With health inflation in India rising at a staggering rate of 14% per annum (as per the Acko India Health Report 2024), healthcare costs are doubling roughly every five years. This has significant implications for your employee health scheme, as premiums tend to mirror these rising costs.
To help you keep premiums under control, let’s explore five effective strategies to reduce the costs of your employee health scheme while maintaining robust coverage.
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Why do Employee Health Scheme Premiums Keep Rising?
Understanding why premiums increase is the first step to controlling them. Typically, premiums are recalculated annually based on the previous year’s claims, along with adjustments for inflation, administrative costs, and taxes.
Here’s an example: if your company paid ₹25,00,000 in premiums last year and claimed ₹20,00,000, the insurer will adjust next year’s premium based on expected similar claims, adding in approximately 10% for medical inflation, 15% for administrative charges, and 18% GST. Suddenly, that premium can increase by as much as 57%, hitting ₹31,50,000.
So, how can you break this cycle? Here are five smart strategies:
Five Proven Ways to Lower Premiums for Your Employee Health Scheme:
1. Analyze Claims Patterns with a Comprehensive Audit
A detailed claims audit is key to spotting high-cost trends and outlier claims that might skew your premium calculations. Were there unusual, high-cost claims last year? Your insurance broker can identify one-time claims, such as accidents or major surgeries, that may not repeat, helping you negotiate a more accurate premium.
2. Leverage Preferred Hospital Networks
Insurance companies often secure discounts with hospitals within their network, which can result in substantial savings for your company. Make sure your insurer is transferring these savings to you, and encourage employees to utilise network hospitals. Even a slight increase in network hospital use can yield significant savings on claims.
3. Negotiate for Special Rates and Discounts
Startups and small businesses may be eligible for special rates on administrative fees or exclusive discounts. Working with an insurance broker who has deep market insights can help you uncover these hidden savings and negotiate the best possible terms for your company.
4. Consider Profit-Sharing Options
Some insurers offer profit-sharing agreements, where a portion of their investment profits is returned to policyholders. Explore this option with your insurer, as it can help offset some of the premium costs and create a long-term saving structure.
5. Encourage Employees to Use Personal Health Insurance First
Many employees have individual health policies or government-sponsored insurance plans. Encourage them to use these first for minor treatments. This can help reduce the claims burden on your group health scheme, as personal health premiums aren’t impacted by claims.
Partner with an Insurance Expert:
Navigating the complexities of employee health insurance can be challenging, especially when trying to balance cost with comprehensive coverage. An experienced insurance broker can be your ally in controlling premiums, offering claims analysis, negotiating with insurers, and providing management tools to help you optimise your scheme.
If you’re looking for a trusted partner, Ethika Insurance Broking offers advanced tools such as a tech portal and a mobile app—free of charge—to streamline your employee health scheme.
Take Control of Rising Healthcare Costs Today
Reducing your employee health insurance premiums doesn’t have to be overwhelming. By implementing these strategies, you can protect your company from escalating premiums while providing valuable health benefits to your team. Ready to make your employee health scheme more affordable? Contact us today to learn how we can help you achieve sustainable cost savings.
