Why Group Mediclaim ?

While reviewing the employer most of the employees consider the benefits they get as first criteria. In benefits with growing health expenses health benefits comes first to the notice. The normal Retail health policy covers only healthy members and comes with pre -existing disease waiting period. In group policy the pr-existing can be covered from day 1. This is the major reason, the group policy is preferred and increasingly becoming essential incorporates.

How much?

Statistics shows that more than 35% of the corporates offer cover equal to or more than 3 Lakhs as sum insured. In India 95% of the ailments get treated with in 3 lakhs sum insured. Apparently, this seems to be an adequate cover.

Employee Funded Group Policy ?

It is very difficult to get a good health cover for our parents in retail market. As the age is more than 45 years the premiums are very high and most often the covers are restricted to only non-pre-existing diseases. The group cover offers this benefit, but it comes at a cost. Large Employers started offering this cover as a option to employees, where in those employees who wants to opt for this cover should pay for the premium. Employees are eligible for the section 80D tax benefit for the premium paid by them. For small employers it remains a challenge.

Renewal ?

Unlike a normal Health policy in retail market, the renewal premium of group policy largely depends on the claims in the expiring year. That means a healthier group will have less premium and a less healthy group will pay more premium. It also means the employer must be very tactical in structuring the policy so that it is open enough to the employee to get good benefit but not open enough for the hospital to inflate the bills under this policy.

Check list for Group policy benefits

To keep the benefits of Group Health Policy attractive following points must be considered

While taking the policy one must ensure with its broker or insurer that all waiting periods are waived off.

  • 30 Days waiting period
  • 1,2,3 years waiting period
  • Pre-existing disease waiting period
  • 90 days new born baby waiting period
  • 9 months maternity waiting period

Certain restrictions must be customized to avail the optimum and real benefit of the policy.

  1. Room Rent Clause: Generally, in this clause room rent is restricted by linking limits to the percentage of sum insured. Instead, it would be appropriate to customize room rent clause for considering the private room or sharing room.
  2. Co-payment Clause: This clause brings prudence in employees. Employees will question hospital for treatment and charges, since certain amount will also be paid out of pockets of employees. Percentage of co-payment by employee shall be nominal. A normal co-payment of 10% of claim can reduce the claims of company by more than 15% to 20% at the end of year.Company may not like to put co-payment clause in reimbursement claims as they can execute control while clearing reimbursement claims.
  3. Disease Wise Cap: It is recommended that a limit of average cost of treatment is applied on the most common ailments like Cataract, Piles, Hernia, Hysterectomy, Gall Bladder, Kidney stones etc. This way claims can be minimized and those who need support for serious ailments which creates burden on pocket get the necessary support.
  4. Maternity Cap: Normal limit for maternity is 50,000 per claim both for normal and C section delivery. A appropriate segregated limit will also save claims.
  5. Deductibles: In order to restrict small value claims and thereby reduce premium of next year deductibles clause must be appropriately designed. It’s a clause where flat nominal amount of say Rs 1000 or Rs 2000 is applied as deductibles per claim. However it’s advisable to apply this clause to those claims to which co-payment is not applied.
  6. Preferred Hospital Network: Some of the insurers has a pre-negotiated tariff with some top hospitals which is less than average cost of treatment elsewhere. Overall claims can be drastically brought down by encouraging members to policy to opt preferred hospitals. One can encourage employees to opt for preferred hospitals by removing co-payment or deductible clause with respect to treatment in preferred hospitals. Also company can work with insurer or its broker to arrange cashless treatments in preferred hospitals. Increasing the room tariff limit in preferred hospitals is also one more way of encouraging employees to opt preferred hospitals.
  1. Outpatient treatment can be covered: There are insurers who offer claims for outpatient treatment also. But one must know that premium for outpatient treatment is as high as 80% of the sum insured. Hence its advisable to review overall benefits offered before opting for outpatient treatment and shall be opted only in rare cases.
  2. Internal congenital exclusion to be waived off: This is a very important aspect to be considered while negotiating premium. Normally this exclusion is part of standard exclusions. So its important to specifically exclude while negotiation. (For any queries on Internal Congenital exclusion please feel free to reach Ethika Insurance Broking Private Limited)
  3. Corporate Buffer : Corporate buffer clause is very helpful in high value claims arising out of accidents or any major illness. This can be limited to any members of the family or with per incident limit or restricted to only critical illness.
  4. Voluntarily Super Top Up Policy: This is in high demand now a days. Employees who are willing to increase the sum insured limit can opt for a super top up policy by paying additional premium. Such employees not only get additional insured limit but also they are eligible to avail Section 80D benefit for additional premium amount paid.

Structuring a group health policy is a intricate task, however above checklist points though not exhaustive but gives critical perspective into structuring of Group Health Policy.

Insuring Parents Through Group Insurance

In India, 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.

The reason why parents are not included in Group Insurance is funding of 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 frequency of claims will be high and most of the times intensity, in other words, the amount of claim is also high. So, whether the employer should 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 parents of the employee. (Also read: alternative solution on What employer can do if employees parents are not covered under group health policy)

Following are few points to be considered while designing the structure of group insurance policy to minimize the premium cost.

Employers who are including parents of the employees in group insurance and paying premium from their pockets shall take following steps while designing the policy. They must focus on ensuring claims are not very high in the current year so that next year the premium will not be high.

