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Why Is Health Insurance Important for Low and Middle-Income Groups?

Being able to access good healthcare treatment is a must these days, but due to the increasing costs of healthcare, this is becoming harder and harder, especially for those belonging to low- and middle-income groups.

One simple way for them to do this is by getting a health insurance plan, which will act as a financial safeguard in case of medical emergencies.

According to a 2019 report, only around 472 million people in India out of a population of 1.3 billion are covered by medical insurance. That is less than one-fifth of the total population. And of those people who do have a plan, almost 70% are covered under one of the many government schemes available to subsidize healthcare.

This low penetration of health insurance plans in India is unfortunate, but here are some ways that low- and middle-income groups can ensure they are covered:

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Benefits of Having a Health Insurance Policy for Low and Middle-Income Groups

1. Help With Rising Medical Inflation

Research has shown that medical costs are rising at an average rate of around 12-14% per year in India. With this medical inflation, access to healthcare is becoming more and more difficult for low- and middle-income groups with a health insurance policy in place to provide financial support during medical emergencies.

2. Keeping Your Savings Secure

Due to the rising costs of healthcare, a serious health issue can end up costing hundreds of thousands of rupees and can wipe out a person’s savings. But with a health insurance, the out-of-pocket expenses will be greatly reduced, as the insurer will take care of a majority of medical expenses

3. Access to Quality Healthcare

Without health insurance, many people from low- and middle-income groups might not have access to quality health care and medications, or they might end up deferring their treatment. But a health cover will cover these expenses, so you won’t have to make this choice.

4. Covers Hospitalization Expenses

Health insurance covers hospitalization expenses for accidents and illnesses, mental health issues, ambulance charges, and more.

5. Pre- and Post-Hospitalization Coverage

Sometimes, medical bills go beyond your hospitalization stay. So, health insurance also covers pre- and post-hospitalization expenses. These are expenses that are incurred before you are admitted to the hospital for treatment, or after you are discharged from the hospital. They include diagnostic tests, investigative procedures, medication, continuing treatments, specific medications and more.

6. Cashless Hospitalization

Another benefit of health covers, especially for low-income groups, is cashless health insurance. It is where you can get the required treatment at your insurer’s network hospitals, and the costs will be taken care of between the hospital and your insurance company directly. This way you don’t need to pay any cash out of your own pocket.

7. Covers Your Entire Family

It is possible to cover yourself and your entire family under one insurance. A good option is family floater insurance, where you can insure all the members of the family under a single sum insured, the premiums remain low.

8. Additional Covers Available

Since standard health plans don’t cover certain situations, if you are financially able to do so, try to customize your health insurance plan, with different add-ons for more coverage. Some add-ons that might be helpful for you and your family include a Maternity cover, Critical Illness cover, or Personal Accident cover.

9. Gain Tax Benefits

When you buy a health insurance policy, you will be able to claim tax benefits under Section 80D of the Income Tax Act. This means that you can save money on income tax.

10. Easy to Buy Online

These days there are many health insurance companies out there, and you can easily compare them online to find out which is best for you and your family. It is also easy to purchase insurance policies online, as the entire process can be done in a couple of minutes.

Government Health Insurance Schemes to Help These Income Groups

There are also a number of helpful government health insurance schemes put into place specifically to help low- and middle-income groups afford quality medical treatments and procedures. They include:

Central Government Health Scheme (CGHS): It provides medical coverage to Central Government employees and pension holders, along with their dependents who live in Indian cities.
Employment State Insurance Scheme (ESIC): Offers health care for employees at factories and sales establishments (like as well as their dependents). It also offers cash benefits in case of disablement or other loss of income.
Rashtriya Swasthya Bima Yojana (RSBY): It provides a cover of up to ₹30,000 to families who are below the poverty line, and cashless services can be availed at RSBY authorized hospitals throughout the country.
Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY): A health cover that provides ₹5 lakh coverage per year for poor and vulnerable families, providing cashless access to health care services.

Additional schemes that offer special health-related benefits include:

Aam Aadmi Bima Yojna (AABY): This covers individuals (between 18-59 years) in rural areas who are below the poverty line, and provides assistance in case of death or disability.
Janashree Bima Yojana (JBY): It is a life insurance scheme for people below the poverty line, where their beneficiaries can receive between ₹30,000 – ₹75,000, at a low premium.
Pradhan Mantri Matritva Vandana Yojana (PMMVY): This is a cash benefit of ₹5,000 offered to pregnant women and lactating mothers after the birth of their first child.

There are also special government health insurance schemes for those with disabilities:

Nirmalya Health Insurance: It covers people with mental disabilities up to ₹1 lakh for medical treatments.
Swavalamban Health Insurance: It offers ₹2 lakh coverage for disabled individuals between 18-65 years of age (and their spouse and children) annual family income is less than ₹3 lakh.

Thus, we can see that while the increasing medical costs in India has made it difficult for some to access healthcare, there is something that can help. Getting health insurance will provide financial security, especially for low- and middle-income groups.

While there are ways to purchase a private policy at a low premium, there are also numerous government schemes that aim to make proper health care treatment more affordable.

Frequently asked questions

All

What happens if you don’t have health insurance?

If you don’t have a health insurance plan in place, it may be harder for you to get the best treatment and can lead to you having to pay massive medical costs out of your own pocket.

What does health insurance for low- and middle-income groups cover?

A health insurance plan covers hospitalization expenses for regular and critical illness, as well as accidental hospitalizations, pre- and post-hospitalization expenses, psychiatric support, child delivery, and even basic annual health checkups!

What is the right age for low- and middle-income groups to buy health insurance?

The right age to buy health insurance is usually while you’re still young. This is because premiums are a lot cheaper and you can complete the waiting periods sooner too. Additionally, with healthcare expenses off the roof, if you ever need treatment for an illness – a health insurance will ensure it doesn’t eat up your early savings.

I'm the only member of my family earning money. What’s more important: health or term insurance?

Both are must-haves. Health insurance protects your savings from hospital bills. Term insurance protects your family’s future if something happens to you and is super affordable. One saves money while you live, the other supports loved ones if you are not around.

How much coverage should I take for health and term insurance?

Your health insurance coverage should ideally be at least 50% of your annual income or ₹10 - 25 lakhs, depending on your city and medical inflation. For term insurance, aim for 10 - 15 times your annual income to ensure your family’s financial security in your absence. Adjust based on age and dependents. This way, your hospital bills won’t eat into savings, and your family won’t struggle financially if you are gone.

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Go Digit General Insurance Limited | Corporate Office Address: Atlantis, 95, 4th B Cross Road, Koramangala Industrial Layout, 5th Block, Bengaluru 560095 | Registered Office Address: 1 to 6 floors, Ananta One (AR One), Pride Hotel Lane, Narveer Tanaji Wadi, Shivaji Nagar, Pune-411005, Maharashtra | Trade logo of Go Digit General Insurance Ltd. displayed above belongs to Go Digit lnfoworks Services Private Limited and is provided and used by Go Digit General Insurance Ltd. under license.