Should I buy health insurance even if I am part of Central Government Health Scheme (CGHS)

Last Updated on October 28, 2025 at 10:44 am

A reader asks, “I am 35 years old and presently have a Central Government Health Scheme (CGHS) cover for myself and my family (wife and daughter) on account of my Central Government job. Considering that the possibility of switching jobs is negligible and that CGHS can be extended to cover me and my wife post-retirement as well, it is necessary for me to purchase a private health insurance policy?”

Editor’s note: This is an oft-asked question; to address this, we must appreciate the pros and cons of the CGHS. In May 2019, I requested Dr Raizada, a faculty at a Delhi hospital, to write about this. Unfortunately, I forgot all about it until now. It is now reproduced below with profound apologies to the author. All aspects mentioned should be fully valid today. The summary at the end of the article is mine.

Pros and Cons of CGHS

(A) OUTPATIENT

• CONSULTATION:  CGHS beneficiaries can, upon being referred from their CGHS dispensary or other Govt Hospital/dispensary, consult a specialist in a CGHS empanelled hospital/clinic of his choice. The CGHS empanelled hospital/clinic will charge OPD consultation fees as per CGHS provisions (revised from time to time). Many such hospitals have different time slots for CGHS OPD  patients. These fees are reimbursable on submission of the required documents.

Pros                                                       

-can go to empanelled hospital/specialist of their choice

-No need to travel to Govt hospital, which may not be nearby

-Govt specialists have crowded OPDs, and getting an opinion is a hassle

Cons

-The annual cap for the Central Government Health Scheme (CGHS) is ₹5 lakh per family, regardless of the employee’s pay scale.  Thanks to @andy_bitts on X.

-Prior referral is compulsory, which depends on your CGHS dispensary doctor’s opinion ( one can request them for the same, but it’s their decision)

-Many renowned private specialists may not be seeing CGHS patient,s even though their hospital is empanelled (Junior or less famous specialists may be used for CGHS OPD)

– Time Slot for CGHS patients may be too small, and due to the rush, there may be inadequate time for consultation

-The private specialist may not give you the same attention as your consultation fees is a pittance as compared to the usual fees

– Getting the reimbursement requires red tape and multiple visits to your CGHS dispensary (difficult for someone in service to get it done, retirees can still manage)

• OPD MEDICINES: The CGHS beneficiary can get all the medicines prescribed to him from the dispensary. Medications up to a period of a maximum of 3 months as per prescription are provided. If any of the medication is not in stock, the same will be indented by the concerned dispensary, which may take a few days.

Pros

–No money to be spent on buying medicines (in chronic disease, this is one major expense)

Cons

  -Some of the medications prescribed by a private specialist may require ratification by a Govt specialist.

-The medicine provided may be generic or of a brand different from that prescribed to you (called “substitute”)

-The brand of the medicine can change over time as new stock is purchased

– Depending on how busy your dispensary is, you might have to stand in line for a variable period to get your medicines ( not an issue for a retiree, I think, but in service, a person may find inconvenient).

• INVESTIGATIONS (LABORATORY AND IMAGING):  The beneficiary can get investigations prescribed by a Govt hospital/ CGHS empanelled private specialist (with prior referral) from CGHS empanelled laboratories/imaging centres (list of these is available on CGHS website and updated from time to time). The charges will be per CGHS rates and reimbursed on submitting required documents.

Pros

–Hassle-free investigations without delay (unlike a Govt hospital) at no cost

–Even the payment made is much less as CGHS rates are a fraction of the actual rates (so even a delay in reimbursement  does not pinch much)

Cons

–No major cons. However, the procedure for reimbursement needs multiple visits, which a retiree can do, but sometimes spending time for a small amount to be reimbursed feels irritating.

• OPD PROCEDURES: If the private Specialist has advised any OPD procedure, prior permission is to be sought from the CGHS dispensary. This permission is valid for two weeks only during which the procedure must be done.

Pros

-same as for investigations

Cons

–None I can think of

(B) INPATIENT

• EMERGENCY ADMISSIONS: In an emergency, A CGHS beneficiary can be admitted directly to any CGHS empanelled private hospital without prior permission. Most such empanelled hospitals will provide cashless admission and treatment to such patients.  I think some empanelled hospitals can ask to pay in cash ( as per CGHS rates), which will be reimbursed later.

If the hospital is not empanelled, it will charge its full rates, but reimbursement will be done only up to the CGHS rates.

Pros

-This is one of the biggest benefits of CGHS. One can get emergency care at several good corporate hospitals without spending and hassles(mostly cashless).

Cons

-None. One should be aware of the latest empanelment status of neighbouring hospitals to be sure where to go in an emergency, but this cannot be considered a con.

• ROUTINE (PLANNED) ADMISSIONS: This should be advised by the private specialist (to whom you have consulted after referral) at the same hospital.

Permission for this admission is required, so the need for admission and the nature of treatment/surgery planned is to be mentioned. 

Pros

-Hassle-free surgery/procedure in a well-equipped hospital

Cons

-In case of complicated cases or rare procedures, there may be some delay in getting the permission

-Cannot get surgery/ procedure from the surgeon of your choice if he/she is not in an empanelled hospital

In summary, the Central Government Health Scheme is an excellent option for eligible personnel . In principle, a separate health insurance cover is not required. However, those who can afford one without breaking a sweat can buy one in situations where there may be administrative delays. In any case, all CGHS subscribers should have a robust emergency fund to handle payments that can be reimbursed later.