How does the implementation of a 100% cashless network affect my current health insurance coverage? Will my premiums increase as a result? What is the relevance of the hospital network of my insurer now if all hospitals have become cashless. Additionally, can the service quality be expected to remain consistent across all insurers in light of this change?

—Name withheld on request

Going 100% cashless is a very positive development taken by the regulator. This allows policyholders to avail cashless treatment across many hospitals and comes at no additional cost.

So, your premium would not increase. To avail this facility, the policyholder is required to intimate the insurer 48 hours in advance, giving it sufficient time to make arrangements with the hospital.

The network of an insurer represents the list of hospitals with pre-existing tie-ups. This allows for direct settlement between the insurer and the hospital, on an agreed tariff. An existing arrangement would also allow for faster turnaround of cashless approval. Also, the agreed tariff is generally lower than the open tariff of the hospital. The lower tariff gets passed onto the policyholder as a lower utilization of their sum guaranteed.

The service quality of an insurer is determined by several parameters, including transparency in policy terms, claim settlement approach and process, and overall responsiveness. For example, in a cashless claim, the manner of coordination between the hospital and insurer would define the policyholder experience. Within their existing network hospitals, the turnaround time of cashless approval varies substantially across insurers. Some provide approval within 30 minutes; others take around 4 hours. The back-and-forth on insurer queries regarding treatment papers and final approval after discharge will still vary across insurers. While the regulator is putting in place a framework to ensure a minimum level of service quality experience across insurers, execution quality is likely to vary.

How do the new group gratuity insurance rules in Karnataka affect the average employee? Has the amount gone up?

—Name withheld on request

The recent changes do not affect the eligibility of an employee for gratuity. The amount payable remains the same. However, the new rules would increase the certainty of payout.

As per the old rules, it was optional for employers to subscribe to a group gratuity policy of a life insurer. The new rules require specified employers to compulsorily subscribe. This will primarily affect private organizations, for whom the Gratuity Act is applicable, present solely in Karnataka. The act, however, provides exemptions to a few types of companies. So, it is important for the employer to check the applicability before implementation.

Under the life insurance scheme for gratuity, the employer’s liability towards gratuity is measured via actuarial calculations. Thereafter, the employer contributes annually towards this liability and accumulates a corpus. The employer can choose the underlying investment scheme for the corpus and earn returns on the invested amount. This corpus can only be used to meet gratuity obligations. The fund cannot be used for any other purpose of the corporate entity. This thus ensures that employees’ right to gratuity is not affected in case the company goes through turmoil or a poor financial patch. The employer can file a claim with the insurer whenever a gratuity payment is due. For the employer, any contribution to the fund would be treated as a business expense and is eligible for taxation benefits.

Abhishek Bondia is principal officer and managing director at

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Published: 08 Feb 2024, 09:50 PM IST

Will going 100% cashless increase my health insurance premium?

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