Cos seen reducing health cover for parents of staff

23-Jul-2010

Corporate India, notably IT companies, that earlier had liberal employee health insurance packages, are scaling back benefits by withdrawing health cover for parents, according to a survey by insurance broker Marsh India. According to the annual employee benefits survey for the year 2009-10, one of the key casualties has been the cover extended to employees' parents as part of the group mediclaim policy.

While introducing the co-payment clause - entailing sharing the premium payment or claim amount by the employee - has become a prevalent practice, some companies, around 30% of the over 100 surveyed, have chosen to withdraw such covers entirely. Compared with the 60% of companies that picked up the entire expense pertaining to parents' cover as per the last survey, the figure has dropped to 50% this time round.

During the pre-recession period, when attrition was rampant, many IT companies offered covers even up to Rs 7 lakh for their key personnel and their elderly parents in a bid to attract and retain talent. Many opted for expensive treatments such as knee and hip replacement surgeries, often leading to a high claims ratio. Over 65% of the corporates surveyed reported a claims ratio in excess of 100%. A high claims ratio during a period results in higher premium payable the following year, as health insurers are bound to hike the premium rates.

The study notes that 73% corporates are likely to re-evaluate the benefits offered in order to keep costs under check and make changes such as introducing preventive care, tweaking parental coverage terms, bringing in sub-limits for room rates, treatment of certain ailments, etc, or even dropping dependent coverage completely. Selection of the preferred provider network (PPN) could also play a key role.

"The developments that have taken place recently (when PSU insurers stopped offering cashless facility at several hospitals citing exorbitant costs) are just the beginning of a larger debate. We believe that a well-negotiated PPN policy will be in corporates' interests. The negotiations could cover, in addition to room rates and standardised treatment procedures and costs, service level offered and the hospitals' response time," said Sanjay Kedia, country head and chief executive officer, Marsh India.

Source : www.insuremagic.com