Allowing inclusion of parents of employees under the group health insurance policy has its own advantages and disadvantages. While including them or not should entirely be your decision, understanding the implications will help make an informed decision.
Advantages of Inclusion
Disadvantages of Inclusion
|Great relief to the employees||Increased claim rate|
|Very few employers offer this benefit||Premiums per employee is higher as average age goes up|
|More loyal and motivated employees||Parents more than a certain age (usually 80+) may not be covered|
Keeping these trade-offs in mind, a decision can be made. It can also be noted that firms employing younger employees may be able to do it more inexpensively, due to parents not being senior citizens.
Still, it can be argued that cost-conscious organisations may prefer to promote senior citizen health insurance to their employees rather than including the parents in the group health insurance policy. It is also more beneficial for the employee and his/her parents, as individual or family floater policy can be renewed for the lifetime.
Case on Inclusion of Parents in Group Health Policy
The average age of the workforce is 34 years at Associated Infrastructures Ltd. The firm had initially bought group health policy with the option to include parents of the employees. However, the insurer has faced an increasing amount of claims in the recent years, and has been continuously increasing the premium for the firm.
The company has tried going for another insurer, but the premiums are coming out to be almost the same for Associated Infra with not more than 10% deviation on either side.
One of the reasons, as explained by Rajat Hawaldar, the firm’s insurance advisor, is that the claim ratio has been very high on the group health insurance which includes senior citizen parents of the employees. Additionally, the average age of employees has also moved up from their ages during the policy’s initial years.
Finally, Mr. Vishal Sardana M.D. and Chairman of the company agreed to give up on the coverage for parents and instead approved an awareness program to promote senior citizen health insurance among the employees.
Rajat explained that this will not only reduce the premium cost but also benefit the employee as they can avail additional tax deduction on the premium paid for the individual or family policy but also, will be able to renew the policy through the lifetime of their parents, thus never losing the cover.
Benefits to the Firm
The financial situation of an employee is an important parameter for any firm, and organizations should ensure that the livelihoods of their workers improve while they work for the firm. The inclusion of senior citizen parents can adversely affect the financial condition of your employees.
Insurers have experienced 50% more claims from employers who offer inclusion of senior citizen parents in the group health insurance policy, which means the following:
- The premiums will be a lot higher than the normal policies.
- Employee does not get any tax rebate on the premiums even if he/she shares a part of it with the employer.
- Employer’s cost of employees will be higher.
- Due to increased claim ratio, the sum insured may get exhausted continuously, leaving the employee without a health cover.
Employees can enjoy both health security for his/her parents and tax benefits through senior citizen policy.