Group Medical Insurance Policy for Bank Retirees- 2023-24

Group Medical Insurance Policy for Bank Retirees- 2023-24

-A write up by Vijayaraghavan

IBA communication on GMI policy for Bank retirees for the year 2023-24, is a rude shock for Bank retirees. Though every year, there used to be steep increase in the premium rates, this year in the guise of offering a base policy as a welfare measure, the premium rates for the same cover taken by a retiree last year is exorbitantly increased. Bank retirees’ policy this year can no longer be called as a welfare scheme, as it offers no concession or benefit for a bank retiree.

Critique of this Year's Policy:

1. The base policy, priced at Rs 2 lakh and covering retirees and their spouses, comes with a premium of Rs 26,454 (Rs 22,419 + GST). Unfortunately, it undermines one of its major benefits – the no co-pay clause. This indirectly forces retirees to bear approximately 50% of the cost for each claim below Rs 2 lakhs, due to the introduction of caps and limits for different ailments and room rent charges.

2. The retiree policy offering domiciliary care appears to be a questionable proposition. It's essentially a cruel joke, where unsuspecting retirees are taken for a ride. For an additional premium of Rs 22,551, retirees gain the benefit of reimbursement for monthly medical expenses, capped at a maximum of Rs 20,000. This means they pay more for a benefit that effectively reduces their cover to Rs 1,80,000. Consequently, retirees are paying an effective premium of Rs 29,005 for a cover of Rs 1,80,000, while a Rs 2 lakh cover costs Rs 26,454. The disparity in premium calculation is glaring and irrational. It is a classic example to show as how premium calculations are being done and offered.

3. The communication is unclear regarding the applicability of the Proportionate clause. If applied, this could significantly reduce reimbursements, causing retirees to incur higher expenses for hospitalization claims, as many costs are proportionate to room rent ceilings.

4. Premium rates for a cover of Rs 9 lakhs, including GST, have surged to Rs 1,07,138 (Rs 26,454 + Rs 80,684) this year, compared to around Rs 72,988 (Rs 57,808 + Rs 15,180) last year, marking a staggering increase of approximately 47%. Such an unrealistic year-on-year increase is unprecedented in any health insurance scheme offered by any company.

5. The policy only offers a Top-Up Cover option, distinct from a Super Top-Up Cover. In a Super Top-Up Cover, the aggregate of all previous claims is considered, whereas the Top-Up Cover only triggers when a single hospitalization claim exceeds Rs 2 lakhs.

6. Typically, Top-Up Cover rates are lower than those of Super Top-Up Covers due to certain disadvantages. Super Top-Up Cover rates are usually lower than base policy premium rates as they activate only after the base policy is exhausted. It's unusual to observe that, in this year's GMI policy, Top-Up premium rates are higher than base cover rates.

7. To ensure competitive premium rates, it's essential to consider bank employees and retirees as a homogeneous group. The present scheme of offering separate policies for employees and retirees may lead retirees to believe that they are cross-subsidizing the premiums of employees, which the bank bears. This perceived inequity could lead to dissatisfaction among retirees.

In summary, there are several significant drawbacks to this year's policy, including issues with pricing, coverage, and communication, which need to be addressed to provide a more equitable and satisfactory insurance offering for retirees.

Comparison with Other Retirees’ Group Insurance policies for this year:

1. SBI Health assist Scheme for SBI retired employees-23-24- For effective cover of Rs 9 lakh, premium is Rs 19,490/-

2.GIC retiree Group Mediclaim Policy -23-24-: For a cover of Rs10 lakh, for Self and Spouse, premium is Rs 9,533/-

3. Group Medical Insurance policies for Bank retirees-23-24- For a cover of Rs 9 lakh the premium is Rs 1,07,138/.

4. Salient features of Comparable Group Insurance Scheme for Retirees:

SBI Health Assist Scheme for Retirees:

Features:(2023-24)

1. Base policy-Rs. 3.00 lakh premium of Rs.19,490. (Effective cover Rs9 lakh)

2. Base Policy-Rs. 5.00 lakh premium of Rs. 43,325. (Effective cover Rs11 lakh)

3. Super Top up plan for Rs 6 lakh will be available free in addition to base cover. Cost of premium for Super Top Up Cover will be borne by the bank.

