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Startup Health insurance - Get a smart and low-cost group insurance

Group health insurance for startups - How can founders and HRs buy a cost-efficient insurance policy for their small teams.

When we think of employee benefits like group health insurance we think of enterprise size companies and maybe some popular mid-size companies. When we think of startups, we generally think of flexibility, friendly work culture, and the obvious - growth. Today, the landscape of employee benefits in India has changed. Group health insurance is for all companies of all sizes as we move toward tech-supported and more dynamic employee benefit programs. 

But hey, let's talk about reality. Not all startups have the money to provide a comprehensive wellness program. And not all startups want to invest in their employees' health. But if you have the budget and want to establish an employee-centric approach, then the first employee benefit that you should offer is a group health insurance policy. And this article will help you get started.

Why should startups invest in GHI? 

Mandatory order

The government made it mandatory from April 2020 and notified insurers to offer comprehensive health insurance policies for workers and asked employers to implement them as a part of the order  №40–3/2020-DM-I (A)

Tax deductions

Employers can enjoy Tax deductions for group health insurance. The expense for GHI is treated as ‘Profit in lieu of salary’ and can be claimed as a business expense in a profit and loss account. You can claim it if you offer to pay a full premium or copay with employees. When you share the premium with employees, you can only claim for what you pay and not employees’ contributions. 

Attract talent

From a bird's eye view, to attract talent, you need to ensure you are providing career growth opportunities, competitive pay, a data-driven culture, and work flexibility. These are non-negotiable for a start-up with a remote or hybrid working model. However, to attract the right talent you need to provide benefits like group health insurance, leave policy, physical and mental wellness support. Moreover, your wellness program has to be customized and inclusive of all your employees. This effectively communicates that you take care, value and recognise your employees and you deserve the best skill sets and talent to help your company grow. This will serve as your 101 for employer branding to acquire the best talent.

Retain talent

The start-up ecosystem is booming but only around 10% of the startups succeed each year according to Failory. Two things that can help with growth and success are impact-driven leadership and adept employees. And when you hire high performing employees, you retain them.

As an organisation, it is important to communicate to your employees that you care for them and show it to them with inclusive employee benefits. Offering a myriad of employee benefits is one of the proven ways companies lower their attrition rate. 78% of employees reported they’re more likely to stay with an employer because of their benefits program according to ArmadaCare. Group health insurance and providing avenues for upskilling employees are the easiest and most beneficial options to care for your employees. Employee benefits play a significant factor in overall job satisfaction and employee engagement and these two elements help with the retention of employees to a great deal. 

Suggested: Upskilling your workforce is a key to growth by Ashwani Chaudhary, L&D Head, Provana

Benefits as compensation

All companies prefer to work with the best. However, it is all the more important for start-ups because they need to set up adept and loyal teams who will guarantee the initial kick-off and growth. The employees work for the company’s upliftment and theirs. The common mantra for start-ups when it comes to employees is ‘grow with us’. 

Start-ups have to be scrupulous as they don't want to incur more and more hiring costs for the same role and would prefer employees who will stay, enjoy the work and strive towards the vision. You have to consider the budget limitations and develop a package that will attract quality resources while also ensuring it is not too heavy monetarily that it irks the investors. To facilitate the same, start-up companies must strike the right chord in terms of compensation and benefits. Most of the time, for startups, employee benefits are just a way to compensate for not offering a high salary. To compensate, startups provide ESOPS, Group health insurance without a copay, and flexi benefits like reimbursements for home office setup, travel, food, Wi-Fi, and devices needed for work.

Suggested: Employee benefits for hybrid companies

Ideal GHI for startups

There is no framework or flowchart to buy the right policy. Every company has its own budget and requirements. However, we have listed some of the ideal practices for startups.


Startups can decide if they want to pay the entire premium or share it with the employees. Some companies take copay with employees to cut down on their expenses. A few companies take it up as employees can claim tax deductions on the premium paid by them. Another rationale is that the employees of startups are younger and may have more working parents largely. Employees tend to hesitate when companies offer a copay in group health insurance policy. With a younger workforce with working parents, it becomes easy to communicate and convince them about the need for an extensive medical policy and co-pay.

Market benchmark 

Startups must have a futuristic approach and opt for coverage based on the market benchmark. When you take up a smaller coverage and then increase the sum insured later it comes with a heavy premium loading. Currently, the best coverage you can offer is 5 lakhs for group health insurance. If you are not offering term life insurance then your best bet is to offer 10 to 15 lakhs coverage group personal accident insurance as road accidents are one of the top 10 causes of death in India.

Cost of group health insurance

 The cost of any group health insurance for a startup depends on the type of policy you choose and the coverage you want to offer. Not to forget that the location of your business and the age of employees also have an impact on the cost. Apart from this, you need a platform to manage employee benefits insurance that helps in managing and communicating effectively to a young workforce. 

Contractual employees

 Yes, one of the biggest advantages of having contract employees is that you don’t have to offer them employee benefits and training. This is substantially cost-effective and startups tend to work with contractual employees to get the initial kick-off and then create in-house teams. In this case, even though it is not necessary, you can have a separate group medical policy for contractual employees. However, you can’t have a single policy for your employees and contractual employees.

Suggested: Minimum number of employees required to get group health insurance

Platform to manage employee benefits 

Managing group health insurance for employees is manual and monotonous as it involves managing TPA, insurer, employee queries and claim process. It is necessary for startups to look for tech-based platforms to manage, and track it to avoid having multiple resources work on it. Relying on an employee benefits management platform will help you lessen HR challenges when startups scale up. It will also drastically improve the employee experience. 

Smarter benefit 

Any health insurance premium increases with age. And it is the same with a group health policy too. We call this a smarter benefit because startups attract younger employees and younger employees mean lesser premiums. You can get the best deals by choosing policies with lower premiums for your employees.

Pazcare group health insurance for startups 

Pazcare offers group health insurance for startups with even 2 employees. Anyone can give you insurance! But Pazcare redefines the insurance experience for employers and employees. From offering the lowest price in the market, seamless HRMS integration, complementary health and wellness programs to zero-day onboarding we deliver the smoothest employee benefits tailored for you. 

If you need guidance on offering the most practically necessary healthcare employee benefits, you are just a click away! 

Paz for start ups

How Pazcare enabled Pagesuite to provide comprehensive healthcare benefits for their employees?


Pagesuite had a simple funda - we want to be a company that cares for our employees and family. So we went for an extensive group health insurance policy that includes employees, spouse, 2 kids and parents with a coverage of 5 lakhs.

With many years of experience in the HR field and having worked with many insurance partners, I agree Pazcare stands above many. The differentiator has been the cost, technology platform, ease of transactions, smooth coordination, right advice at the right time by the Pazcare team. 
Patrick Pinto, Associate Director, HR, Pagesuite

Pagesuite has a holistic approach to employee benefits by providing mental wellness support and upskilling opportunities too. They have an initiative called “Friday’s Got Better” wherein employees work for half days on Friday. The other half-day is dedicated to learning the courses they have picked up, or for team engagement, knowledge sharing sessions, coffee or beer time. They provide 5 days of compassionate leave for any death in the immediate family and additional paid leaves for covid impacted employees. 

And what’s the result?

Pagesuite was able to create a sense of belonging and a safe place to work with their employee benefits. It was a game changer when employees could easily access their benefits with Pazcare app. It helps them retain our employees. They have established an image that they as a company not just provide the best of compensation in the market, but also care for their wellbeing and their family too. It helped them in attracting top talent as today candidates not just look at compensation but also other perks & benefits.

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