Coping With Group Health Policy Cuts

In a corporate cost cutting scenario, is your company’s group health insurance plan the latest casualty? What measures should you take to ensure adequate health cover for yourself and your family? Jay Sampat tells you more.

KEY POINTS:

• Corporates normally offer the same group health coverage for employees with the same designation, or there could be illness-wise capping. As a result, the sum insured could be insufficient. Parental coverage is another key benefit that has taken a hit over the past few years.
• For an individual, the best recourse to counter a reduced group cover is to buy a standalone health policy. Top-up covers are another alternative.
• As per the guidelines released by the IRDA, porting from group to individual policies is permissible. You can convert your group cover into an independent policy while retaining all the continuity benefits.

With the slowdown upon us, companies are looking at various ways to cut costs. One such area is the premium outgo on group health policies. Many companies are looking to curtail these benefits when the group policy for their employees comes up for renewal.

For an individual, the best recourse to counter a reduced group cover is to buy a standalone health policy. In addition to acting as a flanking strategy, this arrangement has other benefits too. For instance, most group schemes cover pre-existing illnesses from day one, whereas individual covers usually prescribe a waiting period of one to four years. Therefore, being simultaneously covered under group and standalone policies will ensure continuous coverage for pre-existing illnesses.

One may consider family floater policies to cover the entire family, as these are a cost-effective option. However, in case your parents are senior citizens and are not in good health, it is better to buy a separate policy for them.

You can also look at purchasing a fixed benefit policy, wherein the insurance company undertakes to disburse the pre-defined amount even if you have already made a claim under an indemnity-based policy like group covers (where expenses actually incurred are reimbursed). The key advantage of fixed benefit policies is that policyholders do not have to worry about the claims settlement, as they know in advance the amount that would be disbursed. Also, the documentation procedure is simpler. One of the major benefits of such policies is that you can use the one-time payout to take care of your recuperation expenses.

Top-up cover is a cheaper alternative to individual policies. This is activated when your group cover falls short of your requirement. Some top-ups restrict their coverage to major ailments listed in the policy. Besides, they could specify that claims would be entertained only if the single claim is larger than the individual sum insured offered by the base policy (group health cover). Therefore, be sure to read the fine print before signing up for a top-up scheme.[PAGE BREAK]

Many companies are partnering with their group insurance providers to offer employees the choice to opt for a higher sum insured top-up cover, which addresses the need for higher medical spends. The arrangement requires the employee to bear the premium for the additional sum insured. Since group covers are customised offerings, these add-ons score over independent top-ups in terms of the nature of benefits offered. In such cases too, one must keep a close watch on the terms and conditions. While some schemes cease to exist once the employee quits the organisation, others continue to be in force regardless of the employment status.

Another issue that individuals covered under group insurance are facing is that companies are leaving out employees’ parents from the group policy’s scope of coverage. However, some employers extend the cover to parents provided that the employee is willing to pay the additional premium. If your elderly parents do not have any other insurance cover, you should opt for such a scheme being offered by your employer even if it means a payout from your side.

One big advantage of corporate policies is that they not only cover pre-existing illnesses even in the initial years, but usually also offer additional benefits, as they are customised for a large number of people in the organisation. Besides, the claims settlement process is likely to be smoother.

Some general insurers are promoting schemes wherein the insured employee can move to an individual policy upon retirement or a job switch. The key benefit of this is that it eliminates the need to serve the waiting period for pre-existing illness cover all over again. Remember, even if the insurer providing your group cover does not promote the scheme actively, you can always enquire about the same.

As per the portability guidelines released by the Insurance and Regulatory Development Authority (IRDA), porting from group to individual policies is permissible. So, you can convert your group cover into an independent policy while retaining all the continuity benefits. At the time of making the initial switch, however, you will have to stick to the existing insurer. Thereafter, you will be at liberty to shift to any other insurer.

While deciding on the sum insured, corporates normally offer the same coverage for employees with a certain designation, as they try to limit their premium outgo per employee. Alternatively, there could be illness-wise capping. As a result, the sum insured could be insufficient. With rising costs, parental coverage is another key benefit that has taken a hit over the past couple of years. This means that you need to proactively work towards ensuring comprehensive protection for yourself and your family. A little thought early on will reduce your outflow substantially in case of a medical emergency.