Organizations
often invest in a medical or health insurance program for their employees and
their family members. They recognize that any loss of health of an employee
directly affects the operating structure and revenue-generating capacity of an
organization. You can read more about the benefits of a group medical insurance program on an earlier post.
From
the organization’s perspective, medical insurance benefits are a very good
perquisite to offer to employees. Going by the current loss ratios in group programs (which is more than 100% in a lot of cases), employees are availing this benefit. This medical insurance benefit is also tax deductible for the organization and considered as a
business expense under Section 36(1)(ib) of the Income Tax Act, 1961.
Picking the best group medical
insurance plan for your organization
Every
organization has the option of approaching an insurance company directly or to
go through a broker.
An
insurance broker represents the client and aims to get the best rate and
features (aka value-for-money) for the client organization. The broker would
take quotes from different insurance companies and often negotiate on behalf of
the client for the best deals. Other than this, a broker offers a myriad of
services such as post-sales service to clients, provides relevant information
to underwrites to decide premium (in case the organization already has a group
medical program running), designs insurance covers as per company requirements,
recommends risk minimizing techniques etc.
Often,
companies also go directly to insurance companies for quotes. This is true for
small aswell as very large organizations. Employees of insurance companies are
often more than happy to deal with organization’s directly as it gives them a forum
to put their case across and get into a more detailed discussion on benefits.
The
following are key steps to be taken by organization to cherry-pick the deal that
will be suitable for their organization –
Step 1 - Start with the below
checklist of benefits and decide
internally what all and how much of the benefits you shall require (blanks
means you can define your number) –
o In-patient hospitalization (choose one)
o 1 lac
o 2 lac
o 3 lac
o 4 lac
o 5 lac
o Cashless benefit – Always tick. Opt for an insurer
who offers cashless benefit and has a wide network of hospitals in the cities
that your staff operates in. In case of small companies, check the city list.
Please note, most insurance companies maintain a network with assistance from
TPAs who also administer the cashless claim. Hence, the correct hospital
network list should be checked from the TPA. Most TPAs should have this on
their website.
o Sub-limits of room (choose one)
o No sub-limit
o 1% to 2% of sum insured
o Rs. _____ per day
o Day-care benefits – always tick this
o Pre-hospitalization and post-hospitalization – always
tick both
o 30 days of pre-hospitalization
o 60 days of post-hospitalization
o Domiciliary treatment (means treatment at home)
coverage (choose one)
o 10% of sum insured
o Not required
o Pre-existing disease benefit (choose one)
o Yes
o No
o Family size (choose one)
o Employee only
o Employee + Spouse
o Employee + Spouse + 2 children
o Employee + Spouse + unlimited children
o Parent coverage (choose one)
o Include
o Exclude
If parent coverage is “Include” then decide on sum
insured amount ____ lac
o Waiting period (choose one; beyond 30 days doesn’t
make sense)
o 30 days
o No waiting period
o Maternity cover (choose one)
o Yes
o No
If Yes, then also select – Baby cover needed (choose
one)
o Yes, from day 1
o Yes, from day 91
o No
o OPD benefits (choose one)
o Yes, maximum limit of Rs. __,000 per year (insurers
may also require to put a maximum ___ number of visits per year)
o No
o Dental benefits (choose one)
o Yes, maximum limit of Rs. __,000 per year
o No
o Vision benefits – this may be applicable for cost of
spectacles, lasik surgery, lenses etc. (choose one)
o Yes, maximum limit of Rs. __,000 per year
o No
o Accident cover – this cover includes payment of compensation
to the insured or nominee in case of accidental death or permanent total
disability or partial permanent disability etc. Please remember that accidents
are almost always included in the group medical plan if it involves
hospitalization (choose from the grid below)
o No
o Yes
§
Accident death
cover (Rs. ___ lacs)
§
Permanent Total
Disability cover (Rs. ___ lacs)
§
Partial
Permanent Disability cover (Rs. ___ lacs)
§
Accidental
medical expenses (Rs. ___ lacs)
o Addition and deletion of members – always tick yes
(understand the logic of how pro-rate calculation of premium will be done
because of the addition or deletion of members in this group medical insurance
policy)
Other
important points to consider when opting for a group medical insurance plan –
o Co-pay – Co-pay means the employee agrees to pay a
part of the medical bill. This can be as low as 10% or 20% of the medical bill.
Co-pay often brings good savings in premiums for the company because a) the
employee shares a small part of the burden and b) employees, when having to pay
a part of the bill, exercise restraint in choosing expensive medical services.
As an organization, you have the option of opting for a co-pay or not. And
further you can choose the co-pay %age.
o Corporate buffer – some insurers may give an option
to clients to use a corporate buffer for the treatment of sicknesses that are
not included in your regular plan. For example, if your organization may opt
not to take the maternity cover. However one of your employees make have a
child birth related complication and may require surgery etc. This is where
companies can dip into their corporate buffer and use it to provide financial
support to their employee or family member.
Step 2 – Keep the list of employees
ready with you
Names
or titles are not required. Insurance companies will ask for –
a)
Number of
employees
b)
For each
employee, the number of family members –
- Spouse
- Children
- Parents
- Spouse
- Children
- Parents
c)
Age of employee
and family members
d)
Gender of each
employee and family member
Step 3 – Keep the claims information
handy
If
your organization has already been running an employee medical and health
benefits program, then you have to keep claims information ready when taking to
a new insurance company. The broker normally does this, but for you to take
claims information is not difficult at all. Keep your master policy number
handy and call your insurer relationship manager.
You
ability to negotiate great terms hugely depends on the claims experience on
your existing policy. For example – if you paid a premium of Rs. 5 lac last
year and the claims was only Rs. 2 lacs, then that puts you at a great position
to negotiate. However if your premium was Rs. 5 lacs, and your members made
claims of Rs. 15 lacs – then you can expect a huge jump in premiums in the
coming year.
Step 4 – Keep an approved budget in
mind
Before starting talking to
insurance companies or brokers, understand how much you are ready to invest in the employee medical insurance program. Often, insurance company sales managers will
ask you for your budget. Most organization don’t hold this number back as it
helps the insurance company to fit in the necessary benefits within your
expense approvals.
Step 5 – Seek quotations from
insurance companies.
The
rule-of-thumb is 5. Often you’ll see that only 2 or 3 companies actually will
go all the way for your business. The reason for this refers to different
underwriting norms followed by different companies. For example – some make not
pick business from some cities where their claims ratio is high, or some may
have restrictions on the number of members that can fit within the group etc.
Step 6 – Evaluate the proposals
The criteria should be comprehensive and include terms, benefits offered, hospital network,
premium and don’t forget to read the policy wordings to understand the meaning
of each definition. Also, don’t fear to ask for references of similar companies
as yours. It is advisable to take references of companies that have spent 1 or
2 years with the insurance company as they would have a considerable experience
in claim settlement also.
Step 7 – Close discussions and sign
up with one insurance company
after taking an agreement internally.
Discussions
on group health programs work well when both parties (the organization and
insurance companies) understand each other. The best and most cohesive deals
are struck when both parties explain the specifics of the program and work out
permutations and combinations. Dialogues other than premium builds success.
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