Is Corporate Health Insurance Enough? Why You Still Need Personal Health Insurance

What is Corporate Health Insurance?

A corporate health insurance policy is a health insurance plan that typically offers coverage to a group of employees within an organisation.

Generally, GHI policies are provided by employers as part of employee benefits, with the premium paid by the employer to offer medical coverage to their employees.

What Does a Corporate Health Insurance Policy Cover?

A typical corporate health insurance policy includes the following features:

1. A corporate health insurance plan typically covers either the employee alone or includes the employee, spouse, children, and dependent parents.
2. In the case of a corporate or group health insurance policy, the premium is paid by the employer.
3. Unlike many other health insurance plans, employees can avail of cashless hospitalisation at the insurer's network hospitals.
4. A group health insurance policy provides coverage for medical practitioner and consultant fees, doctor consultations, pre-hospitalisation and post-hospitalisation expenses, along with domiciliary and day-care treatments.
5. Certain ancillary expenses, such as ambulance charges, are also covered under these policies.
6. Some corporate health insurance policies offer free annual health check-ups for employees.
7. Corporate health insurance plans are known to include coverage for pre-existing diseases and maternity expenses, subject to policy terms and conditions.

Limitations of Corporate Health Insurance Plans

Despite its advantages, a corporate health insurance policy has inherent limitations that may leave employees underinsured during high-cost or long-term medical situations.

1. Lower sum insured compared to individual or family floater health insurance plans.
2. Coverage remains valid only while the employee is actively employed.
3. Limited or no coverage for dependent parents in certain policies
4. Room rent caps that can lead to significant out-of-pocket expenses
5. Mandatory co-payment clauses for specific treatments or age groups
6. Policy terms and benefits can be revised or withdrawn by the employer.
7. Lack of portability benefits when changing jobs
8. Restricted flexibility to customise coverage based on personal health needs

Is Corporate Health Insurance Enough for You and Your Family?

While corporate health insurance benefits both employees and employers. This does not mean that the coverage offered under a corporate health insurance policy is adequate to secure oneself and family-related healthcare expenses.

Multiple medical research reports clearly indicate that medical inflation is rising steadily, and that managing unforeseen medical events has become essential. Let us understand why the corporate health policy coverage might not be enough, and why it is only wise that one has a separate health insurance policy:

1. The Sum Insured of a Corporate Health Insurance Policy is Low

Multiple comparative studies have confirmed that a corporate health insurance policy generally has a lower sum insured than an exclusive individual or family floater health insurance plan.

Most corporate health insurance plans offer a sum insured based on factors such as location, metro or non-metro classification, and employee grade. As a result, the coverage provided under a corporate health insurance policy may not be sufficient in the event of hospitalisation due to a severe illness or a major accident.

2. Situation

Let us consider an example of Michael, who is employed with a well-renowned financial institution. He receives corporate health insurance coverage for himself and his family with a sum insured of Rs 3,00,000 under his company's corporate health insurance policy. Michael has four dependents: His spouse, one child, and his parents.

During the first wave of COVID-19 in India, his family members were infected, and his wife and parents required urgent medical attention and hospitalisation. The total medical expenses for the three of them reached nearly Rs 9 lakhs, which was three times the coverage available under his corporate health plan.

Michael has always been a meticulous planner when it came to financial and risk planning. He had already purchased separate personal health insurance policies for his parents, each with a sum insured of Rs 6 lakhs. This allowed him to manage his wife's hospitalisation expenses through the corporate insurance policy provided by his employer, while avoiding financial strain for his parents' treatment.

However, Michael realised the importance of having additional policies with adequate insurance cover because, in the absence of his parents' policies, he would have had to rely on borrowings from banks and or others. He has now decided to buy a Family Floater Health Insurance Policy for himself, his wife, and his child.

3. Current Employment Status

Corporate health insurance policies are known to provide health benefits only for as long as an individual remains employed with the organisation. The average employee tenure within an organisation is typically four to five years. As a result, if an employee leaves their current employer for any reason, they are no longer entitled to the benefits offered under the corporate health insurance policy.

In contrast, an individual health insurance policy continues to provide coverage irrespective of employment status, provided the premiums are paid on time.

4. Post-retirement Status

As noted above, health insurance coverage provided by an employer under a corporate health insurance policy is available only for the duration of employment with the organisation. After retirement, individuals are required to purchase a separate personal health insurance policy, as the corporate health policy no longer applies.

In such situations, securing health insurance beyond a certain age can be challenging. Insurers typically require mandatory medical tests before issuing a policy, and certain pre-existing conditions may be classified as high-risk, leading to rejection. Even when coverage is granted, pre-existing diseases may be excluded, despite being one of the primary reasons for hospitalisation among senior citizens.

5. Corporate Terms and Conditions May Change

The government has not made it compulsory for organisations to offer health insurance to their employees, and providing coverage under a corporate health insurance policy remains entirely at the employer's discretion. As a result, an organisation may revise the terms and conditions of its corporate insurance policy or choose to discontinue the corporate health insurance policy altogether, without any legal implications.

6. Coverage for Dependent Members

A corporate health insurance policy may or may not extend coverage to an employee's dependents in certain cases. Therefore, it is essential to review the terms and conditions of the corporate health insurance policy carefully in advance.

