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Originally posted on 10.08.2018 SYNOPSIS : The article is about a recent development  in which  insurance company   which was hitherto insuring health of retiree bankers , through a group insurance policy , is said to have proposed increase in the cost up to 150 % .  Elderly bankers  with meager pensions  are unable to meet the cost  and are perplexed not knowing what to do .  In this circumstance , the article looks in to possible solutions to the problem . HEALTH INSURANCE OPTIONS FOR RETIRED BANKERS
 PREAMBLE : Life expectancy is going up due to availability of better medical care  and number of citizens as percentage of population and in absolute numbers is increasing rapidly . Hence naturally , more and more retirees are adding up  to the society . Bankers are no exception . Â
  Result of the longevity of the citizens is society has now to bear more and more cost of maintenance of senior citizens  including their medical welfare  . Recently I read that the total pension bill of the government has exceeded its salary cost for entire present work force .  There are certain sectors like banks   who also offer pensions to their retirees . Others have to depend up on their  savings and on the younger family members who are earning now  .  Most of the time pensions paid remain static as a percentage of their last earned salaries and with increase in cost of livelihood due to inflation , retirees have to struggle to meet the two ends .  Those people who live longer after retirement have to live  with lesser amount of pension .  Struggles are going on for updation of pension so that  those retired long back can also get a decent pension to live on . ​  Life expectancy is going up and up due to better health care available now  and the medical support is helping the senior citizens to live longer  . Flip side is cost of medical support is alarmingly increasing over the years . As one is unable to bear the medical cost on his own  for needed medical help due to desease , old age or accident  , health insurance is playing an important role  in making affordable the medical cost . Main principal of the insurance  that premia paid by a group of insured will take care of medical cost of a member who needs support .  Of course , insurance company is expected to keep a margin for the services rendered . ​
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       HEALTH INSURANCE PLANS FOR SENIOR CITIZENS                                          WITH OR WITHOUT ENTRY AGE RESTRICTION  TO READ THE ARTICLE                              CLICK HERE ​
CASE OF  BANKERS :   In a settlement  effective from November 2012 between banks and their employees , IBA agreed to make arrangement  for health insurance of employees including officers and also retirees  . Insurance was arranged through a public sector insurer . Cost of the insurance for serving employees / officers were borne by the respective banks  and retirees were asked to pay on their own . Some members banks subsidized cost to an extent initially  . The insurance company found that  they were incurring loss due to this group policy with claims far exceeding the premium collected . Second year  premia was enhanced  by the insurance company  with a hope that the new pricing would make the scheme profitable . Unfortunately  insurance company has advised  huge loss for them in the next year also. Now a  new scheme has been proposed by the insurance company  , advising around 110 %  increase of premium for the policy  that does not cover domiciliary treatment and 140 % increase for a policy with   cover  for domiciliary treatment  .  The schedule of new premium proposed causing heartburn for the  retirees as burden of the insurance  is becoming unbearable . For some , cost may take away their entire income by way of pension and they may have to opt out of the scheme . Thus many senior retirees may be deprived of the insurance  at a time when they need most .Â
We are finding lot of messages from retirees expressing their anguish  with the developments  and they are blaming the insurance company involved , bank management , employee / officers unions and retirees association for the plight they are put in to it  .    ​
Many retirees are unable to meet the medical cost themselves due to poor pension they are getting and prospect of losing the health insurance available to them presently is putting them jeopardy . The primary reason for the present plight of the retirees is that  the cost of medical support has gone up beyond the affordability of the retirees . Though we can bargain with insurance companies for reduction of premium , insurance companies , being commercial companies , may not agree if the proposition is loss- making one .  Retirees  have now to look for alternative avenues to manage the position now . Â
