Retain costly health policy or use PMJAY coverage? Seniors have a tough choice

Mumbai: When SK Shah, a 70-year-old retiree, got an alert that his health insurance policy was due for renewal this month, he grappled with a common dilemma: should he continue paying ₹73,000 for a ₹2.75 lakh cover or instead rely on the government’s Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), which is now extended to all senior citizens over 70 and offers ₹5 lakh of free coverage per family?

It’s a question that is increasingly troubling senior citizens across India, as private health insurance premiums soar and government schemes promise substantial coverage, albeit with limitations.

The AB-PMJAY now covers all senior citizens over 70 regardless of income. The move is expected to benefit about 60 million senior citizens and 45 million families. Enrolment for the scheme is likely to begin soon.

“For many elderly individuals, like this 70-year-old retiree paying ₹75,000 annually for a modest sum assured, the cost of maintaining private health insurance is becoming burdensome,” said Mahavir Chopra of Beshak.org, an insurance broking platform. “With no income, a premium of this size is a significant financial strain. At the same time, the government’s PMJAY scheme offers an alternative with ₹5 lakh in free coverage. However, they are caught between a rock and a hard place.”

While private insurance covers a wider range of hospitals, including leading chains such as Apollo, Max and Medanta which most people prefer, PMJAY limits patients to empanelled hospitals, mostly public healthcare facilities. People buying insurance have reservations about the quality of care and the availability of advanced treatments in the public healthcare system. There are 29,000 empanelled hospitals under the government scheme, which includes 12,625 private hospitals, as of June.

Some private hospitals, despite being empanelled under the PMJAY network, prioritise patients outside of the government schemes, and there have been instances where PMJAY patients receive limited treatment options.One such case involved a knee replacement surgery where the hospital agreed to treat only one knee at a time under the PMJAY, despite medical advice that suggested doing both knees simultaneously, said Chopra.Besides, hospitals empanelled under the scheme also face delays in receiving payments from the government, sometimes up to 60 days. This creates a situation where private hospitals prefer clients with private insurance who can pay immediately rather than wait for delayed reimbursements under the government scheme.

So, seniors covered under PMJAY could face difficulties getting proper care in private hospitals. At the same time, general and health insurers such as Star Health, Niva Bupa, and HDFC Ergo. New India Assurance and United India have raised health insurance premium rates by up to 50%.

Health insurance experts said that if PMJAY’s execution improves in the coming years, more seniors might want to drop their private insurance policy if the government scheme can offer faster reimbursements and better hospital options.

“If the government can expand the network of private hospitals under PMJAY, it could offer a viable alternative to private insurance,” said Segar Sampathkumar, director of the General Insurance Council. “In the meantime, many seniors could be hesitant to rely solely on the government’s scheme, preferring the security of private coverage despite the higher costs.”