Under a family floater health insurance plan, individuals can choose coverage for dependent parents, spouse, and children, or opt for separate policies based on specific health needs. In comparison, an exclusive senior citizen health insurance policy is often more suitable for elderly parents, as it is designed to offer additional benefits that may not be available under a corporate health insurance policy.

7. Clauses Around Co-pay

Most group health insurance plans and corporate health insurance policies include a co-pay clause. Co-pay refers to a fixed percentage or amount of a claim that the policyholder is required to pay out of pocket. The co-pay amount payable under a corporate insurance policy is determined by the insurer and may vary depending on the type of medical service.

For example, if an individual visits a specialist for a specific illness and the co-pay amount mentioned in the corporate health insurance plan for consultation is Rs 2,000, the individual will be required to pay Rs 2,000 for the specialist consultation.

8. Limit on Room Rent

The room-rent capping under most corporate health insurance policies is usually quite low. As a result, the insured may be required to bear nearly 50% to 60% of the room rent out of pocket, which can become a significant expense depending on the duration of hospitalisation under a corporate health insurance policy.

9. Inferences

• In rare situations where an employer offers a corporate health insurance policy with a higher sum insured and the employee has no dependents, it may be reasonable to delay purchasing an additional personal policy.

• It is important to note that coverage under a corporate health insurance plan is available only during the period of employment, and employers retain the right to modify or discontinue benefits at any time.

• As healthcare needs evolve across different life stages, it is advisable to review both corporate insurance policy and personal health insurance coverage every three years to ensure adequate protection.

• Holding two or more health insurance policies provides greater flexibility and financial support when choosing coverage during a medical emergency.

Corporate Health Insurance vs Individual Health Insurance

When comparing corporate health insurance vs individual health insurance, the key difference lies in control and continuity. Corporate health insurance is provided by an employer under a corporate health insurance policy, with premiums usually paid by the organisation. While this makes it cost-effective, coverage under a corporate health plan is often limited and linked to employment.

In contrast, individual health insurance is personally owned, offering higher flexibility, customisable coverage, and continuity irrespective of job changes. Unlike corporate medical insurance, personal policies provide long-term protection, making them essential for comprehensive healthcare planning.

Why You Should Buy a Personal Health Insurance Plan Along with Corporate Cover

Relying only on a corporate health insurance policy can leave critical gaps in medical coverage. Corporate health insurance is linked to employment, often offers a limited sum insured, and may include restrictions such as co-pay clauses and room rent caps.

A personal health insurance plan provides continuity of coverage, higher flexibility, and the ability to customise benefits based on individual and family needs. Buying personal health insurance alongside a corporate health insurance ensures protection during job changes, retirement, or employer policy revisions. Together, both policies create a stronger and more reliable healthcare safety net.

How Much Health Insurance Coverage Do You Really Need?

The right amount of health insurance cover depends on factors such as age, medical history, family size, and lifestyle. Rising medical costs and inflation mean that relying only on a corporate health insurance policy may not provide adequate protection. Experts generally recommend having health insurance coverage of at least 8 to 10 times your annual income, especially for families living in urban areas.

A personal health insurance plan allows you to choose a higher sum insured, ensuring sufficient coverage for hospitalisation, critical illnesses, and long-term treatment, even when your corporate health insurance plan falls short.

What Happens to Corporate Health Insurance When You Change Jobs or Retire?

A corporate health insurance policy remains active only while you are employed with the organisation. When you change jobs, resign, or retire, coverage under the existing corporate health plan typically ends immediately. In some cases, a new employer may offer corporate health insurance, but the benefits, sum insured, and terms may differ.

After retirement, corporate medical insurance is no longer available, making it necessary to rely on personal health insurance. Having an individual policy in place ensures uninterrupted coverage, avoids age-related underwriting challenges, and protects against rising healthcare costs.

Can You Port Corporate Health Insurance to a Personal Plan?

Yes, it is possible to port a corporate health insurance policy to a personal health insurance plan, subject to insurer guidelines. Portability allows continuity of benefits, such as waiting periods for pre-existing diseases. However, not all benefits under a corporate health plan may transfer fully, and insurers may reassess risk before approval.

Porting is usually allowed at the time of policy renewal and requires a timely application. Given these conditions, purchasing a personal health insurance policy early often provides greater certainty and long-term coverage than relying solely on portability from corporate medical insurance.

Tax Benefits of Personal Health Insurance vs Corporate Cover

The tax benefits of personal health insurance are more direct and substantial compared to a corporate health insurance policy. Premiums paid for personal health insurance are eligible for deductions under Section 80D of the Income Tax Act, offering tax savings for self, family, and dependent parents.

In contrast, premiums for corporate health insurance are paid by the employer, so employees cannot claim tax deductions on this cover. As a result, a personal health insurance policy not only strengthens medical protection but also provides clear tax advantages that a corporate health plan does not offer.

How JioInsure Helps You Choose the Right Health Insurance Plan

Choosing the right health insurance alongside a corporate health insurance policy requires careful comparison and clarity. JioInsure simplifies this process by helping individuals assess their coverage needs beyond a corporate health plan.

It enables easy comparison of personal health insurance options, evaluation of sums insured, and understanding of policy features such as waiting periods, exclusions, and add-ons.

By offering transparent insights and guidance, JioInsure supports informed decision-making, ensuring your personal health insurance complements your corporate cover and provides long-term financial and medical security.

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