We understand that staff unions / associations have requested the insurance company to extend the available insurance till December 2018 by collecting pro- rata premium for the extended period . Any how retirees have to find suitable solution to the problem in the mean time . Let us explore what are the options available to bank retirees now ​
VARIOUSÂ WAY OUTSÂ FOR BANK RETIREESÂ Â
1.  To find an alternative insurance company who will agree for taking over the health cover on existing terms 2. To accept the increased payment of premium of the present insurer to continue to enjoy the benefits of insurance . 3. Agree to make lesser claims  on the policy and request the insurance company to go back to  old premium structure with lesser insurance benefits .  4. Request  bank managements  to subsidize the cost of premium either on their own or from pension funds  so that cost of insurance becomes  affordable . 5 . Terminate the insurance and go for individual covers separately . Let us examine the repercussions of  the individual options . ​
REPERCUSSIONS OF OF INDIVIDUAL OPTIONSÂ Â
​ 1. To find an alternative insurance company who will agree for taking over the health cover on existing terms :  The reason for  present insurance company  demanding higher premium is that  total claim settled by them  far exceeds the total premium  collected  . If the reason is correct and valid , no other insurance company may come forward to accept a loss-making proposition . Any how   a fresh try can be given for the effort . ​2. To accept the increased payment of premium of the present insurer to continue to enjoy the benefits of insurance  : In case we do not get an alternate insurer , we  can bargain with the present insurer for better terms than proposed . But ultimately we will have to fall back on the present insurer and accept their term and conditions  .  If the premium demanded continues to be high ,  the new schedule of premium is not affordable for many retirees , especially for those retired say before 15 years . Hence they may opt out of the scheme . It appears that  additional premium demanded by the insurance company for domiciliary treatment is Rs 41, 793 & Rs 55,721 for  for maximum domiciliary reimbursement of Rs 30,000 & Rs 40,000 respectively  . If the  information / demand is correct , the demand  is ridiculous as noe one will pay higher amount to get a lower cover . It is as good as abandoning the domiciliary scheme .  Many retirees who already have other health insurance policies may also go out of the scheme , being unable to bear additional burden . ​  The only retirees who will definitely stay back are those who are making large claims under the scheme . Net result will be the reduction  of number insured under the scheme and the reduction of premium collected overall .  Hence it will not be surprising if the insurance company continues to make loss in spite of  huge increase in premium .  Finally   insurance company may opt out of the scheme . A Lose-lose situation .  3. Agree to make lesser claims  on the policy and request the insurance company to go back to  old premium structure with lesser insurance benefits .   If  really the claims being made are more than the total premium collected  , no insurance company will be offering the insurance incurring a loss . Hence to have an insurance , retirees necessarily have to reduce the claims they are making . In other words ,  benefits available in the policy are to be curtailed . Such  curtailment of benefits may include A. Reduction of insured amount B. Ceiling on bed charges  per day C. Ceiling on  treatment charges/ consultation Fee etc .  D Restricting the types of hospitals eligible under the scheme .  Such a curtailment of benefits may inconvenience some retirees who need higher limits . Further certain types of   treatments  for cancer / heart ailment etc  will involve  very high charges  and any reduction in insurance amount  may adversely affect the retirees . Hence a via media may be explored  with higher insurance amount for certain types of ailments . Further retirees may be given an option  original benefits  with payment of additional premium .  Negotiations will be needed  with major hospitals  in major cities to have a special lower fees  structure for the retirees  so that  overall claim will be reduced .  For example some hospitals offer 10 % discount to senior citizens if one goes directly  . Hospitals may not extend such discounts if one has  a insurance policy . Hence new ways may be explored to reduce the total claim , resulting in lower premium and benefiting all . 4. Request  bank managements  to subsidize the cost of premium either on their own or from pension funds  so that cost of insurance becomes  affordable  : In the present situation where the banks are announcing huge losses quarter after quarter  , we may not expect  any major help from them .  However banks can not escape from their responsibilities   towards their retired employees who have sacrificed their entire adult life in the service of the organization . We may persuade  to contribute at least 3 % to 5 % of the pension payment towards health cover  so that burden will be reduced on the retirees . If presently banks are not able  to pay  directly , they may persuaded to contribute from pension funds accumulated . 