Is compulsory Co Payment of 20% in Group Health Insurance Policy a solution?

We understand that for controlling the losses of Health Insurance portfolio a circular has been issued by Ministry Of Finance to 4 PSU’s namely

• New
• National
• Oriental
• United

This circular has many guidelines out of which few guidelines are such, which are to be strictly followed:-

(i)     Co-payment (20%) shall be made compulsory in every Group Health Policy.

Let us see the implication

Employer- Should it pay this Co payment as and when any member of Group Health Insurance Policy undergoes hospitalization and lodges claims to the insurance company.

Employee- Should it be borne by him/her.

Employer is ready to pay higher premium (but without Co Payment clause) in the beginning so that it does not have uncertainly with respect to

• Payment under Co Payment clause.
• Funds planning.
• Avoid unnecessary paper work in accounts/ administration department of the company in dealing with copies of bills etc. In case employer pays this- taxation aspect also is to be taken care of as payment beyond Rs 15000 may have implication of TDS.

Is it that with this move an effort is being made to?

-          decelerate the growth of health insurance portfolio

-          Move business to Private sector companies?

What will be the repercussions of this?

Only Time will tell- let us wait.

Our suggestion is that insurance companies should be asked /instructed to give 2 quotations:-

Option 1- Premium with Co-payment 0% (as at present). We know it will be higher.

Option 2- Premium with Co-payment 20%. Let customers choose this option if budget is the constraint at their end.

Let the Market and the customer decide whether they need Option 1 or Option 2?