Companies shy away from health cover for employees’ parents

According to survey by Marsh Insurance brokers, while 60 per cent of the Corporates were providing employer-sponsored cover for parents of employees in 2009, this number was down to 36 per cent in 2012. On an average, every year around 10% Corporates with mediclaim stop sponsoring parental cover.

Faced with a rising outgo on account of higher health insurance premiums, many companies are either withdrawing health cover for parents or making it voluntary for the employee to pay separately for parental cover in group mediclaim policies.

The main advantage for policyholders under group mediclaim is that pre-existing diseases are covered from day one, unlike individual health insurance policies, which have a waiting period of up to 4 years. However, for insurers, the selective cover for parents has made it a loss-making proposition, with claim ratios exceeding 140 per cent.

Most companies have made parental cover optional for employees.  Since it is optional, only those who feel their parents are really vulnerable tend to insure — making it unviable. Many companies have also launched standalone health insurance cover with a co-payment model for senior citizens with entry age above 65 years. Another problem hurts parents whose health cover has been withdrawn by their children’s employer. In theory, a senior citizen covered under his/her children’s group mediclaim policy should be able to use the portability route to buy a cover if the employer discontinues the policy. But in reality, no insurer has an individual policy which allows a senior citizen with pre-existing ailments to port into.

As claims mount, insurers insist on introducing various clauses, such as minimum threshold level or offering only a one-time option as part of the medical insurance scheme for parents. Some Corporates have introduced a minimum period that the employee has to stay with the company to avail himself/herself of parental health cover.

The greater shock is for employees who are being informed that the present group insurance cover for their parents is being withdrawn. But one needs to face the reality that as insurance get dearer, Companies trying to get their expenses leaner find these costs expendable.

There is a need to have an environment where companies can cover pre-existing ailments so that there can be a policy which will provide benefits through collective bargaining and health management. The group mediclaim cover for parents can work if HR departments work out a separate cover for parents with co-payments by employees and employees are given only a one-time option to be part of the scheme. Instead of withdrawing the group mediclaim cover for parents, the right way to tackle costs would be through wellness programmes and encouraging ‘responsible consumption’ of insurance benefits.