The Future of Affordable Senior Care & Health Insurance

One of the biggest anxieties for India’s elderly has been the ever-rising cost of medical expenses. Having provided medical & domiciliary care to more than 25,000 senior citizens over the last 6 years we understand this concern acutely. As a country with limited resources, India is unable to provide free button-quality healthcare to our elderly-like the National Health Services (NHS) does in the UK.

The middle class, who can afford to pay from their savings, often opt for private healthcare. However, the abysmally low penetration of health insurance, especially among the elderly, makes private healthcare prohibitive in the long run as purely an out-of-pocket expense.

There have been some recent innovations in extending universal health insurance. A big stride has been taken with the launch of the Arogya Sanjeevani Policy. Yet, both the quantum of cover as well as the range of exclusions dilute its effectiveness for the elderly. Senior citizens need significantly more rehabilitation, respite care, domiciliary care and OPD treatment than the general population – all of which are exclusions currently.

Importance of Health Insurance for Senior Citizens
In an age of shocking healthcare cost inflation, it is imperative to have both an adequate medical insurance and a large corpus of personal savings. Whether you are an elderly person or someone caring for an older loved one or indeed an employee planning for retirement, health insurance is much more critical today than ever before.

Senior citizens are prone to more illness: With age comes co-morbidities, chronic illness, critical health problems – and therefore this is an age where medical expenses typically skyrocket. For this reason, medical insurance is critical for senior citizens.

Tamojit Dutta, Co - CEO, Tribeca Care

Peace of mind is critical in old age: With retirement there is increasing anxiety around of loss of income and independence. A good health insurance reduces these anxieties considerably and provides greater financial security for the aged.

Appropriate Health Insurance needs advance planning
A higher age means a higher premium: Unlike life insurance, annual premiums for health insurance increases significantly with old age. While the exact premium depends on multiple factors – including medical history, age, coverage amount – it is generally better to start an insurance cover earlier than in later years.

Those who are retiring, and have a current corporate health insurance plan, may consider “porting” their cover in the post-retirement world. This may improve the premium being paid versus buying a completely different plan from a new insurer which does not have the applicant’s claims history.

There are few senior specific plans: Firstly, there are much fewer senior specific health insurance plans compared to regular options. Some companies are offering dedicated insurance plans for the elderly, but these are typically more expensive and come with many restrictions. So, joining a health insurance programme on a regular plan early is significantly better than waiting to join a senior specific plan in later life.

Secondly, getting a new cover is much more difficult in old age, as insurance companies try managing their own risks and therefore reject many elderly applicants. With age, the applicant’s health condition typically worsens, and so does the pay-out profile for insurance companies. Therefore, continuing with an existing plan is much easier for senior citizens.

Smart options to reduce the premium: However, every family has a different need, and depending on one’s financial position, there are ways of reducing health premiums. Families can consciously choose to remain exposed to some out-of-pocket health expenses by reducing the yearly premium payments.

The first option is a Co-pay plan. Under this plan the patient pays part of the hospital expense, thereby partly reducing the payment exposure of the insurance provider. As the insurance company shares the expense with the patient, the insurance premium is lowered too.

Under the second option, families can choose to cover Critical Illness separately from Base Cover (common illnesses). Since Critical Illnesses are defined, and are capped under these policies, a Base Cover + Critical Illness policy will typically have a lower premium than a Comprehensive cover for the same cap. The problem of course is that critical illnesses are typically expensive, and it is quite easy to blow through the Critical Illness cap if it is set too low to reduce the premiums.

The third option, which could work for some, is the “family floater”- health insurance offered by an adult child’s employer. While this is potentially attractive, there could be many restrictions or caps for senior citizens on such policies. Also, if the adult child changes employment, the elderly may lose any health cover during a subsequent medical crisis.

Healthcare beyond hospitals
The COVID-19 pandemic has changed healthcare for senior citizens in fundamental ways – from an explosion of telehealth to an increased focus on Home Care. We now understand that chronic care can be delivered effectively at home and that not every illness needs expensive hospital treatment.

With the emergence of professional Home Care companies, it is now time that insurance companies start covering out-of-hospital care expenses. This will drive down unnecessary in-patient treatments, slash healthcare costs and reduce insurance premiums, especially for the elderly. Many current exclusions should be included in insurance plans to reduce the need for expensive hospital stays:
• Assistance in activities of daily living at home (e.g. help with bathing, dressing and mobility)
• Home Medical Equipment required for independent living (e.g. wheelchairs or grab-rails)
• Preventive & Respite care at home (e.g. nursing & rehabilitation services)

Also, in this budget, the government should make Home Care services exempt from GST – bringing it in line with other healthcare providers. This in itself would go a long way in reducing everyday costs for the elderly as they too prefer to age at home rather than hospitals.