However, last week he suddenly realised that the company was no longer offering the same cover for his family. Now, the cover was being only extended to him.
Moreover, the amount had come down dramatically from Rs 5 lakh to Rs 1 lakh. When he approached the human resource department, he was told that the company's policy has changed. At present, he is shopping for medical policies for himself and his family.
Though cases of cancellation of group health policies were few in the past, experts say that these could rise from this year, following the lifting of price controls.
That is because 'detariffing' has begun from January this year. Earlier, the Indian non-life insurance industry followed tariffs set by the Tariff Advisory Committee. There were tariffs for fire, engineering and motor lines of businesses.
These tariffs ensured profitability for the insurance companies. On the other hand, health, marine and personal accident were non-tariff lines of businesses. Here, corporates especially, the IT, ITES and engineering companies had to pay negligible premium on their group health policies, if they had a large property or engineering policy.
Under the new system, because of the end of cross-subsidisation, insurers are hesitant to offer large discounts on group health covers. Already, companies such as Oriental Insurance, ICICI Lombard, Bajaj Allianz and others have hiked the premiums for group health insurance and they are underwriting the portfolio on a stand-alone basis.
Says Sandeep Dadia, director, Enam Insurance Brokers, "There could be a situation where insurance companies get aggressive on market share or volumes and underwrite group health insurance at a low premium."
According to him, sometimes the insurance company expects to control losses over time. But when they are unable to do so and the claim ratio also rises, the insurer renegotiates the pricing with the corporate. Then, it is left to the corporate to either accept the new rate or look for a cheaper option.
For an employee, things could change quite dramatically. Earlier, you had the luxury of free health insurance for yourself and your family, as well. Now you may have to either take family floaters or take separate health insurance products for family members. That means that you have to shell out the money from your own pocket. It is always advisable to have a cover of Rs 5 lakh for the entire family, including yourself.
Says Anoop Mathur, vice-president, corporate accounts at Howden Insurance Brokers, "Individuals should avail of an individual health insurance policy, especially in high attrition sectors such as IT, ITES and financial services, depending on their age profile. The premium paid against such health insurance policies also gets benefits under income tax laws, up to Rs 15,000. This effectively brings down the overall cost of health insurance."
The Income Tax department allows a deduction of Rs 15,000 from the total income for individual taxpayers and Rs 20,000 for senior citizens under section 80-D towards payment of medical insurance premium.
Agrees Shriraj Deshpande, head of health insurance, Bajaj Allianz General Insurance, "For a premium of Rs 10,000-15,000, one can get family health insurance policy of Rs 3 lakh, covering husband, wife and two children."
Family floaters are offered by all public sector insurers. Private sector companies such as ICICI Lombard also have similar policies. Companies are already taking into account the changing market dynamics. The result: introduction of innovative products. For instance, one bank has introduced a scheme where you put Rs 1000 per month in a health insurance scheme.
Under this, you get a cover of Rs 5 lakh after you retire. Also, there is an additional cover of Rs 5 lakh cover for your spouse. So the big question is whether you should be considering group health insurance provided by your employer at all.
Says Mukesh Dedhia, director, Ghalla and Bhansali Securities, "I would always advise someone to have a separate policy." He feels that since group insurance is not offered by all companies, it is not necessary that one may have the same cover when one shifts from the present job.
Moreover, if one were to suffer any ailment during the group insurance period, when he goes for a personal health policy these aliments would be treated as pre-existing. So one would not get cover for these diseases.
In short, it is time that employees start gearing up to fund their medical policies. A market economy does mean rising salaries but it also means that there is no subsidisation for the middle class.
