IBA MEDICAL INSURANCE SCHEME – DOES THIS FUNCTION TRUE TO THE SETTLEMENT?

N.RAJAGOPAL

As a part of the 10^th Bipartite Settlement and the joint note signed on 25^th May 2015, the medical insurance scheme for bank employees and officers came into being in lieu of the then hospitalization scheme. The salient features of the scheme are as under:

“The scheme shall cover expenses of the officers / employees and dependent family members in case he / she shall contract any disease or suffer from any illness or sustain any bodily injury through accident. The scheme covers Employee + Spouse + Dependent Children + any two of the dependent Parents / Parents-in-law. The definition of dependents is an improvement over the then prevailing scheme in banks. Room and boarding expenses as provided by the hospital / nursing home not exceeding Rs.5000/ per day and in Intensive care unit not exceeding Rs.7500/ per day or actual amount whichever is less is being considered eligible under the scheme.  Number of diseases included in domiciliary treatment has been increased compared to those that were earlier available in banks.

A thorough reading of the scheme clearly spells out that the bank employees / officers will be reimbursed 100% of their hospitalization expenses, which are otherwise eligible, whatever may be their sum insured. Strictly speaking bank employees and officers are not concerned about the corporate buffer as the settlement clearly ensures full reimbursement of the hospitalization/domiciliary treatment expenses. However, in reality, the availability of the buffer amount only decides the extent of reimbursement amount for the reasons beyond comprehension.

The joint note on corporate buffer says “Rs.100, 00, 00,000/- Corporate Buffer may be appropriated as per the premium of the bank. If the corporate buffer of one bank is exhausted, the remaining amount can be claimed from the unutilized corporate buffer of the other banks…”

Appendix II of the said scheme states the following in the matter of corporate buffer:

Clause 5: The corporate buffer of all the member banks will be in proportion to the percentage of their premium contribution.

Clause 6:  The allocation and use of the corporate buffer would rest with the individual management of the member bank. At the end of the year, we would have a joint review on how many banks have totally utilized their corporate buffer and how many other member banks have not utilized their corporate buffer totally. The unutilized corporate buffer of the member banks would now be proportionately available to the member banks whose corporate buffer has been totally utilized. This would be one of the major benefits.

The member banks came out with a detailed circular on the functional guidelines for utilization of corporate buffer, which, appears to be differing from the true spirits of the joint note cited above. The banks have the following functionality of corporate buffer, some of which is reproduced here under:

• The Corporate Buffer shall be available/ payable only when a claim otherwise falls within the scope of the policy if Hospitalization expenses exceed the sum assured and the same shall be subject to availability of Corporate Buffer amount allotted to our Bank by Insurance Company.
• The maximum permissible amount for claim under Corporate Buffer shall be as under: The eligible amount spent beyond the sum insured subject to a maximum of Rs.4 lacs in respect of Award Staff and Rs.5 lacs in respect of Officers for the expenses incurred/ to be incurred in respect of identified diseases.
• The reimbursement under Corporate Buffer shall not be allowed in cases where employees have stayed in rooms which are much above the eligibility limits i.e. normal bed charges of Rs.5000/- per day and ICU charges of Rs.7500/- per day as specified in the policy i.e. towards expenditure incurred for over and above the eligibility.
• At the policy year end the remaining amount, if any, under the Corporate Buffer can be distributed among such claimants who have spent over and above the sum assured + Corporate Buffer, proportionate to their expenditure.
• The decision of the Bank in granting of Corporate Buffer is final and binding on the employee.

Apparently, the industry-wide settlement and the bank-level circulars differ. At the industry level, there is an implicit assurance that there is no ceiling in seeking reimbursement. The bank / TPA has to pay or reimburse as the case may be beyond the insured amount using the corporate buffer. But the banks have fixed the ceiling at Rs.4 lakhs and Rs.5 lakhs for award staff and officers respectively. Secondly, the industry-level settlement says that the corporate buffer of other banks may be used in the event of corporate buffer of a bank is exhausted.  But this remains only on paper feels the bank staff.

The following points need to be taken care to improve the scheme so that it is really beneficial to all.

• There should be more transparency in the operations of the scheme in banks
• The industry-level settlement should be upheld while dealing with medical bills
• In case buffer is unavoidable, the banks should come out every year with the details of utilization of corporate buffer. The buffer amount, which was fixed at Rs.100 crores during 2015, needs to be doubled as the cost of medical treatment has increased manifold
• There are top-up policies even for serving employees / officers in certain banks, which is against the industry-level settlement on medical insurance scheme. These banks should rescind their decisions
• The delay in approval of cashless facilities should be avoided
• Most of the banks are asking the employees / officers to deal with the TPA directly in contravention to the industry-level settlement.
• The scheme envisages reimbursement even for certain implants, which should be meticulously implemented.
• The premium fixed for the serving and retired employees and officers should be revised only once in five years at the time of each settlement.
• In certain cases, the employees are made to avail reimbursement of medical expenses and this is being taxed as the hospitals are not in the approved list of the Income Tax Department. Appropriate steps have to be taken to exempt medical reimbursement from Income tax in its entirety.

The bank employees and officers are anxious to see the settlement is implemented scrupulously and their suggestions for further improvement of the scheme are duly taken care of.