In the Indian scenario, only 50% of the employers include parents of the employees while covering them under Group Insurance. Out of these 50% employers who include parents, 25% of them collect premium from employees and act only as a facilitator by arranging group policy. Only 25% of employers bear the cost of the premium.
Premium payable is decided based on many factors and most important among those is previous year claims. With people who are aged and with the pre-existing disease it is very natural that the frequency of claims will be high and most of the times intensity, in other words, the amount of claim is also high. So, should the employer forget about including parental insurance as part of employee benefits? The answer is “No”. A strategic approach towards designing the group policy will help in bringing down premium cost and at the same time extend the benefit of group insurance to the parents of the employee.
Following are configurations and scenarios to be considered while designing the structure of group insurance policy to minimize the premium cost:
• The employer bears the cost of the premium and is not collecting any amount from the employees
• The employee bears the cost of premium fully or partially
• When neither of the two above is possible
Now let’s understand the details of the above case scenarios:
Case 1: Employer bears the cost of the premium and is not collecting any amount from the employees
Employers who are including parents of the employees in group insurance and paying premium from their pockets shall take the following steps while designing the policy. They must focus on ensuring the claims are not very high in the current year so that next year the premium will not be high.
• Exercising sub-limits on employee cover: The employer must work with its broker to design the policy in such a way that the employees should take standard/benchmark benefits and not luxury benefits from the policy. The policy must contain in-built limits with respect to diseases. It should include most common ailment intervention like cataract surgery, piles surgery, hernia surgery, hysterectomy, Hydrocele correction, Joint Replacements, Gall bladder stone surgery, appendicitis surgery, etc which are not costly. Also, insertion of a clause that only average standard cost is allowed and anything above that will not be allowed.
Example: For daycare/ short stay procedures, like cataract, BPH surgery, for an employee or the dependents, it is important to consider that the treatment cost can vary significantly depending on the facility where it is undertaken. Due to the lack of standardization of cost across hospitals, cataract surgery in a private hospital will cost around 10,000, however, the same procedure will cost 20,000 in a multispeciality hospital. So, in this case, only 10,000 will be allowed on the submission of actual bills!
• Setting a lower limit on claims: The policy must be structured in a way where employees can claim expenses which are painful to the pocket and not for the sake of claiming. The employer must set a minimum limit for seeking claim say 3,500/- this way all small claims below 3,500/- will be curbed and employees will not be visiting as inpatient just for the sake of claiming.
• Hospitalization in preferred hospitals: Just setting up of minimum limit of claim is not enough. There can be a possibility that hospitals will misrepresent and join hands with employees to fetch money. Therefore, it’s important to include a clause that encourages employees to avail services in preferred hospitals.
A clause stating that employees who are availing services in preferred hospitals will get 100% claim and those who are availing at other hospitals will be getting only partial claim to say 70% of bill amount. It will encourage employees to avail services in preferred hospitals and if an employee chooses other hospitals, it will reduce the claim to 30%.
Preferred hospitals are those hospitals that do not have the tendencies to overcharge or inflate the bills or misguide the patients to draw money. Employer as a company can also work with different hospitals to get a discounted rate of consultation in return for adding their hospital in the preferred list. A list of preferred hospitals must be added to the policy.
Case 2: Employee bears the cost of premium fully or partially
In a scenario where the employer does not want to bear the cost of premium fully or partially, it can act as a facilitating vehicle.
• Run effective campaign to enroll: Company as an employer must run a campaign to encourage most of its employees if not all, to enroll for group insurance with parental insurance. The campaign must be driven to inform the benefits of such enrolment and how the company is supporting by choosing the best broker, including appropriate clauses and dealing with the best insurance provider. Such a campaign if lead by the CEO or HR head will have a more positive impact on the employees. Certain insurance brokers also create and run a campaign for their clients.
• Ensure portability of policy: Employer while negotiating with insurance provider must ensure that the employee who is paying the premium must be allowed to carry forward the policy when he is moving to another company. This facility of carrying forward is called portability of policy.
Case 3: When neither case 1 or case 2 is possible:
• Facilitate senior citizen health insurance:
In case an employer chooses not to spend any amount on medical expenses of employee’s parents, it can at least encourage its employees to take senior citizen health insurance policy for their parents. An employer on behalf of its employees seeks quotes for such policy and with the help of its insurance broker, support its employees to get the best insurance plan.
Employers who can’t afford to support financially at least can support their employees by arranging a facility to take the right decision. If the parent’s health is taken care of, employee’s half the diversion is taken care off.
There are various plans and benefits offered by many insurers. Some of the plans are specially designed for people suffering from ailments like high blood pressure, diabetes, obesity etc.,
The main challenge is that individual Health insurance is only for healthy people. One must declare family history and current health conditions while taking the policy. The insurer then decides to cover or reject the proposal. Even if they decide to cover the existing ailments, it gets covered after a certain waiting period. This makes tough for senior citizens to get the appropriate health cover.
Senior citizen health insurance policy is designed to serve the health needs of senior people who have crossed 60 yrs. of age. These policies cover hospital charges and medical expenses incurred due to sickness or injury due to an accident. Moreover, in senior citizen health policies, the waiting period set for pre-existing diseases is also lower than the regular individual health policies. Certain Banks also offers Group Mediclaim policies for its customers and the premium are relatively lesser than the normal retail policies. Employers can tie up with banks and offer those policies to the employees. Moreover, employees can claim additional tax deductions under section 80D for the premium paid for the health policy taken for parents also.
So now that you know how to cover parents, hope this might help you choose the best approach! In case you need any more clarity and you have any question that needs to be answered, feel free to reach us at Ethika.in!