Govt’s free health insurance scheme welcomes senior citizens. But can they rely on it?

This comes at a time when health insurance premiums for senior citizens have been soaring. But will it be a good idea for senior citizens enrolling for this scheme to let go of their expensive personal health insurance policies? 

Mint examines the features of AB-PMJAY, its performance so far, its hospital network, and the quality of medical treatment under it.

AB-PMJAY: Key features

Enrollment for citizens above age 70 has not yet started. The Union government has directed states and union territories to prepare for the launch of the expanded scheme, expected this month. The policy’s features are expected to be the same as for existing beneficiaries. 

Cover size: The scheme offers ₹5 lakh annual coverage for in-patient hospitalization at the family level. If a family has two members above 70 years, both of them will share the policy cover of ₹5 lakh. If a family already has younger Ayushman Bharat beneficiaries, an additional top-up will be provided for senior citizens above 70 years.

Illnesses covered: “The scheme’s coverage is comprehensive, spanning a wide range of critical illnesses and major diseases. Although a detailed notification outlining specific inclusions and exclusions is still awaited, early indications suggest that most essential medical treatments will be covered in AB-PMJAY for senior citizens,” said Narendra Bharindwal, vice president, Insurance Brokers Association of India (IBAI). 

Existing diseases or conditions: Under AB-PMJAY, there is no waiting period for existing diseases to be covered under the scheme. “Beneficiaries can avail of treatment for any pre-existing condition from the moment they are enrolled in the scheme, unlike many private health insurance policies that usually impose a waiting period of up to 3 years for pre-existing conditions,” said Ankur Gigras, co-founder and chief executive at HexaHealth.

Eligibility: Seniors currently benefiting from other government health insurance schemes such as the Central Government Health Scheme, the Ex-Servicemen Contributory Health Scheme, and the Ayushman Central Armed Police Forces can choose between their existing plan or AB-PMJAY. Those with private or employee health insurance schemes can also opt for AB-PMJAY as an additional cover.

Exclusions: Out-patient department expenses, dental treatments, and vaccination and immunisation are not covered under AB-PMJAY. Also, treatment only in the general ward of a hospital is covered. If you opt for a private or a semi-private room, you may have to shell out a good portion of the medical bill by yourself.

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Only cashless

In a private health insurance plan, in case you get admitted in a hospital that’s not part of the insurer’s network, you have an option to file for reimbursement of the hospital expenses. However, in AB-PMJAY, you cannot get treatment at a non-network hospital and be reimbursed. Hospitalisation under AB-PMJAY has to be cashless. 

“This is the biggest shortcoming of PMJAY. In India, we don’t choose hospitals. Our doctors tell us in which hospital they will do the surgery. If a particular hospital is not empaneled with AB-PMJAY, the scheme will be useless for the patient,” said Mahavir Chopra, founder of insurance platform Beshak.org.

The hospital network under AB-PMJAY is not strong. Data from the National Health Authority shows about 30,000 hospitals empanelled with AB-PMJAY, including 13,466 private hospitals. However, not all are active. “Active hospitals are those from where at least one discharge has happened over the last 45 days. It is less than 3,000 under PMJAY,” said Gigras. 

Importantly, not all AB-PMJAY empanelled hospitals offer all treatments. “Depending on market dynamics and tariffs, hospitals get an option to choose specialities. In our group of hospitals, not all will offer treatment of all specialities under PMJAY,” said Dr. Simmardeep S. Gill, managing director and CEO, Sterling Hospitals. 

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Should senior citizens opt for it?

The AB-PMJAY extension to include senior citizens above 70 years of age is an excellent move, but not practical, said experts, adding that while those eligible should enrol for the scheme they should not depend on it. 

Check which hospitals in your city are empanelled with AB-PMJAY. If you do not find good hospitals in the network, having a private health plan will suit you better. 

Consider buying a private policy with a small deductible that will reduce your premium. A deductible is a fixed amount that you agree to pay before the policy coverage kicks in.

Vivek Chaturvedi, chief marketing officer and head of direct sales, Digit General Insurance, said it is better to opt for a fixed deductible instead of a policy with low sum insured or one with sub-limits. “A ₹2,500 deductible can take your premium down by 10%, ₹5,000 by 15%, and more with higher deductibles up to ₹50,000,” he said.

Another option is to buy a super top-up plan. If a senior citizen is covered by their children’s employer insurance for up to ₹2 lakh, they can buy a super top-plan of ₹5 lakh with a deductible of ₹2 lakh. Hospital expenses up to ₹2 lakh can be taken care of by the employer insurance, and the rest by the super top-up plan. 

Reforming AB-PMJAY

Currenlty, the AB-PMJAY scheme benefits about 550 million individuals, and the inclusion of senior citizens is expected to benefit another 60 million people. But the scheme needs certain reforms before it can see wider adoptions, said experts.

Private hospitals tend to not welcome AB-PMJAY patients chiefly because of delayed payments by the government, according to industry executives. While the stipulated deadline for claims settlement under the scheme is one month, the average turnaround time is about three months. 

Gill of Sterling Hospitals said sometimes payments are delayed for as long as six months. “Payments do come, but the delay causes cash-flow challenges for us. Two-months of delay is fine but anything beyond this pinches our pockets,” he said.

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Also, tariffs under PMJAY are 25-30% lower than cash tariffs, which discourages private hospitals from getting empanelled under the scheme, despite the prices being revised.

“Revised tariffs are 100% higher than previous tariff packages. For example, ICU day tariff of ₹2,400 has been upgraded to ₹5,500. However, it is still over 50% lower than what private hospitals such as Max, Manipal, Medanta and Fortis charge, which is ₹12,000,” said Gigras. 

“A discount of 10-15% on cash tariffs is fine. If that happens more private hospitals will join PMJAY,” added Gill.

Bharindwal of IBAI suggested charging a small premium from beneficiaries for better hospital services. 

“As the government looks to improve the reach and effectiveness of Ayushman Bharat, tweaking the scheme for senior citizens could further cement its position as one of the most important healthcare initiatives in the country,” he said. “Introducing a small premium to allow access to semi-private or private wards, for instance, would enhance the quality of care without overwhelming the system.”