“We are considering signing up for a common medical insurance program that we offer to our member-companies. With over 1700 companies employing millions of employees, we believe we can aggregate at least some of the mid-size and most of the emerging companies into this one large pool of medically-insured individuals. That will reduce premiums by a large percentage AND it will retain price-control over the long term – at least, prices won’t change so dramatically from year to year,” says Kishore Mandyam, Evangelist at NASSCOM EMERGE-Products Group and also CEO of PK4 Software, which operates in the CRM space. Kishore already works with select groups to provide rural health insurance in Karnataka. This scheme was born out of the fact that healthcare costs have risen in India over the last few years. Employees in member companies will have come up against various challenges in funding the healthcare costs of parents, typically, and pregnancies or childcare in some cases. Kishore adds: “If you don’t have medical insurance, you may have wondered how you can help employees in this area without breaking the bank. If you have a medical insurance program for your employees already, you will have seen the cost of that insurance rise every year – some of our members have seen premia increase by 60% year-to-year.”For those interested in the product further, here are some FAQs.
1. Why should I be interested?
Because it will save you money and provide a valuable service for your employees. Seriously, this is a win-win situation for employees and employers, since it reduces the premium by aggregating people across companies. You can choose to collect all or part of the premium that you pay from the employees that you cover, but even if you did that, it works out a lot cheaper for a given level of “cover” than each employee doing this on his/her own.
2. What will this cost?
The final price per employee will vary based on the number of people we sign up in a given year and the specifics of the variations (see below) that they choose. But there are indications that the premium will be about Rs. 2,100 per lakh per year per employee or Rs. 6,000 per lakh per family (employee spouse 2 children + 2 grandparents). This can come down by upto 20% if we have 10,000 to 15,000 employees from various companies covered. By our assessment, this is at least 30% cheaper than doing this on your own, particularly if you have less than 150 employees.
3. Will the price change over the year?
No, the price will remain constant for a given year, the “year” starting whenever we start the program with the first set of signed-up companies and their employees. When you sign up, you have to pay all of the annual premium at one shot. People who join later will need to pay a pro-rated value of the same amount.
4. Do I have to enroll ALL our employees in this program?
No, you can choose to enroll just SOME of your employees in the program. By “program”, we mean any one of multiple variations – see below for detail. You can choose to enroll some of your employees in one variation, some in another and some in none at all. One of the key benefits of this program is that there is no minimum, unlike what you
get from the insurance provide directly – most insurers refuse to cover companies that have less than 100 employees anyway.
5. Will there be only ONE insurance program that ALL people have to sign up for? Can I make variations to it for specific employees?
Our current thinking is that we’ll set up three or four variants – the variations will be based on the amount covered (say, 1 lakh, 3 lakhs and 5 lakhs), whether pre-existing conditions are covered (probably include them in the higher-value variants), whether pregnancies are covered and so on. There are a whole lot of other factors – you may want to read this thread on the EMERGE Community to get a better sense for the nuances.
6. How will it be administered? Will I need to contact NASSCOM every time a covered person joins or leaves my company?
No, you will not need to contact NASSCOM, but you will need to contact an intermediary that we will identify for you. We are considering intermediaries who have a high level of technological sophistication – most of them have websites where you can enroll new employees and drop the ones that exit.
7. How long do I need to sign up for?
You only sign up for the year that you pay the premium for. You are not required to renew it the next year. We do believe, though, that you won’t find a program that’s better value-for-money than this one, so we expect you to continue to renew!
8. Will our payments be refunded if we exit the program?
Payments will be refunded for employees who exit your company. If you choose to cancel ALL employees that you’ve enrolled from your company, there may be a small charge for the cancellation.
9. Will the price be maintained for many years?
No, we cannot guarantee that, but we believe that the increase, if any, from year to year will be much lower than the market. It is possible (but not probable!), too, that the premium REDUCES from one year to the next if we sign up a large number of employees from one year to the next.
10. Is this meant only for emerging NASSCOM companies? Only for large members? Any such variation?
This is meant for ALL NASSCOM members. The program’s effectiveness increases significantly based on the number of employees covered, so our signing up a few large companies and a number of not-so-large companies is good for both kinds.
11. How does this actually work for the insurance Provider?
The basic idea is to aggregate Risk for the insurer. If we rally, say, 2,000 employees (all from different companies) into one program like this, the insurer sees this as ONE group of insured people. So they calculate usage based on the utilization of the insurance during the year across all people covered. Premium is calculated based on the amount of utilization they believe they will see. In small groups of 20 employees, for example, just one serious illness in an employee’s family or one pregnancy will raise utilization to 90% or even 20% of premium paid. In a large group, the number of such incidences as a percentage of the overall group is much smaller – we’ve seen 200-person companies with as low utilizations as 50%. That’s why this makes sense to the insurer – the large the group, the less utilization, therefore the better gains they make…