Healthcare Inflation and Its Impact on Medical Expenses

Written by : Knowledge Centre Team

2025-12-15

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5 minutes read

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The consumer price index, or on-ground retail inflation for common man, had stayed below 5% for two consecutive years 2017 and 2018. However, in the meantime healthcare inflation had been running close to double digits mark. Be it services, cost of medicines or procedures, almost everything had been skyrocketing even with the economy running a bit slow.

How to Prepare for Cost Escalations?

If you already own a health insurance plan, you should check the features again to see if the sum insured has been growing. This will not apply to your employer’s health insurance cover, as the growth of that cover depends only on your income.

Now, defined contribution health plans offer increments to the sum insured for the claim-free years. Most Mediclaim policies offer no claim bonus which is paid through an increased benefit amount for the year.

So, for example, you bought a Mediclaim of Rs. 5 lakhs at the age of 30 and have not made any claim till the age of 35, you may have Rs. 7.5 lakhs available under the policy.

If no claim bonus (NCB) is not available in your health insurance plan perhaps it’s time to upgrade. In any case, you will need to do at least one of the following to ensure adequate health cover in future:

Upgrade the sum insured of your existing policy
Ensure NCB is available in the defined contribution health plans (Mediclaim)
Get a defined benefit health insurance plan or critical health plan with increasing cover (sum assured)

Few Factors to Account For

Getting the right plan with the right benefit amount is just the first step. You should also try to understand the limitations and additional options available to you in the time of need. For instance, have a look at the following limits of the best health plans with increasing cover:

NCB applied to base health cover amount until it doubles
Sum assured of defined benefit health plan will grow by 10% p.a. simple rate until it becomes 1.5 times of the original sum assured.

This means, at one time you will need to add to your health cover. However, there is a trade-off. If you add more cover to your portfolio at a later date the premiums will be higher due to age. Thus, it makes sense to secure the best possible cover for yourself as early as possible.

Top-up Health Cover Plans

You can also explore the top-up cover option for defined contribution health plans. You can opt for a top-up cover if you feel that your existing health insurance will fall short of your needs in the policy year.

This is especially useful in case of extended hospitalization. However, this option only works with Mediclaim or defined contribution policies.

You cannot top-up a critical health plan as the benefit does not depend on the treatment costs. But the low initial cost will allow you to secure adequate coverage in the beginning, and you can opt for a growing cover.

Tax Benefits are Added Advantage

If you are worried about the premium cost of these plans, you should consider the tax savings it allows. Under section 80D of the Income Tax Act, you can avail up to Rs. 75,000 as an exemption for premiums paid for health insurance plans.

This deduction includes any money you spent outside insurance for the treatment, in the case of senior citizen patient.

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Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.