Healthcare Costs After 60 — What to Budget and Why Most Plans Fall Short
Medical expenses in India tend to rise faster than general inflation, particularly after age 70. This article looks at how to think about healthcare costs in retirement planning.
Healthcare is consistently the most underestimated expense in Indian retirement planning. It behaves differently from most other costs: it is less predictable, tends to rise faster than general inflation and can arrive in concentrated episodes — a hospitalisation, a chronic diagnosis, an extended course of treatment — rather than spreading evenly over time. (General educational content.)
Why Healthcare Costs Behave Differently
General inflation in India runs at a certain rate year to year. Healthcare cost inflation — the rate at which medical treatment, medicines and diagnostic costs increase — is typically higher. Estimates from health insurance data consistently show medical inflation in the 8–12% range for out-of-pocket costs, higher in urban areas and for specialised treatment. Over a 20-year retirement, this rate of increase compounds significantly.
A cost that is ₹1 lakh today becomes approximately ₹2.2 lakh in 10 years at 8% annual inflation and approximately ₹4.7 lakh in 20 years. For hospitalisation costs that may already be significant, these multiples matter.
What Ayushman Bharat Covers — and What It Does Not
The AB-PMJAY 70+ scheme provides coverage of up to ₹5 lakh per year per eligible individual for hospitalisation costs at empanelled facilities. This covers a range of procedures and conditions. However, it does not cover outpatient consultations, routine medicines, dental and optical expenses, or treatment at non-empanelled facilities. For many retirees, these out-of-pocket categories represent a substantial proportion of annual healthcare spending.
Three Categories of Healthcare Cost
Thinking about healthcare costs in three categories can help with retirement planning:
Routine costs: medicines for chronic conditions, regular diagnostics, GP consultations. These are relatively predictable but tend to increase over time as health needs grow.
Planned costs: elective procedures, dental work, optical care. These can be anticipated with some lead time.
Emergency costs: hospitalisation, surgery, acute episodes. These are the largest and least predictable category.
- Check Ayushman Bharat PM-JAY 70+ eligibility at pmjay.gov.in
- Review existing health insurance policy — coverage limits, exclusions, co-payment structure
- Estimate current annual out-of-pocket healthcare spending
- Consider how routine, planned and emergency costs may each change after age 70
- Identify the gap between expected coverage and expected costs