4. Subsidy on base premium-50% for family pensioners and retires with 70 years of age and above.

5. Three-year arrangements- quote is obtained for a period of three years with a provision of 5% increase in annual premium for renewal.

GIC Retiree Group Mediclaim Policy:

For 23-24-Loading factor on base premium rates for 2019-20 is only 12.75% , after 3 years.

Premium rates for a 70 year old retiree (Depends upon the age band and basic pay at the time of retirement) for a sum of Rs 10 lakh for Self and spouse will be around 25% of Rs 32,315/-( Subsidy by the Company 75%)=Rs8079+18% GST =Rs 9,533/-

Rs 6 lakh- Premium Rs 6,895+GST=Rs8,136/-

If additional Sum is opted for Rs 20 lakh, premium-Rs21223+GST=Rs 25,043/-Cataract Surgery Limit-Rs 1 lakh (Maximum or actual whichever is less for one eye)

My Views:

1. Previously, I held the belief that the GMI policy was the best option for bank retirees when there were no alternative health insurance choices available from the family members' employers or former employers. The IBA policy boasted excellent features such as coverage for preexisting diseases, no co-pay, and a floater cover. However, this year, the GMI policy has lost its appeal due to an unreasonably steep increase in premiums. For many retirees, it may no longer be within their means.

2. Retirees now find themselves in a difficult situation, facing escalating hospitalization costs while still needing a substantial health insurance cover.

3. If there is a sufficient group insurance cover available from a spouse's or a child's employer, it's worth considering opting out of our scheme.

4. Before deciding to switch to another insurance provider, carefully evaluate alternative options, weighing the pros and cons.

5. Before making the switch, take into account factors such as the preexisting disease exclusion period, specified diseases list and exclusion period, floater or individual cover, co-pay, exclusions, sub-limits, and the lifelong availability of cover upon renewal. In practice, for hospitalization claims, one can only make a claim after the 12- or 24-month preexisting disease exclusion period. Moreover, there's no guarantee that premium rates will remain the same upon yearly renewal, as insurance companies often increase them, particularly for different age groups. There's also no assurance that the claim reimbursement experience will be satisfactory.

6. An alternative option is to create a dedicated fund exclusively for hospitalization expenses from the yearly health insurance premium savings. However, building a corpus of Rs 4 lakh from these savings typically takes six to seven years. In the event of hospitalization during that period, this savings might be depleted, leaving you with a financial burden without health insurance cover.

7. This year's GMI base policy lacks attractive features due to the introduction of ceilings and sub-limits. With a Top-Up cover to reach a total coverage of Rs 9 lakhs, there's a staggering 47% increase in premiums compared to the previous rates, which is beyond the reach of most retirees.

8. Since the premium rates are prohibitively expensive for adequate health coverage, it's likely that most retirees will opt out of the GMI scheme. Without significant modifications to the premium rates and coverage terms or substantial subsidies from the bank, the scheme may struggle to remain appealing or beneficial.

9. If there are limited options for retirees to join other health insurance schemes, they can consider taking only the base policy for Rs 2 lakhs and then obtaining a Super Top-Up Cover with other insurance providers with a deductible limit of Rs 2 lakhs or more. Super Top-Up Cover can be acquired even without a base policy and offers a higher coverage amount at a lower premium. This is because the high deductible amount results in fewer claims, reducing the insurer's liability.

10. In closing, I offer my prayers for the good health and well-being of retirees and their families.

Vijayaraghavan R

Disclosure and Disclaimer: The write is only for information purpose. Perceptions may differ and hence Individuals are requested to read the terms and conditions of the Policy/Scheme and take a broader view and decide as what is suited and best for them based on their perception and comfort level. Views expressed should not be construed as any recommendation. Author neither holds any financial interest/exposure on the IBA Retiree group health insurance Scheme nor a member of the Scheme.