Pros and cons of group health insurance policy

In FY 2023, health insurance coverage in India reached an impressive 550 million people. By 2025, this number is expected to cover nearly half of India’s 1.46 billion population.

The Ayushman Bharat Yojana, India's flagship health insurance initiative, has significantly increased coverage. Initially covering 40% of economically weaker citizens, the scheme was expanded to include all individuals above 70 years of age in 2024. 

Well, the Covid-19 pandemic really flipped the script on what "health" means to us, didn't it? It was a stark wake-up call that shook up the world, including Indian health insurance companies and policyholders. 

In response to this, group health insurance has become mandatory in India. This change has encouraged providers and employers to roll out group mediclaim policies and insurance options that are as user-friendly as your favorite smartphone app.

That’s right, from hassle-free claims processes to telehealth services that fit perfectly into your now health-conscious lifestyle, they're making sure that taking care of yourself is as easy as pie. 

Group health insurance policies — What and why?

Group health insurance policies, commonly referred to as group mediclaim policies, are insurance plans provided by employers to their employees. These policies are designed to offer a comprehensive health safety net, ensuring that employees and often their families are covered for a wide range of medical expenses. 

Do you know the primary advantage for employees in India? Group mediclaim policies are typically cost-free for employees, as in most cases, the premiums are paid entirely by the employer, making healthcare accessible and affordable.

In some cases, however, employees may share a portion of the costs, ensuring comprehensive coverage while keeping healthcare affordable.

Even pre-existing conditions are typically covered from the get-go, subject to the policy's terms and conditions. This eliminates waiting periods and provides immediate peace of mind regarding medical care.

Plus, you can add your family/dependents to the plan, ensuring everyone gets the protection they need. Be it for parents, parents-in-law, spouses, and children, extensive coverage can be provided.

Also Read: Group Health Insurance For Employees

What’s more? Group mediclaim policies often cover maternity and newborn care, and provide access to cashless treatments. This is especially important in urban areas where the frequency of such needs may be higher due to environmental factors like pollution.

What are the advantages of group health insurance policy?

The Insurance Regulatory and Development Authority of India (IRDAI) mandates that a business must have a minimum of 7 employees to qualify for a group health insurance plan.

Also, a recent survey found that over 76% of employees in India consider comprehensive health benefits, including outpatient care, important for their job satisfaction and loyalty. 

So, there exists a high demand for quality group mediclaim insurance policy for employees benefits. Consequently, employers highly prefer to partner with a reliable provider. That's where Pazcare comes in. 

Trusted by over 2000 top companies in India, we offer a wide range of employee benefits, including corporate health insurance, corporate wellness packages, and multi-wallet cards for food and fuel. With Pazcare, you can ensure your employees are well-taken care of and motivated.

Let's now break down the perks for employees that come with hopping on a group health insurance plan.

1. Free coverage

First things first, one of the biggest wins: it’s free for you! That's right, your employer picks up the tab on the premiums, so you can wave goodbye to monthly insurance bills. Who doesn't love free stuff, especially when it’s something as crucial as health insurance. 

2. No waiting period

Forget about those annoying waiting periods for months (or even years!). With many group health insurance plans, pre-existing conditions are covered from day one before even joining the plan. 

So, what’s a pre-existing disease?

A pre-existing condition is any health issue or medical condition that you had before enrolling in a new health insurance plan. This can include the following:

• Asthma
• Diabetes
• High blood pressure
• Thyroid

Questions you can ask about coverage for pre-existing conditions

To completely know about how the pre-existing conditions are covered under group mediclaim policies, consider asking your HR or benefits manager the following 5 questions:

1. In what ways can I benefit from a pre-existing condition under our specific group health insurance plan?
2. Are there any exclusions or limitations on such coverage?
3. Is there a list of specific pre-existing conditions that are covered from day one?
4. Are there any caps or limits on the coverage amount for treatments related to pre-existing conditions?
5. Do I need to provide any documentation or proof of my pre-existing condition to receive coverage?

For more information regarding this topic, refer: Does Group Insurance Cover Pre Existing Disease?

3. Cover for family members

And it gets better: you can often include your family in the coverage too depending on the type of policy you opted for. Whether it's your spouse, kids, or sometimes even your parents, they can also benefit from the same comprehensive coverage. It's all about keeping everyone’s health in check. 

