Note to readers: One of the biggest mistakes a salaried employee makes is to depend solely on the office-provided insurance cover. We, at Moneycontrol, have repeatedly pointed out that you must have your own personal health insurance cover as well. A sudden job loss or even change of jobs might result in your insurance cover vanishing overnight if the new employer doesn’t offer a comprehensive cover or, worse, no cover at all. Then again, there are lots of questions surrounding your office-provided insurance cover as well. Does the corporate insurance plan cover your parents? How to make a claim in a corporate health insurance policy? Can your employer customise the group health insurance cover? In a new series at Moneycontrol, we aim to demystify the corporate health plan and help you to make the most of your group health insurance plan. But remember, it’s just as important to have your own health insurance policy to supplement your corporate insurance plan.
Buying insurance for parents is a tricky topic for many. More often than not, the topic of insurance for parents comes up when a health problem is discovered, either with parents themselves or with someone in the family.
In most such cases, the regular health insurance option is no longer available. An insurer’s underwriting for a regular insurance plan is relatively stringent, which leads to rejection of applicants with adverse medical history. That’s why insurers offer a separate plan tailored for senior citizens. Such plans have more restrictions than the regular plan but are more accessible. At the same time, many private sector employers also offer an option for employees to enrol their parents in a voluntary group health insurance scheme. The question then arises: Which plan should an employee opt for?
The number of health insurance plans for senior citizens is about one-fourth of that offered for young adults. Within those, the special senior citizen plans are offered by only a few insurers. The senior citizen plans are usually offered only to people above a specific age, around 45. While plan features vary across insurers, the core product construct is similar. However, the voluntary group plan for parents offered by employers can vary substantially. So, making an apples-to-apples comparison between the two plan types is difficult. The intent of this article is to familiarise you with key terms that can help you choose between the two plan types. Below are some broad distinctions between these two plan types.
The group insurance plan has several advantages over the personal senior citizen plan.Guaranteed insurance
Firstly, the issuance is guaranteed. Employers open up enrolment for the scheme for all their employees. Formation of the group is generally subject to a minimum enrolment ratio. Once the group is formed, and if an employee is willing to pay the premium, the issuance is guaranteed. No further medical information or history of the parents is asked for from the employees.
In the case of a personal senior citizen plan, insurers do a complete medical underwriting. This involves asking for the medical history of the parent and in some cases needs a medical check-up before the policy is issued. In the case of a personal plan, if the medical condition is adverse, the insurer may refuse to grant cover.No waiting periods
The second advantage of the group plan is that usually there are no waiting periods. All diseases are covered from the first day itself, irrespective of whether these were pre-existing or not.
However, the personal plan carries multiple waiting periods. The solace is that the waiting period for pre-existing diseases in a senior citizen plan, typically one or two years, is lower than that of regular health insurance plans.Insurance company covers most of your bills
The third major advantage of the group plan is the level of co-pay. Group plans may carry a co-pay of between 10 percent and 20 percent on each and every claim. This is a reasonable cost-sharing provision.
However, the special plans meant for senior citizens may carry a higher co-pay of 20-30 percent. This leads to a significant outgo at the time of claim. Some plans may apply co-pay only on non-network hospitals.
The fourth advantage of the group plan is the increased sub-limits. Caps such as those on room rent are generally higher for group plans than personal senior citizen plans. Also, most group plans carry high or no disease-wise limits. The disease-wise restrictions in a senior citizen plan can be restrictive.
Given all that, the personal senior citizen plan scores well in three areas.
First, most plans provide a no-claim bonus for every claim-free year. This is an excellent way to increase the sum assured in a cost-effective manner.
Second, the personal plan is renewable for life, irrespective of your claim history. The group plan is linked to your employment with the company, and in case the company plans to stop the plan, your coverage would end.
The third advantage is in the relative predictability of the renewal price of a personal plan. Pricing of individual plans is fixed for a certain category of people, generally based on age. Your personal claim history does not influence the renewal price. However, in the case of a group plan, the claim experience of the complete group determines the renewal price.
Generally, one in every eight employees covered in a group plan for parents files a claim in a year. That is a high claim incidence and underscores the importance of having coverage for senior citizens. Unfortunately, the availability of group plans is still limited. Among mid-sized and large companies, only one in two firms offers a voluntary parents’ coverage. The proportion is even lower for smaller firms.Wherever such a plan is available, I recommend opting for it. If not, one should consider buying at least the personal senior citizen plan.