FINANCE OPTIONS FOR MEDICAL EXPENSES IN INDIA – PROS & CONS

Going purely by experience, mine and of those around me, two kinds of expenses are the most worrisome – education and healthcare. Both are rising at an alarming rate, with no hope of an immediate mechanism for putting them in check.

I know of couples opting for a single child in order to be able to provide the ‘best’ kind of education for the one, while there will be medical bills to be paid for the elders in the family. After all we want the best of everything for everyone. So did we, when we admitted Ira at Bombay Hospital.

I remember the board with the per day room charges hanging behind the cashier’s desk. Gulp! Nonetheless we took a private ward for her.

“It’s a brain surgery and there should be no chance of any infection.” There are many reasons to choose the best.

Post-surgery we had become so embroiled in the complexities of Ira’s condition that we hadn’t bothered to check the medical expenses.  We were at our wits’ end when we received a bill of 15,00,000 INR after 30 days of admission.  What a tight spot situation, largely because it was not expected! How were we going to pay that?

Hence, this post. Read on to find out the finance options available for medical expenses and their pros and cons.

Government Funds

Currently there are three Government schemes providing medical aid to Indian citizens- Prime Minister National Relief Fund (PM-NRF), Ayushman Bharat Pradhan Mantri Jan Aarogya Yojana (PM-JAY) and Rashtriya Arogya Nidhi.

These schemes are not an option for middle-class or upper middle-class families and provide financial protection to deprived rural families only. Submission of documents including identity proof, ration card and photographs is a mandate.

The PM-NRF is operated from the Prime Minister’s office and disbursements are made by the PM. This scheme relies on public contributions and offers a relief fund of I,00,000 INR.

The PM-JAY is run at Government and empanelled hospitals across India and offers a benefit cover of 5,00,000 INR per family per year. It is claimed to be a cashless and paperless scheme including pre-and post-hospitalization expenses.

The Rashtriya Arogya Nidhi is led by the Ministry of Health & Family Welfare at Government hospitals only with upto 2,00,000 INR per case at disposal as funds.

These funds are good options for poor families – so you could pass on this information to members of such class.

Medical Insurance

I hope you have a medical insurance covering each member of your family. If you don’t have one get it before you finish reading this post.

A health insurance should actually be the starting point for any financial plans that you may have. There are many players offering various kinds of health insurance plans in India. There’s even one specifically for cancer treatments. Though I am no expert on this matter it is better to buy a policy that allows cashless claims at multiple hospitals across your city (no brainer I am sure). Also, get a personal health insurance policy even if your employer offers one as part of the company policy. Reason: Company mediclaim offers a coverage of 3,00,000 INR or upto 4,00,000 INR per year including spouse and children. Club this with your personal medical policy, which probably amounts to 3,00,000 INR per year and you are insured for a maximum of 6 lakhs only. Though, the company and personal health policy can be claimed together for an ongoing treatment (not for the same medical bills) 6,00,000 INR is a small amount given the rapidly increasing prices of healthcare. It is also important to remember that not all medical expenses are covered against the policy.

Pro-Tip: Ira’s paediatrician at Bombay Hospital had advised us to increase the coverage every year by at least 1 lakh INR. So, this year our sum insured is 4 lakhs for year 2019-2020 instead of 3 lakhs (2018-2019). It entirely depends on the type of policy and the company with which you are insured but the premium amounts are not heavy on the pocket even after increasing the coverage.

Liquid Assets

A liquid asset is cash on hand or an asset that can be readily converted to cash.

This includes cash you have, funds in your savings account, mutual funds, stocks and bonds. These can be readily converted into cash to pay for an ongoing treatment. Items like real estate, car, jewellery, etc. are not considered liquid assets as these take time to be sold out.

It is important to build an emergency fund. Keep aside at least 12 months’ worth of expenses in liquid assets, suggest experts (read here). This can be immediately utilized in case of any unforeseen circumstances.

Under dire circumstances, it might be tempting to swipe your credit card for immediate payments. However, failure to pay the returns to the credit company, within a month, can attract an interest as high as 37 %.

Semi-fixed Assets

Semi-liquid assets are those that can be converted to cash within a reasonable amount of time-usually within one year. This includes property, car, jewellery, etc.

When medical expenses start burning a hole in the pocket families stake all their assets for the treatment and think parsimoniously about their own comfort and future-savings. I have read stories of people selling their house or of taking out a mortgage on various assets. It is considered highly risky for the well-being of the family in the future.

Bank Loans

In case of lack of insurance or an underpaid employer insurance policy people often resort to unconventional methods for financing a treatment. Banks offer medical loans, sometimes as personal loans, with high interest rates 12-15 %. Bank loans can be availed irrespective of the patient’s age, medical history and present condition, as opposed to a medical insurance policy which depends on these factors. The amount of loan that is granted by a bank depends on the company you are working for, salary bracket, age and tenure.

You would not want to take out another loan especially if you already have one on the house or car. It is also important to remember that if no security, collateral or guarantor is required the interest rates are steep high (upto 35 %).

Family Loans

This is probably a convenient way of raising immediate funds for any kind of medical treatment. Friends and family may loan money based on trust-worthiness at a minimal or no interest rate, to be repaid at convenience.

The catch? The apprehension and guilt in asking aid from family and friends is quite prohibitive.

NGOs/Trusts

There are more NGOs and trusts than banks which readily offer financial aid for medical treatment. Such funds are usually set aside for deprived families and you would not want to take away the benefits from them. Applying to a NGO/trust is a long process- form filling, identity submission, medical reports, etc. with disbursement of funds after due verification and only 15 – 30 days later. Immediate relief fund is not possible with a NGO. Also, such non-profit organizations grant smaller amounts to many families rather than a lump sum to one, thus trying to benefit multiple families at a time.

Crowdfunding

In definition, “crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet. Crowdfunding is a form of crowdsourcing and alternative finance”.

The next post is about starting a crowdfunding campaign for medical purposes, the pros and cons and the story of how we were able to raise 20 lakhs in 2 days via crowdfunding.

Have you tried raising funds for a medical treatment? You can share your experience in the comments below.