Group Health Plan’s Fine, but Go Solo for Better Cover (ET 10th May 2013)

New health insurance norms are likely to bring in some benefits, but delay in purchasing a policy may be risky, says Preeti Kulkarni

Did you notice that the premium for your company health insurance plan has gone up? Take a look at your revised salary structure, and you will notice that your company is paying a higher premium for your insurance cover this year. But bad news does not end here. Restrictions such as sub-limits and co-payments, too, have gone up. “Premiums for group health insurance are increasing due to high claims,” says Mahavir Chopra, head, e-business and personal lines,Medimanage.com, a health insurance consultancy firm. Experts believe that companies may pass on higher premiums to employees to cut costs. “One worrying trend is that some companies are shifting the cost of parents’ coverage to their employees. This could result in a significant reduction in enrollment of parents,” says Segar Sampathkumar, general manager with public sector major New India Assurance. “Employees shouldn’t opt out of parents’ coverage when the cost of coverage shifts to them, as they might not get insurance for their parents at a later date when they need it the most.” 

TO BUY OR NOT TO BUY At the moment, however, nobody is keeping their parents out. In fact, many of them are scouting for an independent cover for their parents. Many are even looking for independent cover for themselves, probably because of the increasing awareness about the importance of health insurance cover, say experts. “There is a huge flux of salaried employees queuing up to buy independent health policies,” says Mahavir Chopra. If you are in the process of buying a cover for your parents, or even for yourself, be prepared to slog a bit as the process of decision-making is a bit complex.

On the one hand, friendlier products without claim-based loading (where renewal premiums rise if you make claims) and arbitrary premium hikes are expected to hit the market after October 1, when the new guidelines of Insurance Regulatory and Development Authority (IRDA) become effective. On the other hand, premiums across age groups could go up as insurers factor in new regulations in their products. Hence, the question: is it better to wait until October to purchase a health policy or take the plunge right away? “I don’t see any reason why policyholders should put their decision on hold. After all, the changes that are going to be effective from October are procedural in nature. There will be very little or no impact on pricing,” says Neeraj Basur, CFO, Max Bupa. Also, remember, most health insurance policies are annual contracts and you can benefit from the new regulations the next year when your policy is renewed. “My advice would be, if you are uninsured, get yourself insured right now. No day is too soon when it comes to health insurance. Of course, the benefits of the regulations could accrue next year on renewal. But that is no reason to defer insurance protection,” says Sampathkumar. Also, you could look for products that meet the new requirements even in their current form. “There are some products that already meet 90-95% of the regulatory (no loading, no maximum renewable age) requirements, you could buy these products. In case premiums shoot up, you would get a three-month notice (as per new regulations) which would be enough for you to switch to an affordable plan,” advises Chopra. For instance, existing products offered by Apollo Munich, Max Bupa and Tata-AIG have already done away with the claim-based loading clause. 

STUDY THE FEATURES CLOSELY Irrespective of whether you go ahead with your plan to purchase health insurance now or wait till October, you need to take into account a list of parameters. “First and foremost, study the reputation of the insurer, when it comes to claim settlement, even before looking at product features. While looking at product features one must also scrutinise the waiting period for pre-existing diseases (PED) cover, whether any copay has to be borne by the insured, whether there is any ailment-specific or room rent capping, as this will reduce the reimbursement amount,” says Divya Gandhi, head, general insurance and principal advisor, Emkay Insurance Broking. 
If you are buying your policy before October, make sure it does not carry a claim-based loading clause or specify a maximum renewable age. “A good health insurance product is one with no or reasonable limits/cappings and stable premiums across life-cycle/age groups. Premiums for products that have a maximum renewable age or claim-based loadings currently are bound to increase by 20-25%, especially in the higher age groups. Such products should be avoided at least till October,” says Chopra. 
Moreover, you need to be doubly sure of the policy wordings and features when buying a cover for your parents, especially if they happen to be senior citizens. It is, no doubt, a tedious task as such products contain complicated terms and conditions, but this will help avoid nasty surprises at the time of making claims. “One should look at the maximum age at entry, the price, the terms, whether there is any co-pay and what the fine print says. The track record of the insurer should be paramount, as the relationship would continue for decades,” says Sampathkumar. Also, ensure that you tone down your expectations of the ideal product. “Getting a perfect product for parents at this age is highly unlikely. This being a highrisk category for insurance companies, there are bound to be limits. Look for products which save the most for you, have lower co-pay limits, sub-limits and claimbased loading. Avoid products that have combination of many complex cappings - co-pay, surgery limits, room-rent limits, etc. Such products are very complex and end up paying only 40-45% of the actual costs incurred,” adds Chopra. 
preeti.kulkarni@timesgroup.com