How do Health Coverage Gaps Affect Your Finances?

How do Health Coverage Gaps Affect Your Finances?

Despite the government’s efforts to improve health insurance penetration and increase awareness among people, 30% of the Indian population still lacks health insurance coverage, as per a report released by the National Insurance Academy. According to the report, Health Protection Gap (HPG) in India is among the highest globally. HPG is the difference between an individual’s total healthcare expenses and the amount of health insurance coverage he has. This difference reflects an individual’s out-of-pocket expenses for healthcare. Even with a rising number of insured population, the health protection gap is estimated at 73%. This gap leads to financial consequences as discussed below.

Financial Impact of Health Insurance Gaps

When you do not have health insurance or your health insurance coverage is not sufficient, it can have a severe financial impact. Following are the risks of not having health insurance coverage.

Massive Financial Burden

Without health insurance, any medical emergency like an accident or a critical illness can cause massive medical expenses posing a financial burden. Health insurance protects you financially against any unforeseen event.

Drains Your Savings

Unexpected medical expenses can deplete your savings and investments, leaving you with little to no financial security. So, protect your savings with health insurance.


One of the negative financial consequences of not having health insurance is the accumulation of debt. When you don't have the resources to pay for medical treatment, you may need to borrow money to cover your medical bills. This means that you'll have to pay back the borrowed amount after you recover, which can take a long time and leave you with no savings.

Lack of Quality Medical Care

Lack of health insurance coverage can make it challenging to access quality medical care because of the unaffordability to pay  the hefty bills. Instead, you may have to opt for lower-cost treatment options. Health insurance, on the other hand, offers the convenience of getting the best treatment without having to pay cash upfront at the best hospitals.

Lost Tax Benefits

Health insurance allows you to save money on taxes. A lack of health insurance means you will have to lose the tax benefits also.

Let us now understand the factors influencing this gap in health insurance coverage.

Factors Influencing Health Coverage Gaps

The high health protection gap in India is the result of people having insufficient or no health insurance coverage and rising medical inflation. Here are some common factors that influence the health coverage gaps in India.

Inadequate Coverage

Inadequate coverage is a big issue resulting in health coverage gaps. Most people do not want to increase their health insurance coverage because of unaffordability, bad experience during claim settlement or just being satisfied with their existing coverage.

Misconceptions about Health Insurance

Many people have this misconception, that they will not need health insurance; it is just a tool to save tax. Some people think filing a claim is cumbersome and insurers reject most claims, hence they do not want to invest in health insurance. 


Age is a major influencing factor causing a gap in health insurance coverage. The coverage gap is higher in youngsters from the age of 25 to 35 because they do not realise the importance of health insurance. This gap is also there in the age group of people above 60 years because often they have crossed the entry age limit or they cannot afford health insurance due to high premiums for people with pre-existing conditions or comorbidities. 


Education also plays an important role. The coverage gap is generally lower among educated people. People with lower education levels are not able to understand the concept of medical inflation and the importance of adequate health insurance coverage.


Health insurance coverage gaps are higher in rural areas compared to urban regions. The reason is the limited awareness among the rural population and a lack of healthcare access in rural areas.


Individuals employed in the government sector, PSUs or large corporations have adequate health insurance coverage because they are covered under the employer’s health insurance and also invest in their own health coverage. On the other hand, self-employed individuals like farmers, small business owners, etc. are not covered due to lack of awareness or affordability.


Affordability is a major factor in not having health insurance. Most of the uncovered population comes from low-income groups.

How Does Lack of Insurance Affect Health Care?

The absence of insurance doesn't just impact individuals, it also affects the healthcare system. When people are unable to afford healthcare, medical facilities are underutilized. By providing affordable insurance options, people can access medical services, which leads to the development of affordable healthcare infrastructure, even in remote areas.

Concluding Lines

Good health improves the standard of living, hence the financial impact of the health insurance gap covering 30% of the population of India can be enormous for both individuals and the healthcare system in India. Understanding the factors that contribute to the gap in health insurance coverage can help in addressing the gap and finding solutions to minimise it. Care Health Insurance Company is committed to providing affordable health insurance coverage to customers of varying needs. The company ensures that you have access to 24/7 customer support to avoid any coverage gaps. Starting from offering comprehensive yet affordable insurance plans to quick and hassle-free claim settlement, the insurer has a robust network of 24800+ cashless healthcare providers. By visiting Care Health Insurance website or connect with our insurance experts you can clear your doubts like how long can you have a gap in health insurance , health insurance gap impact etc., Choose the best for you and stay protected. 

>> Also Read: Health Insurance Plans vs Health Savings Accounts

Disclaimers: All plan features, benefits, coverage, and claims underwriting are subject to policy terms and conditions. Kindly refer to the brochure, sales prospectus, and policy documents carefully.

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