Page 43 - MEDICAL AND HEALTH INSURANCE

MEDICAL AND HEALTH INSURANCE

Instead of self-funding the medical expenses of its employees, the

company transfers the risk to the insurer by taking up a group PMI policy

to avoid the volatility of medical financial exposures to the company's

financial health status. The underlying principle is that the employer is
responsible for the payment of the premium and may extend to cover the

dependants of the employees as well. In some instances, the employees

may be asked to contribute towards the cost of the premium to defray the
financial burden of the company in providing a group PMI.

An employer may choose to provide different categories of staff with

different levels of PMI cover, subject to their job grade/position or job

exposure. For example, the senior management coverage would be higher,

followed by the managerial level, executives, and the clerical level. The

differing levels of cover would differ in terms of premium payment.
Alternatively, the employer may provide the same level of cover for all its

employees, regardless of their position in the organisation.

Group PMI policies are more administratively heavy and competitive in

pricing with thin profit margins. Insurers generally classify the group
market as follows:

a) Small group

b) Large group or corporate schemes

2.2.1 SMALL GROUP POLICIES

Generally small group refers to, the group size of insurers, who are
normally offered a standard small group size policy, ranging from 10

members to 50 members. The plans may be pre-fixed and employer can

select the plan offered according to one's affordability. This may also be

described as SME plans covering small and medium size enterprises.

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