Adequate health insurance at an affordable cost for bank retirees is the need of the hour

by Rajeev Pathak

Health insurance 

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Background:

Though everyone needs an adequate health insurance cover, I confine my views in this post with a focus on the needs and circumstances of senior citizens with a specific reference to bank retirees. We propose to discuss first, Why do we need health insurance at all, and how to choose a health insurance provider. We are going to discuss why adequate health insurance at an affordable cost for bank retirees, is the need of the hour.

Come September / October every year and every bank retiree is busy talking about health insurance. How much will be an increase in premium this year? Whether there will be a higher subsidy or interest-free advance from the employer?  Such questions/fears are not unfounded. Being a bank retiree myself, I know that the premium has risen from less than Rs. 16,000 in 2015 to almost Rs. 56,000 now in 2021 for a cover of Rs. 9 (4+5) lakh. For many pensioners/ family pensioners, this is more than two months pension.

Any Alternatives to health insurance:

The natural question comes to mind why should I go for health insurance. Recently, I came across a post by a friend in one of the bankers' groups on social media suggesting that he will keep aside Rs. 12,00,000 for medical expenses and will not go for health insurance. The main reasons cited were high premiums and procedures involved in cashless hospitalization and claim settlements. But such are not the alternatives available for all and all the time.

Funny reasons for rejections of claims:

In another interesting post, I was delighted to learn that one of the health insurance companies has rejected a claim for cataract operation because the officer had undergone angiography/angioplasty for heart 6 years back.

We all know when such insurance companies go for a tie-up with our employer banks for the agency model, they show the picture very rosy. They show their true colors when they get a claim from members. I am not aware whether there are any incentives to insurance employees for rejecting the claims.

Five reasons to buy health insurance?

Let us first discuss why we do need health insurance. In my view, we need health insurance for the following reasons.

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• Health insurance to beat Medical cost inflation:

With the corporatization of health and medical services in our country, the cost has gone up substantially.  According to a study, medical inflation has been recorded at 7.18% during 2018-19. During the last 2 years that include COVID 19 pandemic period, it must have gone up substantially. But no data is available for that.

No doubt, the quality of medical services has also improved. But the fact remains, it is going to be out of reach for the majority of Indians unless it is subsidized by one or another agency. So it is a must for all to have adequate health insurance.

• Health insurance to protect your lifelong savings:

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Secondly, health insurance provides financial security to the family. If one has got an adequate cover, there is no need to touch your lifelong savings and spend them on medical expenses. Let it be there for any more deserving purposes.

• Health insurance is a silver line in the dark:

Thirdly, all may not have similar financial conditions. In my view, about 50% of bank retirees must have spent their terminal benefits to fulfill their family and social responsibilities. So there is no option, but to go for a health cover. For such families, health cover is a boon.

• Health insurance gives mental peace:

Imagine a situation when one of the insured person/ family members needs hospitalization and you have no idea about the likely expenses. In this situation, your entire attention will be on liquidating your term deposit or other liquid securities. You will be thinking about creating maximum liquidity in your savings bank account. This is in contrast to the prevailing situation and required priorities. If you have adequate health cover, your whole attention would be on getting the best of the treatment without any worries about expenses.

• Tax benefits of health insurance:

Though it is not the sole reason to buy health insurance, still it matters. By buying a health cover we can substantially reduce our tax liability. The senior citizens are entitled to a deduction of up to Rs.50,000 premium paid for health insurance u/s 80D. 

You may recall that for tax benefits u/s 80C, I have already written a post in this blog with the title How to identify the best ELSS fund for investment in 2021-22. If you have missed that post, you can still read it by clicking on the title of the same.

How much health insurance is adequate?

Seeing around, I find that the average cost of treatment for heart surgery is in the range of Rs. 6 to 8 lakh. For knee replacement,  it is around Rs.4 to 6 lakh, I am sure with time, the cost will go up further. So, the question is how we are going to meet this ever-increasing cost. There is no other way except to go for buying health insurance.

Our present Health insurance cover:

At present, the IBA-sponsored Group Health Insurance policy offers a maximum of Rs.4 lakh regular cover and Rs. 5 lakh as Super Top-up cover. This appears to be just near to adequate. However, in some cases when the expenses accede to the policy cover, we have to make our own arrangements before discharge from the hospital. I also feel with the increase in cost the insurance limit will go up in the coming years. No doubt, the cost of insurance ie. the premium will also go up. So health insurance will continue to be on our shopping list.

Whether the Health insurance premium is a waste?

Once someone gave me an example. He said health insurance premium is like buying a ticket to travel by train or bus. Once you complete your journey, the ticket has no value. But you can’t say your money has gone to waste. God forbidden, if there has been an unpleasant incident like an accident, the travel ticket would have turned into a document.

