Employers are increasingly relying on group health insurance to retain talent rather than just attract it.

• Security & loyalty - GHIs provide employees with a sense of security that is unparalleled. Employee health insurance has become one of the most valuable tools in an employer's arsenal due to medical inflation that is rising at around 20% per year and the employer's inability to provide staff with commensurate raises.
• Attraction & Retention- GHI is an essential tool for retaining employees. In order to keep their employees safe and secure, smart employers implement a higher sum insured than the market standard along with a top-up insurance policy. As part of GHI policies, pre-existing diseases are also covered from day 1 (unlike personal policies which have a waiting period), and the policy holders are entitled to annual health checks.

The health portfolio is usually referred to as a bleeding portfolio because it is rarely profitable for insurers. Typically, insurers do one of the following two things:

• If at some point the Insurer realises that they might be unable to get your asset business or that your asset business is claim prone, the Insurer would move to the other end of the spectrum i.e. refrain from quoting or quote a disproportionate amount.

• Assuming you were charged 50 in premium and incurred 100 in claims, your insurer might charge you 150 when your policy was renewed.

You shouldn't base your decision solely on the cost of your group health insurance policy. Claim settlement ratios, or the ratio of claims paid by the insurer, are also important factors to consider. During a specific period, the claim settlement ratio represents the percentage of claims settled by an insurer. In other words, if an insurer pays 95 out of 100 claims received, then its CSR is 95 percent. The higher the CSR, the more likely it is that the insurer will handle your claim efficiently.

As a result of unprecedented rates of health inflation in recent years, one of the most prominent reasons is that health care costs have skyrocketed. As of 2010, the average cost of cataract surgery in India hovered around 10,000; in less than a decade, a decent hospital will charge you upwards of 40000 - that is a 15% annual growth rate; average salaries have increased at a 9% annual growth rate.

Compensation & Benefits professionals have begun to subsume the rising cost of group Mediclaims into the CTC for Employees, but better underwriting of your GHI policy might be a simpler method.

The Room Rent Clause is undeniably the most misunderstood clause in insurance.

• Rather than a percentage of Sum Insured, customise the room rent clause to consider a "Single private AC room".
• Consider offering an incentive for choosing a shared room over a private one. Incentive payments could be in cash (Rs.1000) or in kind (a couple of extra days off to recuperate). It is possible to reduce the average claim cost by up to 30% by choosing a single sharing room over a private room without affecting treatment quality.

Every time an individual makes a claim, they will be required to pay a co-payment on their hospital bill.

Insurance companies bring prudence into the equation by imposing a co-payment clause, which forces you to examine every expense you incur, even on your own claim. It's as if we suddenly become aware of all the small charges that are being billed to us - be they extra cotton rolls or nursing charges. In turn, this forces hospitals to be vigilant about billing; a win-win scenario.

As a result of adding a 10% co-pay to every claim, the claim cost has dropped by 15 to 20%.

• If the co-pay is waived during an emergency, not only will the distressed employee benefit, but the perception value of the GHI will increase as well.
• It should not be necessary for the employee to pay a co-pay that offsets the perceived benefits of the Mediclaim policy. There shouldn't be a feeling that they are better off without the policy.
• There should be no co-pay for diseases covered by the policy if the plan also has a disease-wise cap. The purpose of a disease cap is to prevent hospitals from exploiting policy holders.

Health plans usually require you to pay a deductible before they will begin to pay benefits. It differs from a co-pay in that it will occur once per year, while a co-pay will occur every time you make a claim. By keeping an eye on the total claim expense, deductibles and co-pays can both enhance the perceived value of GHI and lower your renewal premium. A word of caution seems in order at this juncture. Co-pays and deductibles play a significant role in the perceived value of GHI, so they should be designed with extreme care. There must be a sense of inclusivity rather than exclusivity in both of these.

Cashless treatment at fixed costs is negotiated between insurers and some of the top hospitals. These hospitals are members of the Preferred Provider Network (PPN). About 15% of claim costs can be reduced by increasing the use of PPN Hospitals by about 50% (Something seems wrong).

• Preferred hospitals should be selected whenever possible, especially when hospitalisation is planned. Enlightenment is often the result of knowledge. Once employees are aware of the cost implications, they are more than willing to go the extra mile.
• By incorporating a 10% co-pay clause in non-preferred hospitals alone, the use of preferred hospitals can be increased by about 50%.
• By identifying hospitals frequently used by employees and asking insurers for empanelment, your insurance broker can help broaden the preferred hospital list.
• Organising health talks by doctors at the workplace or arranging free consultations with doctors at these hospitals can increase hospital use.