Health Insurance vs. Ayushman Bharat: Which Is Better for Seniors Aged 70+?

The Government of India approved the expansion of the Ayushman Bharat scheme to all Indian citizens aged 70 years and above on September 11, 2024. This extension of the AB PM-JAY scheme is a groundbreaking and excellent move in various aspects. In this article, I have explained in detail who is eligible for coverage under this scheme, as well as the status of coverage for individuals aged 70 years or above who are already covered under Ayushman Bharat as family members due to their socio-economic status. Additionally, I discuss what will happen to those who already have insurance coverage.

Who is eligible for coverage under this expansion of Ayushman Bharat Scheme?

All senior citizens aged 70 years and above, regardless of their socio-economic status, are now eligible for coverage under Ayushman Bharat. And they will get a cover up to ₹5 lakh per year on a family basis.

This marks a significant departure from the earlier selection criteria for eligible beneficiaries of AB PM-JAY. Previously, the government considered families living below the poverty line and those working in specific occupational categories in urban areas, as identified by Socio-Economic Caste Census (SECC) of 2011. However, for senior citizens, all such criteria have been waived, and all individuals aged 70 years or above are covered, regardless of their socio-economic status.

Senior Citizens in Families Already Covered under Ayushman Bharat

Senior citizens aged 70 years or above, who are part of families already covered under Ayushman Bharat, will now receive an additional top-up coverage of ₹5 lakh per year.

Let’s understand this with an example: Ramesh has a family of six members—Ramesh, his wife, two children, and his parents. Ramesh’s family is a BPL family and is covered under the Ayushman Bharat Scheme. His parents are 71 and 72 years old.

Currently, Ramesh’s family is covered under the Ayushman Bharat Scheme with a coverage limit of ₹5 lakh. This means all family members share the ₹5 lakh sum insured. However, with the recent expansion of this scheme, Ramesh’s parents will now receive an additional ₹5 lakh coverage, which only they can share between themselves. Ramesh, his wife, and children will not have access to this additional coverage. This ₹5 lakh is solely for Ramesh’s parents, in addition to the ₹5 lakh coverage for the rest of the family.

Senior Citizens Already Covered Under Various Government Schemes

Senior citizens aged 70 years and above who are already covered under other public health insurance schemes, such as the Central Government Health Scheme (CGHS), Ex-Servicemen Contributory Health Scheme (ECHS), or Ayushman Central Armed Police Force (CAPF), may either remain with their existing scheme or opt for Ayushman Bharat.

The government has given these senior citizens the option to choose between Ayushman Bharat or their existing health scheme. However, one key difference is the unlimited coverage offered under public health insurance schemes like CGHS, compared to the limited coverage of ₹5 lakh/₹10 lakh under Ayushman Bharat.

One major advantage of Ayushman Bharat is the extensive private healthcare network that becomes accessible to these beneficiaries. Additionally, no referral or prior approval is required for admission to these hospitals under Ayushman Bharat.

Senior Citizens Covered Under Private Health Insurance Policies or Employees’ State Insurance Scheme

If a person aged 70 or above already has health insurance coverage of, they will also be eligible for Ayushman Bharat coverage. However, it will be important to understand how this additional coverage will work in the future, as there are significant difference in treatment costs between Ayushman Bharat and private insurance. Private health insurance pays hospitals more for the same treatment compared to Ayushman Bharat, where the treatment costs are much lower. We expect more clarity on this aspect from the insurance regulator.

Health Insurance or Ayushman Bharat: Which One is better?

Now that the government has extended Ayushman Bharat coverage to all senior citizens, regardless of socio-economic status, many will benefit from this. However, some senior citizens who can afford private health insurance and are also eligible for AB PM-JAY may face a dilemma.

I will discuss both perspectives on how Ayushman Bharat is beneficial for senior citizens and in what aspects private health insurance might be better.

Advantages of Ayushman Bharat Scheme:

It is often difficult for senior citizens to get health insurance because companies hesitate to provide coverage due to the high incidence of chronic illnesses at this age. Ayushman Bharat (AB PM-JAY) will now provide coverage for these individuals.

There are no issues related to pre-existing conditions, information disclosure, or waiting periods. Since this is a group health insurance scheme, coverage for all types of diseases starts from day one, with no claim rejections based on non-disclosure of information, making it a hassle-free experience.

Health insurance premiums are very high for senior citizens at this age. With Ayushman Bharat, they can save significantly, as they no longer need to buy a health insurance policy for at least ₹5 lakh of coverage.

Advantages of Having a Health Insurance over Ayushman Bharat:

Treatment costs under private health insurance are significantly higher compared to Ayushman Bharat. Health insurance companies pay hospitals more, while Ayushman Bharat offers package rates that are relatively low. This often leads private hospitals to prefer insured patients over Ayushman Bharat beneficiaries.

Due to the lower package rates under Ayushman Bharat, hospitals often admit patients to general wards, whereas health insurance usually covers treatment in minimum single standard AC room. While the treatment may not differ significantly, the overall hospital stay and services are notably better with private insurance.

The ₹5 lakh coverage provided by Ayushman Bharat may not be enough for major or chronic illnesses that require frequent hospitalization. Many hospitals willing to accept Ayushman Bharat patients are hesitant due to government delays in reimbursing hospitals, which affects their cash flow and daily operations. In contrast, insurance companies make timely payments to hospitals, making insured patients more favorable to hospitals. If the government does not resolve the delay in payments, hospitals will continue to prefer insurance patients over Ayushman Bharat beneficiaries.