Employee health cost pinches India Inc

With rising premiums in the group health insurance policies an increasing number of Indian corporates have started asking their employees to share the burden of their parents’ premiums.

According to Mr Rahul Agarwal, managing director and CEO of Optima Insurance Brokerage: "We are witnessing a growing trend of reduction in employers’ contribution in group health insurance policies. About 35 per cent of employers either do not include the employee’s parents in health insurance policies or they ask the employees to share the burden of premium."

As group health insurance policies premium are expected to move upwards this trend is also expected to continue in the near future, he added.

Indian companies providing health care cover to their employees are grappling with an average 10 to 15 per cent rise in premiums over the last three years. According to Mr Kulin Patel, head of benefits practice, Watson Wyatt India: "One of the major reasons for the rise in premium was the advent of sophisticated medical technologies. However, employees seeking excessive care and malpractices like over-recommendation of services were also cited as major reasons."

Interestingly, only about 17 per cent of the companies cover post retirement medical expenditure, he added.

Mentioning that Indian corporates use the health care cover as a major retention tool Mr Patel said: "In spite of rising premium costs about 54 per cent of Indian companies did not deduct any premium costs out of employee salaries and about 46 per cent corporates are not planning to ask their employees to share the costs even in the coming year."

However, post retirement medical benefit is mainly provided by companies in the public sector, while a very small proportion of private sector companies provide such long-term benefits, he added.

He further said: "Moving forward we could expect a joint sharing of health care expenditure between employers and employees, an initiative which is known to have brought substantial improvement in the coverage and quality in many countries, notably China."

According to the survey, most Indian companies providing health care cover to their employees are grappling with an average 10 per cent rise in premiums over the last three years.

Meanwhile, recently the insurance regulator IRDA allowed insurance companies to offer ‘Health plus Life Combi Product, a policy that would provide life cover along with health insurance to subscribers. Under the guidelines, the life and non-life insurance firms can come together to offer health-plus-life cover.