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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 .
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 .
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 .
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 .
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
VARIOUS WAY OUTS FOR BANK RETIREES
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 OPTIONS
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 .
WHAT IS THE WAY FORWARD ?
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 .
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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 HERE
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Manjunathan BellurRetired DGM , Indian overseas Bank |
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