What is Group Health Insurance?
Group health insurance plans are offered by employers to their employees as an employment benefit. As an employer, it is your duty to offer this coverage to all your employees. There are many advantages you get when you offer group health insurance. What exactly are these why should you offer group insurance? Read on to know more.
Understanding Group Health Insurance
Let us begin by understanding what a group health insurance coverage is. As the name suggests, a group health plan is a type of health insurance that is offered to a group, which in most cases, is a group of employees. The employer buys the cover and jointly offers the mediclaim benefits to all the employees. The employees get health insurance as an employment benefit. In most cases, the immediate family members of the employees, including their spouses, children and parents, are also covered under the plan. The employees receive the cover as soon as they begin their work contract with the employer. The coverage stays valid for as long as they remain employed. If the employment ceases due to termination, retirement or resignation, the group health insurance coverage coves to an end as well.
Group health insurance offers an indemnity cover as well as a personal accident cover. An indemnity cover offers protection against all regular medical needs such as in-patient care, OPD covers, domiciliary care, pre and post-hospital care, diagnostic checks, daycare expenses and so on. A personal accident cover offers protection when you have an accident. If there is a permanent or temporary disability due to the accident, special compensation is given. The nominees of the policyholder are also compensated if the policyholder dies in an accident.
A group plan is available to a group that is already in force. This means a new group cannot be formed just to get the benefits of a group health insurance cover. If you are a new company buying a group plan, the coverage will only act as an employment benefit, it will not be the reason your company is formed.
The group health insurance cover is not as expensive as an individual health insurance cover. This is because the risk is spread out over a large number of people. The insurance company understands and acknowledges the fact that not every member of the workforce will make large claims. While some will do so, others will make smaller claims and yet another set will hardly even make a claim. This is why the risk is balanced and the health insurance cover is offered at a lower price.
Differences between an individual health cover and a group health cover
How is a group health cover different from an individual health cover? Let us find out:
- Getting the cover – In an individual health insurance policy, the proposer gets to choose and buy the plan for himself. In the case of a group cover, the company buys the plan and the policyholder, who is the employee, has to accept the cover he is offered.
- Sum insured – In an individual health insurance policy, the proposer can select a sum insured that is suitable for him. There isn’t any particular limit on this. However, in the case of a group cover, the sum insured is limited.
- Premium – The premium has to be paid by the policyholder in an individual cover. The premium is high and depends on the scope of the cover. In a group health insurance cover, the insured doesn’t have to pay the premium as the cover is bought and maintained by the employer.
- Flexibility – The individual health plans can be customized in any way the policyholder wishes. They are very flexible in this regard. A group health insurance policy cannot be customized. The employees have to use the cover that is given to them by the employer.
- Policy period – The individual health plans can be renewed for as long as the policyholder lives. The plans simply need to be renewed on time for the coverage to be continuous. A group health cover is valid for as long as a person remains employed. If he quits the job, gets fired, or retires, he will lose his group health insurance coverage.
- Pre-policy screening – For most of the individual health plans, the proposer will be asked to get a pre-policy health check-up done. However, for group health covers, pre-policy health tests are not required.
What is included in a group health insurance plan?
Now that we know more about the group health plans, let us find out what such a cover includes:
- In-patient care – The employee and his dependent family members will receive compensation for in-patient expenses resulting from an illness, a surgery or an accident.
- Pre and post-hospitalization covers – At times, pre or post-hospitalisation care is needed for certain medical conditions. Such expenses are normally covered under a group health plan.
- Domiciliary care – Most group plans cover home health care expenses, also known as domiciliary care expenses.
- OPD expenses – An insured person can get his OPD bills reimbursed under the group health coverage.
- Daycare expenses – More than 150 daycare procedures are included in most of the top-rated group health insurance policies.
- Alternative medical care – Certain alternative treatments, such as Ayush and homoeopathy are included in selected group health plans. Do note that not every group plan covers alternative medicine, so read the policy wordings carefully before you file a claim.
- Dental care – Dental expenses are also covered in some plans, but not in all plans so be aware of the inclusions when you get the cover.
What are the exclusions of a group health plan?
Here is a list of the common exclusions:
- Injuries related to attempted suicide/self-harm
- Any complication related to HIV AIDS
- Cosmetic treatments or surgeries
Why an employer should offer group health insurance
As a business owner, it is highly advisable for you to offer a group health insurance coverage to all your employees. There are some benefits that you get when you do so. Here are some logical reasons why you should offer group insurance:
The employees, without a single doubt, form the backbone of an organisation. You cannot function unless you have the best people working for you. As a result, you always look to recruit the best candidates. But these candidates are much sought after and you need to ensure they choose to work for you. To do this, you simply need to make the workplace ambience positive and along with that, offer all the employee benefits you can. A very handy employee benefit is health coverage. If your best employees get the best benefits they won’t even consider quitting and would happily report to work every day. One of the biggest reasons for a change of job is always the perks. If an employee is offered a similar salary at another company but has more perks to get, he may consider switching jobs. So to retain talent, you need to offer important employee benefits such as the group health insurance covers.
