Financial risk and health insurance utilization among older adults in an urban informal settlement in Pune, India: a prospective community-based study

Background Older adults living in urban informal settlements are vulnerable to financial hardship because of chronic morbidity, repeated healthcare visits, and financial dependence. Longitudinal evidence on healthcare expenditure and financial risk protection in this group remains limited. This study assessed health insurance utilization, out-of-pocket expenditure (OOPE), catastrophic health expenditure (CHE), and associated factors among older adults in one urban informal settlement. Methods A community-based longitudinal study was conducted among 116 older adults aged ≥60 years residing in urban informal settlements under an Urban Health Training Center of a medical college in Western India. Participants were followed for 1 year (June 2024 to May 2025) with quarterly assessments. Data on sociodemographic characteristics, morbidity, healthcare utilization, health insurance utilization, and healthcare expenditure were collected using a pre-tested questionnaire and expenditure recording sheets. CHE was defined as OOPE exceeding 10% of household income. Associations were assessed using chi-square, Mann–Whitney U, Friedman and Cochran’s Q tests (pairwise comparisons were Holm-adjusted), modified Poisson regression, multiple classification analysis, and concentration indices. Results Among 116 participants, 70.69% were female, 58.62% lived in joint families, and 64.66% were financially dependent. At baseline, 75.86% reported at least one morbidity, and monthly prevalence ranged from 69.8 to 83.6% during follow-up without a significant change across months (Cochran’s Q p = 0.069). Health insurance awareness and coverage were reported by 36.21% and 29.31%, respectively, and 10.34% (12 participants) had insurance-covered expenditure at least once. The median annual OOPE was ₹10,900 (IQR ₹4,770–₹20,852.5), with medicines and hospitalization/special appliances accounting for the largest shares of itemised expenditure. Participants with morbidity had higher OOPE than those without (₹12,155 vs. ₹4,800; p < 0.001). CHE occurred in 38.79% of participants. In adjusted analysis, morbidity was associated with CHE (aPR 2.66; 95% CI 1.40–5.04; p = 0.003). Morbidity, lower socioeconomic status, and lower education of the head of the family were associated with a higher OOPE-to-income ratio. CHE was concentrated among poorer households (concentration index −0.230; Erreygers-corrected index −0.357). Conclusion The older adults residing in urban informal settlements experienced substantial out-of-pocket and catastrophic healthcare expenditure despite the availability of health insurance schemes. Morbidity was significantly associated with higher financial burden, indicating the need for strengthened financial risk protection and geriatric healthcare services.