Taking a top-up for higher health cover

Last Updated: Thu, Nov 10, 2011 04:47 hrs

Doing so on group health cover to include parents has its pluses, but not always. For long term, individual covers should be preferred.

Many employers, these days, only partly cover staffers' kin. Co-payment has become a part of employer-provided health insurance plans or group health covers. According to a survey by Vantage Insurance Brokers, 35-40 per cent of employers are asking employees to part-pay for a claim arising from hospitalisation of their family members, especially parent(s).

There is a silver lining. Many of these employers allow employees to take top-up covers for parents on group plans, say experts. The employee bears the cost of it. This is occurring in the services sector.

  • Employers allow employees a top-up on group cover
  • Sum assured depends on employer-insurer deal
  • Premium could be Rs 6,000-8,000 for a Rs 5-lakh cover
  • Top-ups costlier than family floaters, cheaper versus individual plans
  • No waiting period & cover a wide number of health issues
  • Claim first adjusted against group cover and only then against top-up
  • Suggested only if you're hard on funds or your parents are below 60 years
  • Ideally, parents should have individual covers of Rs 5 lakh each

Mahavir Chopra of Medimanage.com says not all employees take covers for their family. "Only those who make claims regularly take cover for parent(s). Hence, a top-up option works out better for employers, as claims lead to higher premiums on renewal," he says.

Till two years before, public sector insurers gave good discounts on group covers. But, huge claims led to feature-based pricing and zero discounts. Around 60 per cent of the claims made in group health policies are from employees' parents, according to insurers.

Worst countries for business

Experts say employees of big companies would be paying Rs 6,000-7,000 annually for a Rs 5-lakh top-up cover for parents. This could be higher by Rs 2,000-3,000 for smaller companies. However, you cannot choose a sum assured. It will depend on the deal between the employer and insurer. Some provide a top-up of Rs 5 lakh and others may give Rs 2 lakh.

Though it is advisable to have individual cover(s) for the elderly, a top-up cover could be an interim solution, says Arvind Ladhha, CEO of Vantage Insurance Brokers. This is mostly suggested when you are hard on funds or when parents are not above 60 years. For those above 60 years, a Rs 5-lakh cover each is a must.

The biggest advantage of a top-up on group cover is that the insurer does not apply any waiting period ,as group health policies don't have this condition. All health issues are covered with immediate effect, including pre-existing ones. Typically, individual policies have an initial waiting period of 30 to 90 days and pre-existing conditions are covered after two to four years, depending on insurers.

The coverage or features are restrictive in individual plans. A top-up on group cover gives a higher coverage, as group policies cover wider health issues, including maternity and related expenses, pre- and post-hospitalisation and ancillary costs like those on ambulance services.

Global Financial Crisis: Here's what the world must do

"A claim made will first be adjusted against the group cover and only then against the top-up, if required. So, the sum assured is saved in case another claim arises," explains Ladhha. Family floater plans also work like this. But, a second member's hospitalisation will land you in a soup if one member exhausts the sum assured.

However, top-ups are costlier compared to family floaters. Bajaj Allianz General Insurance's family floater plan (priced on the basis of the age of the eldest member) will cost Rs 6,156 a year for Rs 5 lakh (age = 26-41 years). Expensive, when compared to Rs 6,000 for parent(s) over 50. Yet, it is cheaper than buying an individual policy. Bajaj Allianz's individual cover costs Rs 15,236 a year for Rs 5 lakh (age = 46-55 years) and Rs 17,879 (age = 56-60 years).

"Group policies are largely cashless. Whereas, an individual plan may or may not be one," says Ladhha. Cashless service is available within the preferred provider network (PPN) of hospitals only, in case of individual covers. Not so for group covers.

This can't be a long-term option. Besides, the point that hospitalisation is costly and elderly need a higher coverage, huge losses on the group health portfolio will see insurers making it more restrictive from here, warns Chopra.

More from Sify: