Group Insurance Scheme: Decades of stagnant premiums impact employee benefits

The Group Insurance Scheme, introduced in 1984, aims to provide financial security to government employees. However, stagnant premium rates since 1994 have caused a significant shortfall in benefits for deceased employees. Despite five pay revision commissions between 1998 and 2018, no increases were made, leaving payouts insufficient compared to other states.

By Manohar Rao Chilappagari
Hyderabad: Many Government employees, mostly the lower-level staff and Drawing and Disbursing officers, lack of proper understanding of the Group Insurance Scheme, which is leading to instances where employees are suffering huge losses due to incorrect deductions of group premiums.

Before we delve deep into the subject, here is a brief background to the issue:

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The Andhra Pradesh State Employees Group Insurance Scheme was introduced through GO No. 293, Finance and Planning Department, dated 8.10.1984, replacing the previously existing Family Benefit Fund. The goal of this scheme was to provide financial assistance to the families of deceased employees at a minimal cost and to ensure financial security upon retirement.

Key Features:
Membership: All government, Panchayat Raj, and municipal employees in service as on 11.11.1984, as well as work-charged employees who have completed 10 years of government service, and those appointed after 1.11.1984 are members of this scheme.
Grouping: Members are divided into four groups (A, B, C, and D) based on the maximum limit of their pay scale.
Premium: Group A pays 8 units, B pays 4 units, C pays 2 units, and D pays 1 unit as monthly membership fees.
Premium Rates: Initially, each unit was valued at Rs. 10. However, this was increased to Rs. 15 per unit through Government Order No. 367, Finance and Planning Department, dated 15.11.1994. Out of this, Rs. 4.50 is contributed to the insurance fund and Rs. 10.50 to the savings fund.
Newly Joined: Employees joining in months other than November must pay a special premium for the remaining months of that year.
Promotions: Changes in group membership due to promotions take effect from the following November.
Death Benefits: Upon the death of an employee, their family receives a sum equal to the number of units they were paying multiplied by a certain amount, along with their savings and accrued interest.
Retirement/Resignation: Upon retirement or resignation, the employee receives their savings fund with interest.
Recovery of Premiums: Drawing officers are responsible for recovering membership premiums from employees’ salaries.
No Withdrawals or Loans: No withdrawals or loans are allowed from the insurance or savings funds.
Nomination: Employees must submit nomination forms (Forms 1, 2, 3, 5, 6, or 7) for themselves and their families.

Points to remember:

• Employees must record their membership details in their service books.
• The government reserves the right to change interest rates.
• Premiums must be recovered even during leave without pay.
• In essence, the Group Insurance Scheme provides a safety net for government employees and their families in the event of death or retirement.

This is how employees put to loss:

Despite the establishment of the Group Insurance Scheme for the benefit of employees and teachers, the subscription or units associated with this scheme have not been increased over time. As a result, the amount received by a deceased employee remains unchanged.

For example, if a person paying a subscription of Rs 15 dies, they receive Rs 15,000, and similarly for Rs 30 or Rs 60 subscriptions, the payouts are Rs 30,000 and Rs 60,000 respectively, with a maximum of Rs 1,20,000.

While the subscription for this scheme is revised for every five years in other states, the subscription for the Group Insurance Scheme has not been increased in Telangana and the then Andhra Pradesh. As a result, the deceased employees are not receiving the expected benefits.

The subscription was increased last in 1994 and had remained unchanged for the past 30 years. Although a pay revision commission is constituted every five years, none of the five pay revision commissions between 1998 and 2018 recommended an increase in the subscription for the group insurance scheme.

However, in many states of the country, group insurance subscriptions are increased every five years. Currently, the subscriptions for group insurance schemes in some states are as follows:

This table compares GIS subscription amounts (in rupees) across Kerala, Maharashtra, Karnataka, and Telangana for different employee groups.

Group	Kerala	M’rashtra	K’taka	Telangana
A	2000	960	720	120
B	2000	480	540	60
C	1600	240	480	30
D	800	60	240	15

(The author is a retired Government employee. He can be contacted on 96406-75288)