5 . Terminate the insurance and go for individual covers separately : If none of the above solution works  , the last way out is  to withdraw the scheme and persuade  the banks to return to the old schemes  wherein they were providing limited cover  for the retirees for a nominal fees .  Insurance cover will be drastically reduced . We understand that one of the member banks is planning with such a move   .  Though I have listed some of the way outs possible , the ultimate solution may lie in judicious mix of all  the options to make scheme viable  and create a win -win  solution for all the stakeholders .  We may have a solution with some increase in premium , some reduction in benefits with banks chipping in some help towards their retired employees with insurance company managing the scheme efficiently with a reasonable remuneration for their services .  Other retirees may also come out with innovative solutions  to find a solution . ​
ANOTHER BLOG ARTICLEÂ Â FOR RETIREESÂ Â :
ALTERNATE INVESTMENT PLAN FOR RETIREES Â CLICK HERE TO READ
WHAT IS THE WAY FORWARDÂ ?Â
 It is my personal thought about a  possible solution  we can find in which we can create a satisfactory  answer to the problems of all concerned .   The problems in the present situation are 1. Loss for the insurance company under the present scheme . 2. Domiciliary cover proposed is of no economic benefit to the insured . 3. Premium proposed unbearable for many retirees , eating away few months of their pension .  In solving the problem , I propose following steps  . 1. Collect correct data of claims received & reimbursed vis a vis premium collected .  2.   Use  Data Analytics  to find out the nature of claims  and analysis  of the distribution of claims  . 3. Find ways to  reduce the claims  and impact of each limit on the reimbursement of claim .   For example limiting bed charges to a particular level may reduce 5 % of the total reimbursement .  Limiting reimbursement from 100 % to 95 % may reduce a 5 % claim .  4. With testing various limits  . find out the total reduction in claim  and check  whether the total claims come within the premium collected   .  If not , retry with different levels of limits proposed .  In finding out the limits , we may take the schedule of existing limits allowed by various insurance companies as reference and work out possible limits . Help from a professional Data Analytics company may be taken in this endaevour .  5 . In case  if claims are still not more than the premium ,  find the quantum of enhancement of premium needed .  6. To the cost of claims , we have to necessarily a management charges incurred by the insurance companies .     7. The support , if any , received from the management / pension fund will reduce   to that extent premium to be collected  from the insured 8 .  Check with various health insurance covers available from different insurance companies to find out the premium so arrived is better than that being offered for the public .  9 .In case any other insurance is available cheaper than  our worked out policy , we may directly negotiate  with such insurers for   better terms .  10. If any of the retirees are ready to bear additional cost , policies without any limitations  may be tailored for them .  Any how such policies are to be cheaper than the policies available in the market .  The problem can be only solved if the insurance company . bankers , unions / associations of employees / officers  and representatives of retirees jointly sit together  to find an amicable win-win settlement  with  mutual trust with a goal of achieving long  haul  deal  where retirees  will have a  peaceful sleep of having taken care of future medical needs and insurance company getting a long time business deal . ​
FINAL NOTE  :  Author is just one of the members of the retiree community with interest in the scheme like any other retiree . He is not privy to any to any official  data / communication /  negotiation  on behalf of the retirees . His knowledge is limited to what is available to an ordinary member or  highly unreliable information received through social media . Hence the information /  figures  quoted in the article are not  authentic .  The article may be taken as an attempt by ordinary member towards understanding the problems faced by the community .  Readers  are welcome to come out with suggestions  for improving on the proposals given by the author .  ​
NEXT BLOGÂ ARTICLE ONÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
 HEALTH INSURANCE OPTIONS FOR RETIRED BANKERS  we have added a new blog  article that explores the alternate avenues for  existing  health insurance group policy for Retired Bankers TO READ THE ARTICLE                              CLICK HEREÂ
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Manjunathan BellurRetired DGM , Indian overseas Bank |