IBA Group Medical Insurance for Bank Retirees-Important updates dated 12.10.2023

IBA Group Medical Insurance for Bank Retirees-Important updates (by Vijayaraghavan R -Iobian -R dt 12.10.23)

In IBA latest communication dt 11.10.23, on Group Medical Insurance the following changes are given effect.

1. As a onetime measure those retirees who had not subscribed to the current year policy have the option to join back. (the words “Only” mentioned in the eligibility clause in the earlier communication has now been removed)

2. This year Single person premium has been allowed, if the retiree does not require cover for the spouse (Earlier this was not allowed. It has not been mentioned any condition on this clause, as in some Banks communication a bar has been mentioned that spouse cannot be added for another two years)

3. It is now clarified that Top up and Super top up policy are the same, eliminating any confusion between two terms.

4. For those who opt for the Top-Up policy in addition to their Base policy, the room rent per day is capped at Rs 5,000, and the ICU charges are capped at Rs 7,500.

5. Retiree Base policy with domiciliary, the limit for domiciliary expenses/domiciliary treatment is set at 10% i.e., Rs 20,000/-

6. Retirees’ top up policy with domiciliary does not cover domiciliary treatment and domiciliary expenses.

7. The rates of retirees with domiciliary top up policy have been reworked. (there has been no other change in premium rates for base policy and Top up policy without domiciliary). This is insignificant, as most would not opt for Top up with domiciliary. There seems to be great anomaly on this. In earlier communication premium for Rs 1 lakh, top up with domiciliary ( for family with GST)) was quoted at Rs 52,876/- and now reduced to Rs 35,307/-. For Rs10 lakh top up, earlier premium quoted was (family with GST) Rs 3,65,505/- and now reduced to Rs 1,32,556/-

Anomalies in IBA GMI Policy (23-24) and Clarifications Needed:

1. IBA earlier communication (dt 18.09.23) has stated that once the Top up variant is opted the entire policy Base policy + Top up policy will not have the caps mentioned. It is silent about the removal of limits and ceiling mentioned in the base policy. It has to be clarified that the limits and ceilings will not be applicable on both base and top up policy. (Ceiling mentioned for various treatments in IBA communication dt 30.08.23).

2. It is mentioned as Top up policy and Super Top Up policy are same. It has to be clarified as to why the term Super Top up has not been used instead of Top up even in the revised communication. These terms have distinct definitions in health insurance, the word Super Top up could have been used when it is clarified both are same.

3. It has to be clarified, how the rates are reworked and reduced drastically for Top up premium rates with domiciliary from Rs 52,876/- to Rs 35,307/-( for Rs 1 lakh Top up). And from Rs 3,65,505/- to Rs 1,32,556/-( for Rs10 lakh).. When the quote involves a Group Health Insurance Scheme covering lakh of retirees, it needs to be explained the reasons for such wide variation on recalculation and the methodology adopted and rationale for arriving at the rates.

4. It has to be clarified whether premium rates for Base policy and Top up policy are reworked and found to be correct, due to the fact that there is a downward revision in the premium for Top up with domiciliary, on recalculation.

5. The Top up policy with domiciliary does not cover domiciliary expenses and domiciliary treatment. Then, why the Top up policy is offered with the wording Top up with domiciliary? What are the additional benefits of this policy, in commensurate with additional premium quoted for these policies? The additional benefits that a Top up policy with domiciliary will fetch over Top up without domiciliary has to be listed out and clearly spelt.

6. The benefit for domiciliary expenses can be claimed up to a maximum of Rs 20,000/-.

For example, if a person opts for a base policy of Rs 2 lakh and Rs 1 lakh Top up (both without domiciliary) the premium rates will be Rs 26,454+Rs 27,159=Rs 53,613/-.

