The Covid-19 pandemic has ruthlessly exposed the limits of our healthcare system. The insurance sector is no exception — hospitalisation rates have grown exponentially, resulting in a similar rise in health insurance claims. The sudden inflation in hospitalisation expenses due to demand for hospital beds far exceeding supply, also resulted in existing insurance coverages proving insufficient to cover costs. And to top it all, insurance companies are responding to a higher cost of claims by raising premiums. All of this has forced companies to take a hard look at their Group Health Insurance policies.

A good rule of thumb to follow is that the only restriction in your policy should be the “sum insured” amount per employee (for policies that cover only employees) or per family (for policies that cover employees and their families). This is the maximum amount your employees can claim throughout the year. The higher the sum-insured amount, higher the premium. Pick an amount you are comfortable paying.

Let’s take a look at 3 clauses that, if not specifically negotiated against, result in a serious dent in employee-experience.

1. Room-rent limits: Let's say the sum insured is Rs 5,00,000 per family, and someone is admitted to a hospital and opts for a private room that costs Rs 10,000 per night. A two-day stay results in a total bill of around Rs 50,000 (including tests, doctor's fees, medicines, apart from room rent). Normally, this shouldn't be a problem at all — it's only 10 per cent of the sum insured. But, if the policy had a room-rent limit lower than Rs 10,000 per night, the insurance company is not liable to pay the full amount. If the room-rent limit in the policy is Rs 5,000 per night and the actual is Rs 10,000, the hospitalised employee will end up getting reimbursed for only half the total bill. This is because medical bill amounts are charged in proportion to the room rent limit. Just opt for no limits on room rent, and adjust the sum-insured to manage costs. Alternatively, keep room-rents at a high enough amount like Rs 10-15k per night for metros and Rs 5-10k per night for non-metros.
2. Co-Pay: A percentage of the bill will be paid directly by the patient regardless of the sum-insured amount. In the previous scenario, 10 per cent co-pay would result in the employee having to pay 10 per cent of the total bill out of pocket (Rs 5000). But for a real emergency, where the bill comes to the Rs 5 lakh, the employee has to spend a sizable amount out of pocket (say, Rs 50,000).
3. Waiting-Periods: Group Health Insurance policies usually don't have waiting periods — your employees are covered from Day 1, as long as you paid the premium on time. If you are offered a discount in exchange for inserting a waiting-period clause, please refuse. Avoid compromising on waiting periods. Also note that retail or individual health insurance policies usually have waiting periods. This is one of the reasons to provide coverage to employees regardless of their own retail policies.

The next decision to be made is about the insurer itself. The two things you should keep in mind when picking an insurer:

1. Claims-Settlement Ratio: Go with an insurer with a high settlement ratio — their claims processes are likely to be user-friendly, and your employees have a higher probability of getting their claims reimbursed. Most claims get rejected because of the broken and non-transparent process of the companies, especially in times with an extraordinary amount of strain on their existing systems. Purchasing through a trustworthy partner who can be on your side and help claim the process is an ideal option. They can communicate on your behalf with enough medical knowledge to rebut any unfair claims deductions which may have arisen due to process gaps at the insurer.
2. Network of cashless hospitals: This one is a no-brainer — cashless facility is far better than reimbursement — your employees walk in to the hospital, get treated, and walk out, with no money going out directly from their pockets at any time.

Going through a trusted intermediary or a broker makes these tasks easy — they will help you negotiate the terms, get the best price, pick the right insurer, and, most importantly, consult your employees on their claims to minimise risks of claim rejection.

To summarise, pick a simple policy with a sum-insured amount that you can afford, with no waiting periods, co-pay clauses or room-rent limits. Pick an insurer with a good claim settlement ratio and a large network of cashless hospitals in cities where a majority of your employees live. And, when in doubt, go through a trusted broker.

The writer is co-founder and CEO, Nova Benefits

DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.