Get ready for a cut in group health benefits

New Irda norms may push up prices for group covers, making it difficult for employers to foot the bill.

it’s likely that your group health insurance benefits were curtailed a couple of years ago, with employers taking steps to cut costs. Come 1 January 2015, these may witness a further reduction with the Insurance Regulatory and Development Authority (Irda) releasing a new set of guidelines on pricing of risks for group products. Says V. Jagannathan, Chairman and Managing Director, Star Health and Allied Insurance: “The new method of determining pricing might push up the prices, more so because the group policies are currently underpriced.“ This will not only prompt the insurers to raise premium rates but, subsequently, employers may also cut down on the benefits or ask you to share a part of the premium cost. Says Arvind Laddha, CEO, Vantage Insurance Brokers: “In cases where the claims ratio is adverse and increase in premium is very high, corporates may be compelled to resort to such options.“ If your employer introduces such restrictions, you should consider buying an independent or a top-up cover to bridge the gap.

Independent policies

The corporate covers are inadequate, with most companies offering family floater plans of `3-5 lakh. Experts have always recommended purchasing independent covers, irrespective of a group health policy.They come in handy when you switch jobs or after retirement, when it is difficult to buy a standalone cover. Moreover, a simpler claim settlement process for those covered under multiple policies makes it even more desirable. If your group sum insured were to dip below `3 lakh, independent health policies might become indispensable.

Top-up covers

If you cannot afford an individual health insurance policy, you could consider buying a top-up cover, which gets triggered only after the base cover is exhausted. “If the base cover is `3 lakh, it is ideal to go for a top-up plan. It is a cheaper option and will protect you against large payouts,“ says Jagannathan.

Critical illness policies

These policies sold by life and general insurers are also important. They not only reimburses the high medical costs in treating critical illnesses, such as cancer, cardiac conditions and stroke, but also hand out a lump-sum recuperation benefit. Moreover, the claim procedure is simple. The sum insured is released once the illness has been diagnosed. However, some products come with a survival clause, where the amount is paid only after a 30-day survival period. The cover could also cease once the claim has been settled.

Senior citizens’ covers

Till recently, only parental coverage had borne the brunt of the cost-cutting initiatives of employers for group health policies.This, despite the fact that it is a source of comfort for employees, as those in the higher age brackets tend to need health insurance the most. However, higher claims from parents is the reason some companies de cided to scrap this cover. Some others gave their employees the option to bear the premium cost for the parents’ health insurance. If your company allows you to do so, go for it, notwithstanding the amount of premium you have to pay. Since claim settlement in group health insurance is always easier, the cover will serve your purpose.

If your parents are over 60 years, you can also consider buying a specialised senior citizen cover instead of a regular one. Make sure you evaluate the sub-limits and waiting periods for specific ailments listed in the policy. Besides, the co-pay ratio–where the insured has to bear a part of the premium and is usually an in-built feature of such policies-should be a key parameter while choosing a product. “You must also consider the current health condition of your parents. If they are suffering from a specific ailment, such as diabetes or cardiac conditions, they should consider buying a policy that is tailored to address their medical conditions,“ says Laddha.

Source: Economic Times

Date: 01-12-2014

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