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Why you should not only relay on company medical insurance to cover your parents

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   Group health insurance covers provided by employers are a great source of comfort for millions of employees. Such schemes typically pick up the hospital bills of employees and their family members. However, their utility value ranks the highest when it comes to the employees' elderly parents or in-laws. Generally, many health insurers dither from extending covers to senior citizens, as the likelihood of individual claims is quite high in this category. Even when they do, many senior citizens find the premiums to be beyond reasonable limits. Little wonder then, that employees treat employers' group health cover as a godsend.


However, last year, some companies and health insurers decided to impose ceilings on the benefits in order to control mounting losses in their health portfolios. In most cases, this took the form of introduction of the co-pay clause. A few organisations completely excluded the cover for parents, while some others transferred the cost (premium for parents' cover) to employees. Last year, some companies had capped the benefits provided to employees' in terms of parental coverage and the trend continues this year as well. Organisations are looking at managing their costs better. So, one of the ways for insurers to take care of both ends is to maintain the same costs, but revise their service offering. Limiting the coverage to just the employee, introducing co-pay, etc are some of the changes that are being made towards this end. Some companies also offer employees the option of paying an additional premium for extending the cover to their families or increasing the cover amount.


Due to claim ratios being unhealthy in the parents' segment, insurers have either hiked the parents' premium ranging from 30% to 100%, or added new restrictions like co-pay, deductibles, treatment sub-limits and so on. The changed scenario means that whether your organisation tightens its belt or not, you need to be prepared for the possibility that your parents could be left out of the group cover. You will also be entitled to deductions under Section 80D for the mediclaim premium that you pay for your parents.

SITUATION 1

If parental cover is scrapped altogether: It could be a major setback, but companies seldom take such a drastic measure. But, you will be better off reducing your reliance on your company's largesse even otherwise. It's high time employees stop depending only on the employer-enabled parental coverage and start evaluating a good health insurance product, preferably offering lifetime coverage. As parents get older, the chances of getting a good cover with wider coverage terms in the retail health insurance space decreases substantially. If your parents are senior citizens, you could look at senior citizen health policies offered by some health insurers. Also, opt for the largest possible cover for your parents.

SITUATION 2

Cover comes with the co-pay clause: Copay clause refers to the arrangement where the policyholder (in this case, the employee) agrees to share the claim burden in a pre-defined proportion, with the insurer chipping in with the balance. Co-pay ratios usually range between 10% and 25%. That is, for every claim of . 100 made, the policyholder will have to shell out . 25 (assuming 25% to be the co-pay ratio) while the insurance company foots the bill for . 75. Your plan of action in this case would depend on the terms of the scheme offered by your employer. If the benefits under such plans, particularly the pre-existing diseases cover, are not offered by other individual health policies available in the market, you can consider giving your assent to this arrangement. If the policyholder feels that the group cover is insufficient, he can opt for a top-up cover. Such covers get triggered only after the limit under the basic policy is breached. Now, suppose your company covers your parents to the extent of . 2 lakh, which you feel is inadequate. You can buy a top up policy, of say . 1 lakh, that will become effective only if the entire sum assured of . 2 lakh is exhausted. Going for a top up will be a cheaper option than buying a regular policy. To boost the health cover further, you can look at buying benefit policies for your parents. Offered mainly by life insurers, such policies hand out a pre-fixed sum once the claim is made. Some policies also provide a pre-agreed amount based on the number of days spent in the hospital. The claim approval process is relatively smoother and does not entail submission of original bills and documents. You can make a claim under such policies even if you have already been reimbursed by the corporate cover.

SITUATION 3

The company provides parental cover, but employee has to bear the premium cost:


Again, the terms of the group cover would be key here. Often, health insurers are more generous while dealing with corporate mediclaim policyholders. They get a preferential treatment in the sense that insurers try to ensure that the service offered to this category is satisfactory. A case in point is the withdrawal of cashless facility last year for treatment at certain 'corporate' hospitals. Public sector insurers, who took a strong stand against such hospitals after accusing them of charging exorbitant rates, spared corporate policyholders from this ordeal. Also, as mentioned earlier, the fact that most group health policies cover pre-existing illnesses could work in their favour. Personal health policies exclude pre-existing illnesses from terms of coverage for the initial 1-4 policy years, depending on the insurer.


Making a decision in this scenario calls for a thorough cost-benefit analysis. You need to compare the premium payable and benefits provided vis-à-vis what is available in the market. The employee should also know that the premium he is paying will not be refunded, if he separates from his employer. Also, he would, in most cases, not be able to carry forward special group benefits (like coverage of pre-existing diseases, maternity) to an independent policy that he may wish to buy at that stage. Therefore, it ultimately boils down to the needs of individuals as well as their families and the price tag for the offerings in the market that can meet these requirements.


And, in all cases, even if the employee decides to opt for the group cover, investing in an independent personal policy for parents makes huge sense. After all, the employee can move to another organisation that may not offer parental cover, or, may not offer it on similar terms. Moreover, the parallel retail policy would also act as a top-up in case of a claim exceeding the sum assured under the group policy.

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