Medisep phase two launch deferred; phase one to continue

Kerala government has deferred the launch of phase two of the Medical Insurance Scheme for State Employees and Pensioners (Medisep) because of technical issues. The phase one will continue for the time being.

Phase two of Medisep, with enhanced insurance coverage as well as increased premium rate, was to have been launched on January 1.

The launch has been deferred because the Finance department is trying to get the scheme exempted from GST and a decision on it is yet to materialise.

While all personal health insurance policies were recently exempted from GST by the Centre, group health insurance policies continue to attract 18% GST on the premium. This is because individual policies are treated as voluntary and social security-oriented, while group insurance is considered as an employer-provided benefit, which could be part of the welfare or compensation package.

The monthly premium in phase two is going up from the current ₹530 to ₹810, which works out to an annual premium of ₹8,237 plus 18% GST (approximately ₹1,482) for the first policy period of 2026-2027.

A GST exemption would mean that the monthly deduction from employees of ₹810 (₹700 premium + ₹110 GST) would also come down.

Miffed over premium

Employee organisations have been unhappy about the enhanced premium in phase two and the fact that despite the government’s attempts to enhance the beneficiary base, private hospitals have not shown any interest in enrolling in the scheme. The employees have been demanding that the government restructure the scheme, by putting in its own contribution to the premium and also making the scheme optional for employees.

However, government sources pointed out that it was only in Thiruvanthapuram district that the private hospitals and private insurance companies were acting like a cartel, preventing even willing hospitals from getting empanelled in Medisep, because the scheme spells huge losses for them. In other districts like Ernakulam, there has been reasonably good participation from private hospitals.

They also point out that in all Central government health insurance schemes – including CGHS – and insurance schemes run by neighbouring States like Tamil Nadu, enrolment in mandatory and not optional.

The fact that the government, by not making any contribution to the health insurance scheme, has reduced its role to that of a facilitator or mediator, assuming no responsibility for the manner in which the scheme is run has been one major grouse about Medisep, right from its inception.

The Secretariat Action Council, meanwhile, said that the government is in total confusion over Medisep. In a statement here, the convenor of the Council, MS Ershad pointed out that the deduction of premiums from pensions is illegal. Phase two of Medisep is no improvement over phase one and despite paying higher premiums, employees still do not have access to better medical care and facilities as the government has failed to empanel the State’s leading hospitals under the scheme, he said.

The Council demanded that IAS officers and Ministers should be brought under Medisep so that they get a taste of how the scheme is. The powers to be will truly understand the plight faced by government employees who have been forced into the scheme only if they try seeking medical care in hospitals using the Medisep card, Mr. Ershad said.