Government Vs Private Health Insurance - How To Choose The Right Coverage?

One of the most important components of life is healthcare, but escalating medical expenses tend to make it an overwhelming issue. In India, both private health insurance and government health insurance schemes focus on offering financial backing, but in contrasting ways.

Even though government schemes are meant for economically weaker sections at subsidised rates, private insurance provides flexibility and additional benefits. Read on to learn more about government and private health insurance, alongside their definitions, types, distinctions, and more.

What is Government Health Insurance?

Government health insurance is a programme launched by the central or state government to make quality medical facilities available at an affordable rate to citizens, particularly the economically weaker section of society.

These policies tend to provide financial support for reimbursement of healthcare charges such as hospitalisation, medicines, and surgery. Government health insurance schemes tend to fill the gap between increasing medical bills and accessibility, as well as encourage inclusive healthcare availability for all classes of people, whether rich or poor.

Types of Government Health Insurance Schemes in India

Let’s discuss the top eight government health insurance schemes in India available to citizens:

1. Rashtriya Swasthya Bima Yojana (RSBY)

RSBY is a government-supported health insurance scheme that offers financial protection to unorganised sector workers, low-income families, and households below the poverty line (BPL).

It covers up to ₹30,000 per family each year for hospitalisation costs, including pre- and post-hospitalisation expenses. The government subsidises the premium, making it more affordable for the intended beneficiaries.

2. Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY)

AB-PMJAY is a government-supported health scheme that provides up to ₹5 lakhs in health coverage per family annually for secondary and tertiary care hospital treatments. It covers hospitalisation costs for serious conditions like cancer, cardiovascular problems, and kidney failure. PMJAY aims to offer free healthcare services to over 40% of the Indian population.

3. Pradhan Mantri Suraksha Bima Yojana (PMSBY)

The Pradhan Mantri Suraksha Bima Yojana (PMSBY) is a government-supported medical insurance scheme that aids individuals aged 18-70 years with annual life insurance coverage of up to ₹2 lakhs.

It aims to provide financial security to individuals and families in the event of death or disability resulting from accidents. Additionally, it includes personal accident coverage of up to ₹1 lakh for accidental death and disability.

4. Employee's State Insurance Scheme

The Employee's State Insurance Scheme is a comprehensive national healthcare programme that offers social security and socioeconomic protection to all Indian workers. It also extends benefits to dependents of insured workers.

This scheme’s coverage begins on the first day of insurable employment, offering comprehensive medical insurance to workers and their families.

5. Central Government Health Scheme (CGHS)

CGHS is a health scheme funded by the government that offers health coverage to government employees and their families. It covers hospitalisation costs, including expenses before and after hospitalisation. The scheme also includes the costs of medicines, medical tests, and diagnostic tests.

What is Private Health Insurance?

Private health insurance is an arrangement from non-governmental insurers that offers cashless medical treatment and payment of hospital bills. This type of healthcare plan enables individuals and families to get coverage for a wide range of health issues, avail cashless treatment at network hospitals, receive quicker services, and select from a broader list of doctors and hospitals.

Compared to public-funded schemes, private insurance provides more flexibility, customisation, and convenience. This is why it is a one-stop solution for those who want comprehensive, timely, and readily available healthcare services.

Types of Private Health Insurance Policies in India

Here is a comprehensive overview of five major types of private health insurance plans in India:

1. Individual Health Insurance

Individual health insurance, also known as personal medical insurance, is a type of healthcare policy that provides medical coverage based on an individual's specified sum insured.

Being one of the most prevalent forms of health insurance plans in India, it offers coverage for the hospitalisation expenses incurred upon admission to the healthcare facility. By paying an additional premium, you can include your parents, spouse, and children as beneficiaries under the same policy.

2. Family Floater Health Insurance

Family floater insurance encompasses the entire family (spouses, kids, and parents) under a single coverage. The advantage of family health insurance is that it helps eliminate the need to manage multiple policies, making it a cost-effective option.

3. Senior Citizen Health Insurance

Among the various types of health insurance policies, the senior citizen health insurance policy is specifically designed for older adults over 60. It covers medical treatment costs for senior citizens, who are prone to illnesses. This plan provides coverage for preventive health check-ups, pre-existing diseases, age-related ailments, cashless hospitalisation, and more.

4. Critical Illness Plan

Critical illness cover provides financial protection to the insured by offering coverage against life-threatening health conditions such as cardiac arrest, kidney failure, cancer, stroke, and multiple sclerosis.

The specifics of critical illness insurance plans vary in terms of the number of conditions covered, depending on the insurer, and they do not consider pre- and post-hospitalisation expenses.

5. Maternity Health Insurance Plan

Maternity health insurance is a policy that offers comprehensive coverage for all medical expenses related to pregnancy, such as hospitalisation costs, delivery (both normal and caesarean), pre- and post-natal care, medical tests, and expenses for newborns. It provides financial security and aids women in preparing for motherhood.

Government vs Private Health Insurance: Key Differences

Both government and private health insurance policies provide unique benefits. To decide which one is best for you, go through their differences in the table below:

Both government and private insurance have their own set of benefits, and the decision is based on your financial status, medical requirements, and lifestyle. Government health insurance schemes provide basic coverage for those in need, while private plans offer greater flexibility and more comprehensive care.

Suppose you are planning to choose a healthcare policy. In that case, the best thing you can do is to analyse your needs well, weigh the alternatives, assess your eligibility, and select a plan that guarantees peace of mind and protection for your health.

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