In April 2020, the Ministry of Home Affairs (MHA) made health insurance a mandatory benefit for employees. While this is an excellent move that will help both employers and employees in the long run, it will put additional cost pressure on businesses for the short term. When revenues are down, and profits are shrinking, employers are looking for every possible way to save costs without affecting their employee' well-being. In this context, getting the best value for money on a group health insurance policy can be a very resourceful move for any organization.
How To Choose the Right Policy Terms
Definition of Family
The terms in your group health insurance policy can significantly affect the costs incurred. For example, the definition of family can include only the employee, the employee plus their spouse and children, or the employee's entire family, including their parents. The broader the definition of family, the more expensive the group health insurance cover will be.
Another key deciding factor is the sum (amount) insured, which can be in the range of INR 3 to 10 lakhs. The sum insured is the maximum amount the insurer will pay if the employee is hospitalized. You need to keep in mind what kind of hospital your employees are likely to visit and plan for the sum insured accordingly. For example, if your employees are based in a tier 2 city, you can manage with a lower sum assured.
Hospital Room Rent Limit
Your group insurance policy premium will also get affected by the highest limit you want to set for hospital room rent. The room rent limit can be a percentage of the sum assured or can be uncapped.
For example, if the sum insured is INR 3 lakhs, your room rent limit will be INR 3,000. If your employees choose a higher category room, they have to pay the additional amount from their pocket.
Maternity is an add-on benefit available under a group health insurance policy. The maximum benefit available is INR 50,000. It can cover both pre and post-hospitalization charges. You can choose not to provide this benefit and save on your premiums.
If you want pre-existing diseases (e.g., diabetes or cardiac disease) to be covered, it can increase your premium payable. You should also lookout for the waiting period.
Suppose there is a 30-day waiting period. In that case, any hospitalization will not be covered in the first 30 days of taking the policy. Ideally, the health insurer should waive off the waiting period. There are also ICU charges, which can either be uncapped or be a percentage of the sum insured.
In terms of industry benchmarking, different companies choose different policy terms. For example, some companies allow employees to add parents to the group plan but ask the employees to bear the cost. In some cases, the sum insured can vary by the hierarchy in the company. In some cases, the company may co-pay a certain percentage (say 20%) for parents and ask the employees to pay the remaining amount. Some companies may offer a minimum sum assured of say INR 3 lacs and give employees the option to choose a higher sum assured at an extra cost.
The policy terms can have a significant effect on the overall pricing of your group health insurance policy. You should check for different combinations and choose a plan that matches your budget.
Be Mindful of Hidden Clauses
Capping of Room Rent
In some policies, there may be a hidden clause that caps the room rent. For example, they could have a hidden clause such as 2% of the sum insured, up to INR 5000 for a regular room. In this case, even if your sum insured is INR 5 lacs, the room rent is capped at INR 5000 (though it should be INR 10,000 as 2% of 5 lacs). Other times, there could be a separate cap for an ICU room. Despite you paying a considerable premium, your employee may not be able to get the most of the group health insurance policy because of these hidden clauses.
Not Covering Pre-Existing Diseases
Covering pre-existing diseases is an essential feature for most employees, especially if they take health insurance for their parents. You should confirm whether your plan covers pre-existing conditions. You should also ensure there is no waiting period for these diseases. In individual policies, the waiting period for pre-existing diseases can go up to 4 years. However, when buying group insurance, you should insist that the waiting period is zero.
Choose the Most Appropriate Insurer
List of Cashless Network Hospitals
Every employee would like a cashless insurance experience where they do not have to pay cash from their pocket and wait for months to get reimbursed. Leading health insurers have tie-ups with hospitals, known as network hospitals. You should check the list of cashless network hospitals offered by your insurer and ensure all prominent hospitals in your town/city are included.
Claim Settlement Ratio
Claim settlement ratio or CSR refers to the percentage of claims paid out by the insurer out of total claims made. A higher claims settlement ratio is better as it indicates the insurer has paid out many claims. This information is readily available on the website of the Insurance Regulatory and Development Authority (IRDAI).
Number of Claims Processed
In addition to the claims settlement ratio, you should also check the number of claims processed by the insurer. Having a better claim settlement ratio is not adequate if the insurer has processed significantly lesser claims than the competition. Choose an insurer that has a high number of claims processed, along with a high claim settlement ratio.
The efficiency of Internal Processes
Internal processes at the insurer's end play a significant role in providing an excellent experience to the employee and your HR department. For example, they should give a quick response to your employee's queries. If the insurer's team is helpful and provides a seamless experience, it can go a long way in motivating your employee and making them value you as an employer. Check for references from other organizations in your network to know about the internal processes of your insurer.
Negotiate the Right Price
At times, even with the same policy terms, different insurers may offer different rates. It is better to get quotes from multiple insurers before zeroing one for your group health insurance policy. While this can be a time-consuming process, having multiple quotes can help you negotiate a good deal with the insurer of your choice. You could also consider employing a broker to do most of the heavy lifting, and ensure you get the best price after consulting multiple insurers.
To conclude, choosing the right group health insurance plan is not an easy decision. You will have to thoroughly understand each insurer's policy terms and make sure there are no hidden clauses. It would be best if you customized the policy based on your employee's needs and budget. The goal should be to minimize your costs while providing a pleasant experience to your employee. If your employees are not getting cashless claims or are incurring too many out-of-pocket expenses, you will not get value for money on your group health insurance policy.