Companies may be forced to curtail benefits extended to employees because of rising premium payments on corporate health insurance plans. Staff may also face restrictions on the choice of hospitals and on room rent besides having to share part of the claim burden under new co-pay clauses.
About 60% of companies in a recent survey by ICICI Lombard expected insurance premium payments to rise 5-8% annually in the next five years. Last year, premiums for health insurance increased by about 9%, without any expansion in health care benefits, the survey said. Other insurers have"Premiums for employers' health insurance policies have gone up by around 15% this year," said Renuka Kanvinde, assistant vice-president, health insurance, Bajaj Allianz. In the ICICI Lombard survey, 49% of respondents said the increase in treatment costs was their main concern. While 31% of employers said the increase was due to factors such as lifestyle changes, 20% attributed it to the complexity of diseases and treatments. Nearly 48% of employers said that costs would need to rise for any widening of benefits.
This explains why employers have been curtailing benefits and introducing restrictions in corporate health insurance over the past few years to contain claims.
"Nearly 60-70% of our corporate clients have introduced restrictions for their employees," said Kanvinde. Coverage for dependant parents, in particular, has taken a hit. "An increasing number of corporates are asking employees to pay the premiums for parental coverage," said Segar Sampathkumar, general manager, New India Assurance.
However, cutting benefits is not the only way to reduce costs, according to Sanjay Datta, chief, underwriting and claims, at ICICI Lombard. Some companies expect their employees to voluntarily take cost-containment measures.
For example, employees could be asked to visit a primary health centre - where the charges are lower - instead of visiting a hospital for minor injuries or ailments. Another way to lower costs could be to intimate the insurance company well in advance for planned surgeries.
"Early intimation gives the insurance company time to recommend hospitals and also negotiate with them," said Datta.
As premium costs rise, companies are mulling the possibility of curtailing the benefits extended to their employees under corporate health insurance plans. Some of the options under consideration are reducing the choice of hospitals, room rent and making employees share a part of their health cam costs under co-payment clauses. A recent survey done by ICICI Lombard showed that 60% of companies expect their insurance premium payments to rise by 5-8% annually over the next five years. Last year, premiums rose by 9% without any additional healthcare benefits being offered to employees. Almost 49% of corporate respondents in the ICICI Lombard survey said that rising costs of treatment were the main concern.