How to Plan for Rising Health Care Costs| North Loop Official Blog
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01 Dec 2020

How to Plan for Rising Health Care Costs

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Introduction -

One of the biggest worries as you age is deteriorating health and rising healthcare costs. Managing these health-related expenses can get very challenging and throw your finances off-balance if you haven’t crafted a strategic retirement plan. Moreover, with premiums for insurance and healthcare costs soaring like never before, it is even more necessary to plan well in advance for these expenses.

Health-insurance -

Indian healthcare is getting expensive day by day, and the spiralling medical inflation is not helping either. If you do not have health insurance or money put aside to cater to medical needs for the future, you can get into big financial trouble. That is also the primary reason why most experts suggest that you should get health insurance as soon as possible.

Another reason to hurry up is also the fact that with growing age, health conditions and pre-existing diseases make it difficult to get insurance at low premiums or procure one at all. Financial experts also recommend evaluating your cover every five years to ensure that it remains adequate for rising healthcare costs.

You can also increase the cover on your existing policy or buy a new one without discontinuing your previous ones. However, health insurance cannot take care of all your needs and even if the cover is enough for hospitalization, many components do not get covered by the insurance companies. Therefore, along with the average health insurance cost of your policies, you should also put aside some additional money for your healthcare needs as you approach middle-age.

If you are retired or are nearing retirement, looking out for health insurance for retirees can also be a good option. These policies may provide better covers and reasonable premiums. However, before narrowing down on any health insurance for retirees, you should carry thorough research and comparison of the different available options.

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Financial stability -

Being financially stable is one of the most crucial parts of planning for rising health care costs in the country. As you grow older, the increased cost of healthcare requirements can get stressful, and the state of healthcare in the country can only add to your problems.

Unlike developed nations where the social security systems and health services take care of the retired elderly, the resources available in India are much limited. While private sectors may offer a better quality of healthcare facilities, the inflated prices charged by them can increase your cost of retirement by a large margin. If you are a government employee, you will be surprised to know that only 10% retired employees in the country get a pension from the government or former employers and the other 90% get forced to survive on their savings.

Also, more often than not, the cost of retirement is so high that their savings get exhausted within a few years of retirement. Many of these people have to ultimately depend on their children or others to meet their average health care costs and other financial needs.

That is the reason financial advisors and experts suggest planning for the rising healthcare costs keeping all the above factors in mind. A well-crafted plan that takes into considerations your lifestyle and medical history can also help in answering questions like how much does health insurance cost per month or average health insurance costs. Once you determine how much does health insurance cost per month, you can create a retirement budget and plan accordingly.

Along with understanding about possible health insurance cost per month and other healthcare-related expenses, it gets recommended to review your plan regularly.

Medical experts have been saying that the life expectancy of people has increased in recent times, but the quality of life has fallen tremendously. In other words, you may be living a longer life, but it may not necessarily be free of diseases or health problems.

That is why, it is necessary to make a conscious effort to remain actively engaged with your finances, understand the average health insurance cost per month for people of different age groups and take the necessary steps beforehand.

Health care cost increases by year chart -

Even though India’s public health expenditure has risen over the last the few years in order to cater to its growing population, it is significantly lower as compared to that of developed nations like the United States.

Take look at the health care cost increases by year chart given below –

Indian Healthcare Spending – Historical Data

Year Per Capita (INR) % of GDP
201750733.54%
201644853.51%
201543383.60%
201441913.62%
201341173.75%

Conclusion -

With cyclical diseases like dengue, chronic-lifestyle related ailments such as diabetes and infectious diseases like Covid-19 overwhelming the health care system in 2020, health care costs can rise further.

That is the reason becoming proactive has become the need of the hour to avoid excessive stress in the future. A sound financial plan based on short-term and long-term goals that include retirement cost, healthcare expenses etc., has become a necessity.

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.