Companies Ask Employees to Pay More for Parental Cover

Corporate firms as well as insurance companies are finding it difficult to cope with the medical expenses of elderly parents in a group insurance.

To cope with rising premium costs in group health insurance – many companies are asking employees to pay their own way for parental covers.

An 80% increase in the health insurance premium of Karthik Shekhar’s aged parents came as a shock to him, this happened after no claim had been made, and also because he had to pick up the tab to cover his parents under the group health policy offered by his company.

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V Jagannathan, Chairman and Managing Director of Star Health and Allied Insurance, said that corporate firms have been keeping parents out of the group health offered to their employees and their families over the last few years as huge claims on account of parents were inflating the premium costs.

He also mentioned that most corporate firms have asked that employees buy a separate policy for parents. The advantage that policyholders have under a group policy is that pre-existing diseases are covered without any waiting period, while individual policies have a waiting period of a minimum of 4 years. However, for insurers, the selective coverage of parents has made group health insurance a loss-making proposition, with extremely high claim ratios.

Sanjay Datta, Chief - Underwriting and Claims, ICICI Lombard, said that the company insists on a minimum group size to provide a selective parental cover to employees of a corporate.

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According to a recent study, though, by Marsh Insurance Brokers, 19% of the organizations that had not covered employees’ parents last year have introduced it this year.

The study also revealed that 41% of the organizations provided 100% employer-sponsored cover in 2014-15, up from 35% in 2012-13. Also, that 76% of the organizations facilitated parental cover with employee contribution this year up from 54% in 2012-13.

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Because of the cost impact, insurers and corporate firms will need to strike a balance to ensure that the premium costs are kept at a low so as not to squeeze the employers, and the insurers also do not make huge losses.

Source: Deepa Nair

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Source-Medindia