My 40 years old client was not ready to take a health insurance cover because he was already covered under the Mediclaim policy through his employer. He was planning to purchase the policy at age 55, closer to his retirement. I still insisted him to go for one as he may not get it at higher ages. Somehow, he agreed and applied for a family floater health insurance of 20 Lakhs and the story begins here.
His proposal for health insurance was rejected by the health insurance company as both husband and wife were having some health issues which they thought is minor. He was having hypertension (thanks to his high paying corporate job!) and his wife was suffering from thyroid issues. My client knew the issue beforehand and always thought it would not affect anyways, at least in buying a health insurance policy. I suggested him to try it with another health insurance company and finally he was able to get cover for his family, with a higher premium. But the scope of cover is limited due to pre existing diseases. Now, he has no other option.
This is not one of the cases, insurance companies are rejecting proposal based on your health conditions. You may think that it is a small issue, but for insurance companies it may be big. So, the question is
Should you buy a health insurance cover even if you are covered through your employer?
Let us see.
Group Mediclaim policies provided by employers are a big source of relief to millions of employees of organized sector. This is all the more useful to cover elderly parents, because the scope of covering them in other policies is limited and the cost is very high. Of late lots of changes are happening in the corporate health cover which will affect the scope of health cover. The so called office mediclaim is no more sufficent for you in the long term.
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What has changed in your office mediclaim?
For most of the companies, Health Insurance is a loss-making portfolio and now they started changing the conditions. Some companies are introducing a Co-pay clause, where you have to pay a pre-fixed part of the claim. The Co -pay ratio is generally between 10% and 25%. So, for every claim of say Rs. 100/- made, you have to pay Rs. 25/- and the balance Rs. 75/- will be paid by the insurance company (if the co-pay ratio is 25%). Some organizations completely excluded the cover for parents and some are charging the cost of cover of parents from the employees. Some companies are adding health insurance premium in CTC. Restrictions such as those on room rent and sub limit on claims, which were a part of individual mediclaim policies so far are slowly being added to group insurance covers also.
The employers are reducing the benefits because the insurance companies have increased the premium substantially because of the high claim ratios. This has forced the employers to negotiate for health cover with low premium by reducing the scope of the cover!
Restrictions in Parental coverage in office mediclaim
Most of the employers are now offering health cover for parents with some restrictions.
If the employer is offering cover with Co-pay option, you have to consider it carefully. If the benefits under such policy are coming with offers like pre existing disease cover, which is not offered by individual health policies in the market, you can go for it. You can also think of buying fixed benefit policies offered by Life Insurance companies to boost the cover. You can claim under such policies, even if you have been reimbursed by the corporate cover.
If your employer is charging the entire premium for parental cover from you, the decision to go for it or not has to be taken after a cost benefit analysis. The terms of the group cover are also important here. Often health insurers are more generous while dealing with corporate mediclaim policy holders. Most group policies cover the pre-existing diseases, while personal health cover will exclude them during the first 1-4 years. But, if you are leaving the employer, the premium paid will be a loss because in most cases, you cannot transfer this cover to an individual policy, which you want to take at that time. Purchasing an independent personal policy will be always worth because, you need not worry about so many complications in future.
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Changes in Hospital Network – No more 5 star hospitals
Most insurance companies are now restricting the network of hospitals, you can access in corporate mediclaim. If you are opting for other hospitals, then there will be co-pay applicable. Another way the employers are considering is replacing the expensive corporate hospitals in the network with comparatively cheaper ones. There are hospitals which are charging higher rates to insured patients and this has resulted in all these mess.
Disease wise restrictions
Don’t expect your entire hospital will be reimbursed in corporate mediclaim in future. Some of the companies are fixing sub limits for certain diseases. For common procedures like angioplasty, cataract surgery, knee replacement etc. the company will allow a fixed amount proportional to the sum assured. The shortfall has to be paid by you.
Claim settlement
Insurance companies are getting strict about the submission of claim documents. Some are insisting that the claim documents for reimbursement claims should be submitted within 30 days of discharge from the hospital. So, study your policy conditions carefully, so that you will not miss out the valuable benefits.
Why you should go for an extra health insurance policy?
Most employees are not interested in taking an additional health cover because the entire family is covered under the corporate group cover. In the present job market, switching jobs are very common for employees.
What will happen, when you are changing the jobs?
- Whether the cover continues during the notice period?
- Will your new employer have a medical cover for family also?
- What about the health cover after your retirement? Would you be able to get it?
Answer to all the above questions will point towards the need for going for an extra health cover in addition to the corporate health cover. With lot of life style diseases and increasing corporate pressure and resultant health issues, we cannot afford to be without a health cover even for a day! When we are changing the jobs, normally there will be a notice period of 1-3 months, where the corporate health cover is not available in most cases. Similarly, the new organization, where you are joining may have some restrictions in claims for some time. All these will expose you without a cover for some time, which is dangerous.
As we nearer retirement, most companies are reluctant to cover us even with high premium. If at all it is available, there will be lot of restrictions and limitations. After age 40, it is difficult to see someone without problems like hypertension, high cholesterol, overweight, diabetic etc! Insurance companies are not ready to offer policies in such cases.
Tax benefits under Section 80D for health insurance
Health insurance premium paid for self and immediate family qualifies for tax benefit. Premium upto 25,000 per year will qualify for tax benefits under section 80D. It is 30,000 if one of you is senior citizen.
If you are paying health insurance premium for parents, there is another 25,000 deduction allowed under Section 80D. If they are senior citizen, the deduction allowed is 50,000 per year.
Can you continue the office mediclaim after retirement?
General insurers have started offering continuity of group mediclaim policies to employees after retirement. The catch is that it no longer remains a group policy and the premium will be higher. But, features like inclusion of pre-existing diseases and continuity clauses remain with the policy while waiting periods for covering certain ailments are waived. But these policies are yet to catch up. Also check whether the insurance company will insist on premedical check up at the time of conversion from group policy to individual policy.
It will be difficult to get a policy, when you are nearing your retirement. These rules can change anytime and you may leave without any health insurance after retirement.
Think of a situation at age 60, not having a health insurance of decent value! With huge medical inflation, the retired life can be miserable!
It is better to go for an extra health insurance cover in your personal capacity now when health is on your side.