Group insurance covers maternity costs, but only partially, finds an employee benefit survey

A nurse examines a baby in a maternity ward in Ukraine.

One of the benefits of going through group insurance cover, especially those given to us by our employers, is that the hospitalisation costs are available to employees - in many cases, their families and parents too - from day one. The only problem is that many such group covers have sub-limits for specific illnesses or medical conditions.

A study done by Plum Benefits, an insurance distributor that facilitates group health covers  for companies and their employees, found out that although many employers offer maternity covers as part of their group insurance, many times, they are inadequate.

Parents in India shell out between Rs 70,000 and Rs 2 lakh for caesarian section deliveries at private hospitals across metropolitan cities, while ‘normal’ deliveries cost up to Rs 45,000-55,000. 

Employers’ group cover inadequate?

However, since most employers’ group health insurance policies reimburse hospitalisation expenses of up to Rs 50,000, employees have to meet a significant part of the costs out of pocket.

Out of 1,094 companies that Plum surveyed, 722 offered maternity covers as of January 2022. “While 66 percent of Plum’s customers have adopted maternity covers, a majority of them cover expenses only up to Rs 50,000 for up to two children,” the report said. Maternity benefit comes with such sub-limits under group as well as retail health insurance policies.

It’s primarily the new-age companies, including start-ups, that offer larger coverage. “Only 15 percent of Plum’s customers, which are new-age companies, have taken covers between Rs 1 lakh and Rs 1.25 lakh for maternity,” Plum said in its report.

According to the study, Bengaluru is the most expensive city for childbirth-linked hospitalisation, with an average cost of Rs 55,000. Chennai comes second at Rs 53,000, followed by New Delhi at Rs 51,000, Mumbai at Rs 45,000, and Hyderabad at Rs 45,000.

Also read: Why young couples must cover maternity costs via health insurance 

A highly valued employee benefit

Employees tend to value maternity insurance as the coverage kicks in from day one. In contrast, independent health insurance policies that offer maternity coverage come with higher premiums and several restrictions. For instance, the waiting period can range from nine months to four years. Group health covers are more accommodating.

“Group health insurance policies can cover female employees and female spouses for expenses on maternity treatment, infertility and any prenatal complications and offer a baby day cover from day one,” says Abhishek Poddar, CEO and Co-founder of Plum.

Also read: How expectant moms must plan their money matters 

Have an independent financial plan

At their end, however, employees can plan for these expenses well in advance by making the right investments to create a sufficient kitty. Health insurance policies are primarily meant to cover unexpected emergencies, which is not the case with pregnancies.

Moreover, you must not completely rely on an employer-funded group cover as it ceases to exist the moment you switch employers or face job losses. It is best to plan ahead for hospitalisation expenses, regular medications, diagnostic tests and follow-up visits over a nine-month period.

In addition, women in particular should also create a buffer corpus for any break in career they might have to take due to health complications or other reasons after delivery.