Group Health Insurance For Startups - How to choose the best plan?

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.‍

However, the employee benefits landscape in India is evolving. Group health insurance is for all companies of all sizes including startups 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.

Check out : Insurance for startups

Why should startups invest in Group health insurance? 

For startups, every decision matters like from hiring the right people to building a culture that fosters growth. Offering group health insurance for startups is a strategic move that impacts compliance, finances, employer branding, and employee retention.

Here are six reasons why startups buy group health insurance policy for their team:

1. 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) By providing a startup health insurance plan, you ensure your organization stays compliant while safeguarding your workforce.

2. 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. 

3. Attract talent

From a bird's eye view, to attract the right talent, you need to ensure you are providing career growth opportunities, competitive pay, and work flexibility and the obvious - employee benefits.

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 recognize your employees and in turn 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.

4. 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.

And what's a better way to communicate it than offering startup health insurance?

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

5. 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’. 

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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 for a salary that does not meet that competitor benchmark, startups can provide ESOPS, Group medical insurance without a copay, and flexi benefits such as meal allowance, reimbursements for home office set up and more.

6. Boosting Employee Well-being and Productivity 

Healthy employees are more productive and less likely to take frequent sick leaves. Group health insurance helps employees access timely medical care without worrying about high medical bills, reducing stress and enabling them to focus on their work. For startups aiming for rapid growth, a healthy team is a strategic advantage.

Comparison table between individual insurance vs group health insurance

Suggested: Employee benefits for hybrid companies

How can startups choose the best group health insurance plan?

Here are actionable tips for founders and HRs to buy a cost-efficient and impactful group health insurance plan:

1. Start with your team size and budget

You don’t need to be a large company to offer group health insurance. Plans are available even for teams with 7 or more members. Decide on your maximum budget and coverage expectations before choosing.

2. Understand the coverage you actually need

Don’t just pick what others are offering. Customize based on what your team values most.

3. Pick a modern insurance partner

Manual policy management can be painful. Choose an insurer or broker that offers:

• API sync with HRMS
• Easy endorsement and claim tracking
• Employee and admin dashboards

Platforms like Pazcare provide all of this with real-time support and analytics.

Tips to get the best deal when buying startup health insurance

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:

1. Consider adding a co-pay 

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 comparatively have working parents. Employees tend to hesitate when companies offer a copay in group health insurance policy. With a younger workforce with working parents, it is easier to communicate and convince them about the need for an extensive medical policy and co-pay.

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2. Benchmark with your competitors

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 consider offering is 5 lakhs for group health insurance.

If you are not offering group term life insurance then your best bet is to offer 10 to 15 lakhs coverage of group personal accident insurance as road accidents are one of the top 10 causes of death in India.

3. Exclude parents from policy

Adding parents to a policy will increase your premium as they are more likely to claim it. You can consider providing employee, spouse, children. You can always add them into your coverage when you renew.

4. Include contractual employees

Startups tend to work with contractual employees to get the initial kick-off and then create in-house teams. Adding more lives may give you an advantage to negotiate with insurers. You can also include your interns in your policy. All you have to do is create an employee ID for them.

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

5. 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.

With Pazcare you get a dashboard to manage all your employee benefits for free when you buy a group policy. And you employees can easily raise claims with Pazcare app.

It will help you lessen HR challenges when startups scale up and drastically improve the employee experience. 

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.

Final thoughts

In today’s competitive job market, offering health insurance for startups is essential. For startups, it’s the smartest way to show employees you care, attract the right people, and protect your team from medical emergencies.

With the right plan and the right partner, even small teams can access big benefits.
So if you're a founder or HR at a growing startup, start small, but start today.

Health insurance for startups by Pazcare

• We offer the best health insurance for startups with 7 employees.
• We give the best pricing for startups, along with zero-day onboarding.

‍Our experts will help you with understanding and designing the best policy for you