1. Home
2. Blogs

Switching jobs? You may lose out on corporate health insurance benefits

• 
• 
• 
• 0
• 0

Published on February 22, 2010 | Est Read Time: 3 min

Blue-collar employees are generally very clear about their finances. How much do they make in a year? How much tax do they pay to the government? How many investments do they have at any given period? However, things are not as clear when asked about medical insurance as they'd like it to be. Employees generally don't feel the need for additional medical insurance as they are already covered under their respective corporate medical insurance plans.  Do you need additional health cover for you and your family, or do you think it's a drain on your resources? And what happens when you lose your job, or you decide to quit? Will you still be covered? Before you settle-in with the health insurance provided by your employer, make sure you go over a few critical points mentioned below.

#1 Standard Sum Assured
Your corporate insurance plan essentially takes a one size fits all approach to calculating the policy holder's sum insured. However, most individuals have very specific needs when it comes to healthcare for themselves and their family. An individual's health insurance should be more tailored around various aspects like medical history, age of the policyholder, lifestyle, and others. The problem with a corporate insurance plan is that it does not consider the complexities of an individual's specific healthcare needs. As a result, if you have a family member with a critical cardiac condition, your corporate health plan may not give you the complete coverage that you need.

#2 Changes in Work Situation
Your corporate insurance plan ends the day you leave your job or are terminated by your employer. So, if you are in-between jobs or see the possibility of being downsized in the near future, remember that you and your family will be unprotected if some medical emergency were to take place. Corporate medical insurance plans only come good if and only if you are working in that organization. This makes it very risky to depend solely on one source of medical coverage.

#3 Limited Coverage
Corporate insurance plans are generally limited in the healthcare coverage they provide. Most plans cover the policyholder and their spouse. Insurance companies are increasingly looking to add two dependants (children) as part of the standard policy coverage. However, for families with more than two children or dependent parents, they don't provide much needed medical cover. This puts the policyholder at a huge disadvantage as small children, and older parents generally have a higher propensity for medical coverage.  

#4 Lack of Flexibility
Unlike individual and family health insurance policy, your corporate insurance plan cannot be ported over if you decide to switch over to another plan. The plan that your company decided for you will be with you for the remainder of the time you are employed in that company. Another disadvantage of corporate insurance is that they offer bare-minimum coverage at a premium. This is primarily done to lure employees by providing greater benefits and employee retention and recognition efforts. However, a study by LiveMint showed that corporate plans were generally 10%-20% more expensive than individual plans. What this means is that if you gave up your corporate health insurance and decided to buy an individual policy, you'd hypothetically end up paying less and possibly get better coverage.

#5 Zero Tax Benefits
Unfortunately, corporate health insurance doesn't offer any tax benefits for the premiums paid over the year. This means that policyholders do not have the option to add these payments on their yearly returns. This is not the case with individual health insurance plans. Under the latest budget for FY 2021-22, the Government has increased health insurance deduction under Section 80D to 25,000INR for all policyholders and 50,000INR for senior citizens. There is also a tax benefit of Rs. 1 Lac for an individual. Unfortunately, for corporate policyholders, this new tax directive does not apply to them.

#6 Unpredictable Changes
Although corporate plans have their share of benefits (which are numerous), one of the major drawbacks is their unpredictability. Your company management or HR can change your insurance plan at any time. This is usually done to cut costs by altering terms with their corporate insurance partner. Although this might benefit your employer, it will most certainly catch you off-guard, especially if you or a family member is undergoing medical treatment.

#7 Limited Room-rent
Another limitation of corporate plans is the limitation on room rent. Some plans offer only room rent up to a certain amount, while others have categories like 6-4 sharing wards. This can sometimes only cover half of the rent if you are looking for a private room. The remainder will have to be borne by the insured individual. Sometimes the room rent limitation goes as far as covering only the room and nothing beyond. In this case, other major expenses, like doctor visits or on-call nurses, are not covered.

Conclusion

While switching your job may bring you monetary benefits or other conveniences, it is important to not neglect the corporate health insurance benefits that potentially go away with it. Hence, it is important to have a discussion with your employer right at the start regarding this. Keeping the above factors in mind, ensure that you are covered in your own capacity even if you lose your job.

Disclaimer:  The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.