To make the employees feel secure
A worker who receives a strong employee benefit like health insurance feels secure in his job. He realises that he is of value to his employer. This makes him more loyal to his company and also increases his productivity. A workforce that puts in its best efforts helps to increase the profits of the business in the long run and this benefits the employer directly.
For the overall wellness of the organisation
When employees fall ill regularly, they stay home and miss out on completing their work commitments. Many a time, your employees may not even seek treatment because they lack a health insurance cover and paying the medical bills out of their pocket is a huge liability. At such times, the presence of a group health insurance coverage works as a blessing. The employees seek timely medical attention and recover sooner. This enables them to get back to work at a quicker pace and that works positively for the wellness of the organisation.
To avail a tax benefit
The employees who receive a group health cover as an employment benefit do not pay the premium. As an employer, you pay the premium. This payment can be shown as a business expense and you can claim a tax benefit on it. As an employer, this is a big advantage you get when you provide a group health insurance policy.
The above-mentioned points clearly show just how beneficial the group health insurance plans are for employers. If you haven’t started offering the cover to your employees, do so without any further delay.
Handy tips related to group health insurance
Many times, a small business owner stays away from offering group health insurance because he feels the costs would be too high. However, as we saw in the points mentioned above, offering this benefit can be of great advantage to you as well. You just need to pick the right cover and stick to your budget. Here are some more tips for you to remember:
Designate someone for the job – Rather than doing everything on your own, designate someone for the job. The person you hire should be able to understand the clauses of the health cover. He or she should be able to make correct calculations and get a plan that is comprehensive as well as economical.
Offer the cover to everyone – Offer the health cover to everyone, including your part-time employees. This will create a sense of loyalty and well-being among your workforce and you will see an improvement in the performance.
Explain the clauses to the employees – A new employee should have a proper understanding of the health insurance cover he or she is entitled to. Explain the clauses of the health cover to your workers clearly. This will prevent future disputes and disagreements from taking place.
Keep these tips in mind you will find it easier to manage the group health insurance policy.
Benefits received by the employees
A group health plan offers many benefits to the employer, but it offers some handy benefits to the employees as well:
Affordable health insurance – An individual health plan is not affordable for everyone. This is especially true for those who work in low-wage jobs. The availability of health insurance as an employment benefit thus proves to be extremely beneficial.
Coverage for the entire family – Not just the employees, their dependent family members also get a health insurance cover. This is another benefit as many people struggle to get health insurance for their loved ones.
Coverage from day 1 – In practically every single individual health insurance plan, waiting periods are associated with certain health conditions. For example, if you have diabetes, you have to wait for about three years before you can make any claim for an ailment related to diabetes. Waiting periods are also associated with other health areas including maternity and childbirth. But when you get covered under a group mediclaim cover, you do not have to worry about the waiting period, as there is no such clause here.
This is quite a comprehensive set of advantages that the employees get out of their group health cover.
Pros and Cons of a Group Health Plan
Let us quickly glance over the pros and cons of a group cover:
- No waiting period
- Maternity and newborn covers available
- Affordable health insurance
- Health insurance for dependents as well
- The cover cannot be customized
- The coverage is lost as soon as the employment ends
- The premium can go up if there are too many claims and this can become a liability for the employer
- The group health policy can be cancelled altogether if there are too many claims in a year
Keep the list of pros and cons in mind when you offer group health insurance to your workers.
Risks involved in group health insurance
While a group health insurance policy is beneficial for both the employee and the employer, there are some risks involved:
Fraudulent usage by employees – It is often seen that employees unfairly use their health insurance coverage to pay for the medical expenses of people not related to them. This is unfortunate and can cause many issues for the employer.
Gets too expensive for small businesses – A small business may not find it affordable to offer this benefit to its employees. It is, therefore, advisable for you to compare various options and then settle for the plan that is the most economical option for you.
Coverage may be insufficient – In most cases, the coverage offered to all employees is uniform. An employee cannot modify the group health cover to suit his needs, He may feel the cover is insufficient and may become unhappy with it. Make sure you negotiate with the insurance provider when buying the plan and include as many health covers as possible, albeit within your budget.
These are some of the unfortunate risks you may come across when you offer group health insurance to your employees. Be mindful of these and try to work your way around them.
The final word
Keep all the points mentioned above in mind and you will not regret your decision of offering a group health insurance coverage to your employees. Health insurance is a big requirement and when your employees get it from you, they become happier in their jobs and that works out well for your business.