Whereas if a person opts for Base policy with domiciliary and top up with domiciliary the total premium is Rs 84,312/-The difference premium works out to Rs 30,699/-. For the apparent benefit of domiciliary treatment of maximum up to Rs 20,000/-for the remaining cover of Rs 2,80,000/- a person has to pay extra Rs 30,699. The rationale behind offering this policy with additional premium for a lesser effective cover, the added benefits available for these policies needs an explanation justifying the extra premium.

Either IBA has to explain the add on benefits available on the policies with domiciliary or if there is no additional benefit on Top up policies with Domiciliary, retires can demand withdrawal of the policy in order to prevent unsuspecting retirees opting for it where the premium out go will be more than the domiciliary expenses cap of Rs20,000/-

My Views:

One of the primary advantages of the GMI Scheme is its coverage of preexisting diseases, lack of copay clauses, and coverage without age limits.

Also, the claim experience in the past for most of the retirees is by and large satisfactory.

However, there are pain points to consider,

such as the annual premium increases that make it less affordable over time.

Additionally, this year, they have introduced clauses like caps and ceilings for the base policy and exorbitant premiums for Top Up cover, possibly the highest among all insurance companies.

There are several significant drawbacks to the policy for 23-24, including issues with pricing, coverage and premium.

For many retirees, premium quoted may no longer be within their means.

Hence under the circumstances retirees may consider the following options:

1. Opt-out: If you have access to sufficient group insurance coverage from your spouse's or child's employer, you may consider opting out of the IBA scheme.

2. Retain IBA Base Policy: Retirees, especially those above 75 years without alternative health cover options, should consider keeping their IBA-GMI Base policy for continuous coverage and potential subsidies from their respective banks. Avoid taking Policy with domiciliary.

3. Base Policy with Top-Up: If there are limited options for retirees to join other health insurance schemes or those who want to continue with IBA Scheme, can consider taking only the base policy for Rs 2 lakhs plus Top up cover of Rs 1 lakh, subject to affordability, to avoid caps in the base policy.

4. Explore other insurers for Super Top up cover:

Explore group insurance schemes offered by General Insurance Companies (GICs) and reputed insurers, which may provide attractive features, including coverage of Ped from day 1 and competitive premiums.

Super Top Up cover can be considered, with a threshold or deductible limit of Rs 3 lakh where the basic cover of Rs 3 lakhs available or no base cover is available.

5. Explore Group Insurance Cover for Base policy for Retirees group through association of retired employees: Another alternative available that can be considered is the group insurance Schemes for retirees offered by GICs and reputed insurers. Such schemes look attractive with coverage of PED from day one and with similar or better features of IBA-GMP with competitive premium. It will be better to opt for such schemes after studying the past performance, reviews and claim settlement experience. The risk factors are - there is no assurance for continuity of the Scheme and possibility of hike in future premiums during renewals. These schemes meant for retirees as a group and thus has to be enrolled through association of retirees.

6. Evaluate Alternatives Carefully: Those retirees who want to switch to another insurance provider, should carefully evaluate alternative options, weighing the pros and cons. Also, the down side risks are to be evaluated such as loss of continuity with the IBA scheme and the potential entry barriers for rejoining the IBA GMI scheme in the future.

7. Points to be considered before switch over: 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, cashless claim availability and availability of prominent hospitals in network, room rent ceilings, Proportionate clause deduction, 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 a specified waiting period called 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.

8. Dedicated fund: 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 the retiree with a financial burden without health insurance cover.

9. Conclusion:

In conclusion, the IBA GMI scheme remains advantageous due to its coverage of preexisting diseases, lack of age limits and availability of life long cover and a decent claim history However the recent changes in pricing and coverage, year on year exorbitant hike in premiums took away the benefits and the scheme is no longer affordable and attractive. Hence those who do not afford to continue the scheme can explore the options given above and take informed decision based on individual needs and comfort.

10. My prayers for the good health and well-being of retirees and their families.

Vijayaraghavan R

Disclosure and Disclaimer: Please note that the views expressed here are for informational purposes and should not be considered as recommendations.