A health insurance company can provide financial aid to some of its policyholders because a large number of them don’t request a claim in the same year. Now, imagine a year when most of them raise a claim. The company will either incur losses paying everyone or hurt its market reputation by rejecting several claims. To reduce their losses, the insurance companies hike the premium costs of their plans. Similarly, the soaring inflation also leads to an increase in health insurance premiums. Read on to find out more.
Today, medical science is making giant strides towards finding treatments for several ailments that were once seen as incurable. However, the flip side of that has been the rising cost of healthcare services. The best way to afford quality healthcare facilities is to get a health insurance policy with adequate coverage. Well, this scenario is also quickly changing, and you can blame inflation for it. Yes, the premium of health plans has gone up considerably in the past few years, and this trend is making standardised care costlier and out of reach for many.Medical inflation is a steady increase in costs related to health and healthcare services over time. These costs include hospitalisation, medicines, consultation charges, and diagnostic tests.
Causes of medical inflation
Some of the common causes of medical inflation are:
1. Advancements in medical science and technology
Advancements in medical science and technology have made medical procedures quicker and reduced risk factors. However, these procedures are expensive, leading to an increase in healthcare expenses. Advanced medical procedures, cutting-edge technologies, life-saving equipment, and other factors contribute to medical inflation.
2. Growing demand for healthcare services
As people age, they become vulnerable to illnesses due to low immunity. As a result, the demand for healthcare services goes up, leading to higher costs.
3. Rising labour costs: Skilled healthcare professionals such as doctors, nurses, and technicians seek higher wages, which contributes to the overall increase in healthcare costs.
Chronic conditions like diabetes, high blood pressure, cardiac issues, etc are on the rise. Managing chronic illnesses requires long-term and expensive treatments, leading to an increase in healthcare costs.
5. Pharmaceutical costs
Due to extensive research, development costs, and regulatory processes, branded medications, particularly for chronic and life-threatening diseases, tend to be expensive.
How is inflation affecting health insurance and standardised care
The rising medical inflation greatly impacts health insurance premiums and standardised care. As the cost of healthcare services increases, the insurance companies have to pay a higher compensation to policyholders. They pass on this cost to the customers in the form of higher premiums. This impact of inflation and higher premiums is more on senior citizens and people with pre-existing medical conditions as they are more likely to need medical treatment. As insurance companies compensate more for senior citizens, their policy premiums increase.
With inflation, the cost of hospital care and treatment, such as hospital stays, surgeries, medications, and diagnostic tests, also increases. Insurance companies adjust their premiums to cover these higher costs, which can make standardised treatment options unaffordable for many as they are forced to opt for lower coverage plans.
How to deal with medical inflation and rising health insurance premiums?
While we cannot stop medical inflation, we can take measures to manage the rising health insurance premiums due to inflation. Here are some ways:
1. Review your policy
Reviewing the policy at least once a year will help you know if you require that much coverage or need to reduce considering the change in your health conditions. For instance, you may not need maternity coverage after delivery. Removing this add-on will reduce your premium. It’s also important to review your policy periodically to ensure the rising premium is affordable. Sometimes, insurers offer options to adjust coverage levels based on your affordability.
2. Compare Policies
Due to competition in the insurance market, premiums for the same coverage can vary between insurers. Comparing policies offered by different insurance providers can help you get the same coverage at a lower cost. Use online comparison tools to compare multiple policies. The health insurance premium calculator will help you estimate the premium based on coverage, the insured’s age, medical history, etc.
3. Higher deductibles
Deductible is the amount that you have to pay out of pocket before insurance steps in. Opting for higher deductibles will lower your premium costs, but you must be financially strong to pay for the medical expenses in case of a claim.
4. Opt for top-up plans
If you want more coverage but are worried that the premium will shoot up, the best option is a top-up plan. These are usually more affordable than the base plans.
5. Multi-year policy
When you buy a health insurance policy for three or more years, you pay the premium in one shot for the entire duration. This has many advantages – one, the premium rate remains locked for that duration, so any hike in premium due to age or inflation will not impact your premium amount. Second, insurers offer attractive discounts on a multi-year policy.
6. Healthy lifestyle
Practising a healthy lifestyle reduces the risk of developing health issues and hospitalisation. Hence, some insurers offer discounts on the premiums if you adhere to a wellness programme and follow a healthy lifestyle.
7. Tax benefits
As per Section 80D of the Income Tax Act, you can avail of a tax rebate of up to Rs 25,000 on the premium paid towards health insurance. If you pay for your parents, you can claim an additional rebate of up to Rs 25,000 if they are below 60 and a maximum of Rs 50,000 if they are senior citizens.
Conclusion
Medical inflation has a significant impact on health insurance premiums. But the good news is there are several ways to reduce the premium and still stay financially protected against the rising medical costs. If you have any doubts, reach out to your insurance provider for options which not only meet your medical needs but also your budget.
Note: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.
Disclaimer: The above content is non-editorial, and TIL hereby disclaims any and all warranties, expressed or implied, relating to the same. TIL does not guarantee, vouch for or necessarily endorse any of the above content, nor is it responsible for them in any manner whatsoever. The article does not constitute investment advice. Please take all steps necessary to ascertain that any information and content provided is correct, updated and verified.
