Why corporate health insurance should only be a secondary line of defence

Most employees tend to rely primarily on corporate insurance for their health cover. But a study conducted by online insurance platform Policybazaar.com reveals a few shortcomings in these plans, including coverage, continuity, and customisation. Though corporate insurance also offers unique benefits, to rely entirely on the same would be equivalent to pulling a cover too thin.

Unique benefits

Corporate insurance starts cover from day one, extending to pre-existing diseases (PED) as well. To cover PEDs before the customary four or two years in retail insurance, an additional PED rider is purchased in most retail health policies. Also, maternity cover is a special case where the employer provided insurance can accommodate up to two childbirth-related expenses in the coverage period from day one. These facilities are only additional features in retail policies, if they are available in the first place.

Corporate insurance operates through dedicated TPAs (third-party administrators), which simplifies cashless reimbursement at the time of admission and adds to the ease of use of these policies. Even multiple claimscan be accommodated in a year, within the coverage limit. Personal insurance does so as well, but in testing times such as Covid admissions, it was observed that corporate insurance was preferred for cashless admission by hospital administrators on limited management bandwidth.

But on the metrics of coverage, continuity and customisation, corporate insurance may not be up to the mark and a personal plan must be considered.

Also read: Insurance Query: Choosing a suitable health cover 

Cover

Corporate insurance is structurally inadequate to address high-cost medical care and may be designed to be so. The study reveals that 74 per cent of all corporate policies have a sum insured of less than ₹4 lakhs. Most higher order treatments such as cardiovascular, oncological, or renal care are barely covered with such limits, which can only address primary or secondary treatments for infections, routine accidents, and diseases. This is in stark contrast to retail health policies where available covers have moved up to over ₹1 crore, with only a slight increase in the cost of premium in the last five years. This chimes with the structural aim of corporate insurance to address only lower cost treatments. The policyholders’ probability of a healthy recovery so as to continue employment is also higher after primary and secondary care, compared to tertiary care patients, which explains the stagnation in corporate insurance covers.

Customisation

Corporate insurance covers are one-size-fits-all products that rob one of customisation that has benefitted retail health insurance. Top-ups on covers, wellness or OPD benefits, restoration option cannot be unlocked.

According to the study, only a third of all corporate insurance products partially cover (up to 50 per cent of sum insured) advanced treatments, which is regularly available in retail policies. Similarly, in specific procedures like cataract, sub-limits are lower in corporate insurance.

Most retail policies now offer single private A/C rooms and have done away with room rent capping. But 60 per cent of employer-sponsored policies offer a sub-limit of ₹5,000 per room, which may proportionately impact the final bill as well.

Continuity

Even without cover and customisation drawbacks, continuity is a key concern in corporate insurance, which should relegate it to a secondary line of defence. On contracting a long-term illness, income and even the insurance derived from the job, may be in jeopardy, concurrently. The time when insurance is needed the most is when one is uninsured, without a regular income as well. At such times there is the concern of a shift in career or location, which can leave one under-covered till the next offer. On marriage or birth of a child, corporate insurance can accommodate, but with lower cover limits, the insurance may be further ineffective.

Corporate insurance can function as a quick back-up for regular health ailments, and will also be easier to execute for cashless admission or reimbursements. But for larger ailments and as a constant back-up, one should rely on personal health insurance. The market for the latter has evolved significantly, accommodating most needs and can also be cost-effective.

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