Increased life expectancy comes with rising medical expenses. Thus, many young people consider it prudent to buy health insurance cover for their parents. What this does is ensure the best medical care without a major financial burden. So, as an advantage, there is a provision for adding members’ parents in group health insurance plans.
Most employers provide group mediclaim insurance cover as an employee benefit. As a result, employees get the convenience of cashless hospitalization. This group mediclaim insurance coverage is often extended to employees’ family members too. Thus, aged parents do not have to undergo medical tests and can even be covered for pre-existing conditions. This can prove to be a great relief for employees as it alleviates their concerns of the medical expenses that could arise from age-related ailments. Since this is not a benefit that many employers offer, those that do, could attract more loyal and motivated employees.
The cost of coverage for adding members’ parents in group health insurance plan
Providing insurance for parents is an excellent benefit that employers can give employees. This is because waiting periods in group insurance are much lesser than individual insurance. However, on the flip side, some employers are concerned about the costs of group medical insurance plans that provide coverage to aged parents. Sometimes, the high claims of parents can increase the premium for employees as well. So, the risk for companies is that it may not be sustainable for them to offer parents cover each year. The specific issues are:
As people age, they are likely to face problems that require medical care. Thus, providing coverage for the parents of employees might mean a greater frequency of claims. This can eventually result in higher overall costs in the group health plan.
Inadequate cover for others
Medical cost inflation is 12% to 18% per annum and the sum assured under group mediclaim insurance is not very large. What this means is that multiple claims may consume the whole or most of the sum assured. This will leave little for other members of the family.
The premium of a group medical insurance plan depends largely on the average age of the group that the policy covers. So, if the group health insurance covers more elderly people or if the insured make multiple claims during the year, the employer will have to pay a higher renewal premium.
Options for employers to cover parents
Employee welfare should be an important consideration for employers. However, associated costs can make employers think twice about including the elderly parents of their employees in a group mediclaim policy. In fact, insuring parents under the same group health insurance cover might leave employees with inadequate cover. This could be a huge financial risk in case of a medical emergency. In such situations, employers can consider some alternatives.
Structure parents’ insurance thoughtfully
Employers could include a co-pay of 10–25% for parents. This brings costs down. Also, employers can consider buying two distinct insurance plans, one for the employee and their family and the other just for parents. This would mean that high claims in parents’ insurance would not impact core employee insurance adversely. Finally, employers can lower their cost by covering a large number of parents. This allows economies of scale. The best option is to cover over 100 parents, if possible.
Encourage employees to buy individual insurance for parents
If employees’ parents are aged 60 or above, a senior citizen health insurance policy is the best option to meet their medical needs. These policies cater specially to the health needs of the elderly. They provide comprehensive coverage for medical expenses incurred due to sickness, illness, and accidental injury. Another benefit of buying senior citizen policies for parents is that they are renewable life-long unlike group health insurances that are renewable yearly. Also, employees get an additional tax deduction under section 80D for the premium paid for this policy.