RETIRED BANKERS AND HEALTH INSURANCE

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  . 

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            HEALTH INSURANCE PLANS  FOR SENIOR CITIZENS 
 
                                                                              WITH OR WITHOUT ENTRY AGE RESTRICTION   


TO  READ THE ARTICLE                                                         CLICK HERE 
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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 . ​

ANOTHER BLOG ARTICLE   FOR RETIREES    :

ALTERNATE INVESTMENT PLAN FOR RETIREES  

CLICK HERE TO READ

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 . 
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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 BLOG  ARTICLE ON                                 

 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 

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