of an accident.

5. Tax Benefits

So don’t forget the tax advantages of having health insurance. According to Section 80D of the Income Tax Act, any self-employed individual investing in individual health insurance or the medical insurance policy covering the dependent family members can claim paid premium amount as deductions. This can assist in lowering your taxable income, hence decreasing the amount of tax that you are likely to pay to cater to the premiums.

6. Get with the program and plan for the future

Last but not least, it is important to get updated regularly on the changes that are happening in the health sector and insurance. Sometimes it may be useful to check your policy more often and track the changes in premiums to reflect this in your financial plans. It is also advisable to set an emergency fund only for medical costs.

The Road Ahead

The three ministers signify the 25% increase in health insurance premiums, which is an eye-opener to many. This shows how people should make financial forecasts and ensure adequate coverage to meet the world's future needs today. This is true, especially with rising costs; however, these should act as a wake-up call to protect you and your family. But by reading this article today, know these costs are manageable, and you will always be shielded when the time comes.

Conclusion

The 25% increase in health insurance rates highlights the necessity of careful financial planning. Even though growing expenses are difficult, they might be lessened by looking into coverage alternatives, applying health initiatives, and taking advantage of tax advantages. Being proactive and knowledgeable about your policy may help you maintain financial stability and safeguard against unexpected medical costs. To help you through these difficult times, make sure you have the appropriate coverage in place, whether it be through individual or family health insurance.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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