  1. Normal benefits only: The employer must work with its broker to design the policy in such a way that employees should take normal benefits and not luxury benefits from the policy. The policy must contain in built limits with respect to diseases. It should include standard ailments like cataract, piles, hernia, dental procedures etc which does not require very high treatment cost. Also, insertion of a clause that only average standard cost is allowed and anything above it will not be allowed. Eg: If Cataract operation is done and standard average cost allowed for this ailment is 10,000 rupees but employee chose to get his parent operated in some luxurious environment which cost him 20,000 rupees. Then only 10,000 rupees will be allowed on submission of actual bills.
  2. No small claims: As the purpose of insurance is to provide a cushion to bear the medical expenses, not reimbursement. The policy must be structured in a way where employees can claim expenses which are painful to 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.
  3. 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 say 70% of bill amount. It will encourage employees to avail services in preferred hospitals and if employee chooses other hospitals it will reduce the claim to 30%.Preferred hospitals are those hospitals who don’t have 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 discounted rate of consultation in return for adding their hospital in preferred list. A list of preferred hospitals must be added to the policy.An employer can take service of an insurance broker to get these clauses placed in policy and claim settlements.For any query in this regard please feel free to reach Ethika Insurance Broking Private

In the scenario where the employer does not want to bear the cost of premium fully or partially it can act as facilitating vehicle.

  1. 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 enrollment and how the company is supporting by choosing the best broker, including appropriate clauses and dealing with the best insurance provider. Such campaign if lead by CEO or HR head will bring more impact on employees. Certain insurance brokers also create and run a campaign for its clients.
  2. Ensure portability of policy: Employer while negotiating with insurance provider must ensure that employee who is paying premium must be allowed to carry forward the policy when he is moving to other company. This facility of carrying forward is called portability of policy.Portability of policy can be group to individual or group to group. To know more about portability of policy feel free to reach Ethika Insurance Broking Private Limited.Care your parents with no worries of medical expenses- Reach to us to know more about parental insurance.

In India, nearly half of the employers do not include parents of the employees while insuring them under Group Health Insurance Policy. The prime criteria for this decision is high premium cost. Though high premium cost issue can be dealt with a strategic approach. (Also read: Parental Insurance in Group Health Insurance Policy – an employee benefit plan). However, even if employer has decided to exclude employee’s parents from group policy he can still take care of employee’s parent’s medical expenditure in following ways:

  1. Actual reimbursements: Medical reimbursements of health care expenses of employee and his family including parents to some extent is a good way of offering employee benefits. Employer can collect the original bills for expenses incurred by employee towards medical expenses incurred for himself, his family including parents. After verifying the original medical bill, approve the reimbursement in next payment cycle. Employer can fix a limit of such reimbursements to avoid unrealistic claims.Another benefit of such reimbursements will be employee can claim exemption from tax to the extent of Rupees 15,000 per anum on such medical reimbursements.
  2. Facilitate senior citizen health insurance: In case employer chose 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. Employer on behalf of its employees seek quotes for such policy and with the help of its insurance broker support its employees to get best insurance plan.Senior citizen health insurance policy is designed to serve the health needs of senior people who crossed 60 yrs of age. These policies cover hospital charges and medical expenses incurred due to sickness or injury due to accident. More over in senior citizen health policies the waiting period set for pre-existing diseases is also lower than regular individual health policies. (Also read: Senior Citizen Health Insurance Policy for detailed information)More over employees can claim additional tax deduction under section 80D for the premium paid for health policy taken for parents also.

It’s well said that if you can’t help by contribution you can still help by giving an idea and direction. Similarly, employers who can’t afford to support financially at least can support their employees by arranging a facility to take right decision. If parent’s health is taken care of employee’s half the diversion is taken care off.

For any support or further information on planning employees benefits or senior citizen health insurance feel free to reach Ethika Insurance Broking Private Limited.

Comparison

Advantages of Group Mediclaim over Retail Individual Mediclaim policies

# Coverage in Individual Policies Advantage under Group Policies
First 30 Days Waiting period Employees are covered from Day 1 of joining the organization.
1 year, 2 year waiting period for specified diseases Not applicable under Group policies
Pre Existing Diseases covered after 4 years Pre-existing Diseases are covered from Day 1
Maternity Not covered Maternity is covered with specified limits
New Born Baby Covered from 91 Day New Born Baby covered from Day 1.
Co-payments – Applicable depending on Insurer Not applicable
Room Rent Capping 1% of Sum Insured in Public sector Insurance companies Can be defined as Standard Private Room
Disease wise capping Not applicable
Choice of TPA not with us Choice of TPA given to us
Pre and Post hospitalization 30/60 days Same as Normal Policy
Addition and deletion – Not possible Addition and deletion done on pro rata basis
Coverage for higher claims not possible Corporate buffer is given to take care of any higher claims.
Coverage for Parents is very difficult because of higher age. Medical test is pre requisite. Parents can be covered without any waiting periods and Medical test is not required.
Online Claims portal for Management not provided Online Claims portal is provided.
Routine Health Test not provided Routine Health test like Eye / Dental / General check-up camp conducted.

Note on Advantages of Group Mediclaim over normal Individual Mediclaim policies.

  • Most of the employees joining your organisation might be having Medical coverage under Group policy provided by the previous organisation. They might compare the coverage with what is provided to them earlier. The below is the comparison chart for the same, and you will observe that you will find the gap is very wide. The coverage provided by Normal Individual policies is very inadequate.
  • 70% of the Employers in IT and ITES industry provide Group Mediclaim cover to employees.
  • 95% of those Employer provide Pre-Existing Coverage under group Mediclaim.
  • Cost of coverage under Group Mediclaim is very less compared to Individual Policies.