Experts recommend that all individuals must get a comprehensive health insurance plan before retirement to protect themselves and their families from the financial burden arising due to unexpected medical expenses. This is because high medical bills can dent one’s savings and affect the quality of life one leads in retirement. Individuals are also advised to get critical illness insurance to have a safety net to cover the rising cost of seeking treatment for chronic illnesses such as cancer and cardiac diseases. However, to make the most of health coverage, individuals are recommended to start retirement planning and medical safety provisions early in life. This will enable individuals to save more and invest a part of it towards their health and retirement goals without burdening their monthly income.
That said, let’s discuss the importance of including medical care in retirement planning and healthcare plans to check out.
Why is it Important to Have a Healthcare Plan For Effective Retirement Planning?
Medical costs are surging faster than the inflation level, which makes it important to plan retirement more carefully and include healthcare provisions. This is because most individuals become financially dependent post-retirement. A reliable financial blanket can help become more independent and become better equipped to account for medical emergencies and age-induced illnesses.
Individuals have many options for medical retirement planning to choose from, such as comprehensive health insurance plans, mediclaim policies, and government healthcare plans. These options empower retired individuals to take control of their financial future and prepare medical contingencies for retirement.
However, it is suggested that individuals choose a health plan that suits them and can help them cater to their health requirements better after retirement. This approach will help them plan their medical provisions better. However, before that they should identify their actual healthcare requirements, health conditions, scope of coverage, and budget before picking a plan.
Health Insurance Plans
Health insurance providers typically offer personalized health policies to empower individuals to cover the cost of hospitalization and outpatient costs independently even after retirement. Some insurers provide customizable investment plans for retirees that help them account for the cost of treatment and seek required medical assistance regularly after retirement.
Critical Illness Insurance
Critical illness insurance policies typically pay a single lump sum benefit to the insured if they are diagnosed with a critical illness that is covered by the plan.
Married couples or nuclear families often avail of comprehensive family floater health insurance as they cover both spouses or all family members under a single policy. A floater plan is known to offer extensive coverage at a relatively cheaper cost, it is an affordable means to protect one’s finances during medical emergencies. The low-cost premium and extensive coverage help retirees seek timely medical attention without dipping into their retirement fund.
Annuity Plans with Healthcare Riders
Retirement health plans offer retirees extra coverage to maintain their financial independence even during a medical emergency.
Employer-provided health schemes
Many employers offer post-retirement health coverage to their employees and often pay for it either partially or in full. This move helps employees save substantial money for their future medical needs by mobilizing a small part of their income toward the cover.
Individuals planning to retire early in life should also review their employer’s health plan benefit plan and thoroughly assess if they need additional cover.
Popular schemes and investments that contribute to retirement medical planning
- Public Provident Fund: PPF is a pension scheme backed by the government that allows subscribers to withdraw a part of their saved corpus for any medical emergencies. However, they can withdraw only after the completion of the sixth year of the scheme. The pension scheme generates guaranteed returns and is considered a low-risk investment option.
- Equity Mutual Funds: These popular investment options park money into company stocks. Equity funds are popular among investors for generating high and inflation-adjusted returns over the long term, but they are riskier than traditional savings options and debt mutual funds.
- Pradhan Mantri Vaya Vandana Yojana: The Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a pension scheme for senior citizens in India. The government-sponsored scheme offers the subscriber a guaranteed pension for straight 10 years, and a part of the amount can be used to account for healthcare expenses.
- Fixed deposit: This financial tool allows one to save money for unforeseen medical expenses, such as hospitalization and treatment.
- Senior Citizen Scheme: This government-sponsored savings plan offers lucrative interest rates and substantial tax benefits to subscribing senior citizens, making it one of the best retirement plans. The pension scheme is effective in building a corpus to account for healthcare expenses and for promoting savings.
Government healthcare schemes
Central Government Health Scheme: CGHS is a government-backed health insurance scheme that offers individuals the option to access cashless treatment at a huge network of private and government hospitals.
Employees’ State Insurance Scheme: ESIS is a government-sponsored health insurance scheme designed for employees working in the organized sector. It provides healthcare benefits to employees and their families during employment and after retirement.
Rashtriya Swasthya Bima Yojana: This health insurance scheme is designed for senior citizens who belong to the economically weaker sections of society. The scheme offers healthcare benefits to the insured or their beneficiary, depending on the nature of the claim.
To become a beneficiary of healthcare-centric plans, individuals, especially those planning retirement should check the eligibility criteria and apply for them accordingly. To determine the insurance premium and applicable coverage they can use an online insurance calculator. On the other hand, they can use an NPS, PPF, or FD calculator to determine the returns on investment and pick a suitable plan to build a medical corpus for efficient retirement planning accordingly. When selecting a health insurance policy or investment for retirement, it is crucial to consider one’s retirement goals, available budget, medical cost, and inflation rate. Individuals should also explore more healthcare options to build an emergency provision for emergencies to cover chronic illnesses during retirement.