Also Read: Why including parents in your GHI policy is a win-win? 

4. Maternity and new-born baby coverage

Planning a family? And have you worked at the company for at least 80 days in a year before your delivery or adoption date? 

Your group health insurance has got your back. Because the Indian Maternity benefit (Amended) Act 2017 ensures that a woman employee will be compensated in full during her maternity leave. 

Most group mediclaim policies cover maternity and newborn care, which means hospitalization costs for both normal and C-section deliveries are taken care of. Plus, your new bundle of joy gets medical coverage from the moment they enter the world. 

5. Cashless hospitals

The cashless feature is a lifesaver and hassle-free. With a vast network of hospitals offering direct settlement of bills, you don’t need to worry about upfront payments during medical emergencies. 

Here’s how cashless hospitalization works and why it’s beneficial:

• Direct Billing: When you get treatment at a network hospital, your insurance company settles the bills directly with the hospital. So there’s no need for out-of-pocket payments and then waiting for reimbursement.
• Easy Access: Most insurance providers have a wide network of empaneled hospitals and often provide 24/7 support . You can easily find a nearby hospital that offers cashless services, making it convenient during emergencies.
• Pre-Authorization Process: For planned treatments, you can get pre-authorization from your insurance company. Hence you’re aware of what costs are covered, and the hospital is informed about your coverage beforehand.
• Reduced Financial Stress: You can focus on getting the best possible care in case of an emergency without worrying about immediate financial arrangements.

Also Read: Pazcard : Tax-saving Employee Benefits Solutions

6. Room rent limit

When you're hospitalized, the room rent limit ensures you're covered for ICU or ward room charges without exceeding a set percentage of your sum insured. It helps keep costs manageable during your stay.

For instance, consider Sam is hospitalized for a minor surgery, and he chooses to stay in a standard ward room. Look at the expenditure table below:

Key Takeaways:

• By choosing a hospital room that costs ₹4,500 per day, Sam stays within this limit. So, he avoids any out-of-pocket expenses and his hospital stay is fully covered by his insurance plan without extra financial burdens.
• However, if Sam had chosen a room costing ₹6,000 per day, he would have exceeded his room rent limit by ₹1,000 each day, leading to a potential extra out-of-pocket expense of ₹3,000 over three days.

For a deeper insight into the room rent limit concept, read our detailed blog on: Room Rent Capping in Group Health Insurance 

7. Tax benefits

Group health insurance can offer tax benefits depending on where you live. This means you might be able to save money when tax season rolls around. 

Let’s explain this with an example. 

Consider you have a group health insurance plan with an annual premium of ₹30,000. Your employer pays ₹20,000 towards your premium, and you pay the remaining ₹10,000 out of your pocket. 

Assuming you fall into a 20% tax bracket, 

Potential Tax Savings = 20% of ₹10,000 = ₹2,000

Key Takeaway: By paying ₹10,000 towards your group health insurance premium, you can reduce your taxable income by the same amount. In this case, you save ₹2,000 in taxes. This tax benefit helps lower your overall tax liability, effectively saving you money during tax season. 

8. Add-on covers

As an employee, your group mediclaim policy already provides a solid foundation of coverage, but did you know you can enhance it further with add-ons? 

Yes. Beyond the basic coverage, you can make the most of add-ons to meet your specific healthcare needs.

Pazcare helps employees opt for add-ons like maternity coverage, OPD insurance, and health and wellness plans like gym memberships and fully curate the plan. 

So the best part? You can ensure you and your family are well-protected without high out-of-pocket costs.

To better understand: Imagine Lilly chose a Maternity and Newborn Care add-on with her group health insurance. Her normal delivery costs ₹40,000. Luckily, using her add-on cover, Lilly didn't pay anything out-of-pocket, saving ₹40,000. She ensured her delivery and postnatal care were financially stress-free.

How to get add-on covers?

• Consider your personal health requirements and lifestyle. Which add-ons will benefit you the most?
• Consult your HR department or insurance provider about available add-ons and how to integrate them into your existing plan.
• Review the additional premium costs for each add-on and how they fit into your budget.
• Follow the necessary steps to enroll in the desired add-on covers, ensuring they are activated and ready for use when needed.