Health insurance premium v/s the cost of hospitalization:

One will appreciate that for a common dengue fever the cost of treatment is near to Rs.80,000 to Re. 1 lakh. If an insured member is hospitalized for a common disease like dengue, he has to spend approx. Rs.80,000 to Re 1 lakh. Now consider what is the proposed premium for one year, it is approx. Rs. 56,000 for a cover of Rs. 9 lakh including a Super Top Up premium. So your entire premium of one year is put to use.

Life & soul of Group Health Insurance Policy:

Maybe that you or I may not have any claim for 4- 5 or any number of years, but other colleagues have to be taken care of. You will appreciate that this is the basic crux of a group insurance policy. More than 60% of members may not have any claim, but the remaining 40% have to be taken care of.

Choose your health insurance wisely:

A majority of bank pensioners/ family pensioners are members of IBA-sponsored Group Insurance Policy. But still, there are few other insurers in the market. But the question is whether all are trustworthy.

The experience one of my friends shared in the previous paragraph speaks louder about it.

I give another example. Suppose, an industrial house named XYZ has billions of NPAs to the banking system. The group approaches you as a sanctioning authority (just imagine you are still in regular employment)  for further financial assistance, will you entertain them? Your answer will be a clear ‘No’, I am sure.

But the group has an insurance arm that offers you life or health insurance or wants to sell a mutual fund, is there any reason to trust them. So, we have to be very cautious while choosing an insurance company.

How to choose your health insurance provider:

If you are not a part of IBA-sponsored health insurance for bank retirees and looking to choose yourself, the following aspects need to be looked into. 

• Check out for the parentage:

First of all, we should see the parentage and their past record. Who are the promoters of the company and what is their own track record? What is their reputation in the industry in general and more particularly in the banking industry?

• Network Hospitals:

Before finalizing, please check the list of their network hospitals. More wide a list, it is better for all. Many of us reside in small cities/towns. How many good hospitals are on the list of health insurance providers from our own area, we should ensure.

• Claim settlement process:

It is always advisable to go for cashless hospitalization. If it is not possible for any reason, please learn their claim settlement process. In my own view, the simple claims process and the faster settlement of the claims, give a lot of relief to the insured.

• Pre & post hospitalization expenses:

One has to find out about the provision of reimbursement of pre/ post-hospitalization expenses for consultation, treatment, the cost of medicines, etc. We have to learn about how much period is allowed on both sides.

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• Coverage of pre-existing diseases:

If you looking to switch over from an existing health insurer to a new one, please ensure that the new policy does not exclude pre-existing diseases and you are covered with immediate effect. This is very important. If we ignore it now, we may have regrets when a claim arises.

• Lifetime renewal of health insurance:

One should lookout for a health insurance policy that allows a lifetime renewal facility. As we advance in age, the possibilities of suffering from new diseases are high. Choose your policy with all prudence and stick with it. Because it will be very difficult to buy health insurance at an advanced age.  

• Claim Settlement Ratio:

We must always check the Claim Settlement Ratio of the health insurance company. There are many companies whose Claim Settlement Ratio is 95% and plus. So we have to choose from them only. I am not going to settle down with a company whose Claim Settlement Ratio is below 90% in any case.

Role of employers & retiree unions in health insurance:

Every year, we hear that GST will be demanded to be waived on insurance premium, health premium will be reduced, subsidy or reimbursement will be demanded from the employer or even interest-free advance will be considered by the employer. The fact remains that there is a need to do something concrete in all these matters.

Bank pensioners have found their own ways to pay the hefty premiums on due date by borrowing or by saving through a Recurring Deposit or liquidating a term deposit.

The salt to the injury is added as series of festivals like Navratri/ Durga Puja & Diwali also fall in the same period. Bank retirees are not allowed to cry as they were paid well during their work life and crying is below their dignity.

There is a need for employers and retirees unions/associations to do something concrete on these issues.

Conclusion:

I am of the considered view that all bank retirees should join health insurance cover provided by their employers/IBA. But, it must be the responsibility of the employer / IBA to ensure that adequate health insurance cover is available at an affordable cost for all retirees for whole life. 

Even at the cost of repetition, I reiterate that adequate health insurance at an affordable cost for bank retirees is the need of the hour. Following suggestions may be considered:

• Sharing of the premium by the employer to the maximum possible extent should be considered.

• As regards, interest-free advance for payment of the premium, banking employers should act proactively and extend such facility to their old colleagues as a gesture of goodwill. 

The need of the hour is to adopt a serious and sincere approach with an aim to minimize the hardships of bank retirees and their dependent family members.  

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