9. Preventive healthcare and extra benefits

Lastly, as part of group mediclaim policy benefits, many employers throw in some cool extras to encourage a healthy lifestyle. These might include access to health apps that track your fitness, provide nutritional guidance, or even offer mental wellness support. Some policies reward you for keeping fit and maintaining a healthy lifestyle, which can be a fantastic motivator. 

So, as you can see, enrolling in an employer's group health insurance policy is a strategic move that keeps you and your family healthy without breaking the bank. 

What are the disadvantages of group health insurance policy?

While group health insurance comes with a basket of benefits, it's not without its drawbacks. Let’s walk you through some of the cons that might give you pause when relying solely on your employer-provided health plan. 

1. Fear of discontinuation

First up, the big worry: What happens if you lose your job? Instantly, your insurance coverage ends the moment your employment does. In the volatile Indian job market, this leaves you without health insurance until you secure another job with benefits or arrange a personal health plan. 

2. Employer-dependent cover

The coverage is designed for the group, not for individual needs. In a diverse country like India, where health needs can be unique and varied, this one-size-fits-all approach might not cover specific health treatments or preferences. 

3. Lack of control

Desiring to tweak your plan? Unfortunately, group health insurance offers little to no room for customization, which can be limiting if you or your family members have specific health care requirements. 

Click here to know more about Pazcare insurance platform for your employees.

4. Inadequate sum insured

In some cases, the coverage amount provided by standard group insurance might not be sufficient. This is particularly true in metro cities like Mumbai or Delhi, where healthcare costs are exceptionally high, often resulting in significant out-of-pocket expenses.

5. No individual tax benefits

You won't be able to claim tax benefits individually because you're not the one paying the premiums. Normally, premiums paid towards health insurance are tax-deductible under Section 80D of the Income Tax Act. However, this benefit doesn't apply if your employer is covering the costs.

6. Claims can be troubling

The claims process can sometimes be bumpy. In India, bureaucratic hurdles can cause delays or issues when settling claims, adding stress during critical times. For employees, this means potentially facing unexpected financial burdens and complicated paperwork when they should be focusing on recovery.

However, with top-tier health insurance providers like Pazcare, these concerns are significantly reduced. Pazcare's dedicated claims team streamlines both cashless and reimbursement processes, ensuring you experience a smooth and stress-free hospitalization. This commitment allows you to focus fully on your recovery without the added worry of navigating complex claims procedures.

7. Unreliable for personal financial planning

Relying solely on group mediclaim policies for long-term financial planning is risky. It's particularly precarious in the Indian context, where job transitions can be frequent, leaving gaps in your coverage.

Here are some limitations you should know:

• Coverage Gaps: If you switch jobs or face unemployment, you might lose your health insurance coverage, leaving you and your family vulnerable during transitions.
• Post-Retirement Coverage: Most group health insurance policies do not extend benefits after retirement, leaving you without coverage when you might need it the most.
• Dependents’ Coverage: The extent of coverage for dependents, including spouses, children, and parents, might be limited or insufficient in group plans.
• Portability Issues: Transferring group health insurance benefits to a new job can be challenging and may result in a loss of continuity in coverage.
• Lack of Control: Since employers design and manage group policies, you have little control over the terms, coverage limits, and choice of providers.

Also Read: Pazcare Mobile app for Employees

Alternative for group health insurance plans

While the perks of group health insurance are definitely attractive, aforementioned downsides are important to consider. It’s always wise to evaluate your health coverage needs against these limitations to ensure you and your family are truly covered, no matter what life throws your way.

While group mediclaim policies offer collective benefits, consider opting for a retail or individual health insurance plan for more personalized coverage. Individual plans often provide greater flexibility and customization options.

Here comes the exciting news, because Pazcare is about to launch a new retail/personal health insurance plan designed to meet your individual health needs effectively. Stay tuned for more details on how this plan can benefit you!

Bottom Line

Remember, the specifics can vary based on the policy details your employer has chosen, so always check the fine print. But generally speaking, these benefits make a solid case for why group health insurance is a pretty awesome deal.

But while corporate group mediclaim policies provide a solid safety net, it's wise to complement it with an individual health plan for more comprehensive coverage that's tailored to your specific needs.

Securing group insurance for your employees has never been simpler or more efficient. Why wait? 

If you're leading a startup and aiming to provide robust group mediclaim policy benefits to your team, contact Pazcare. Receive a personalized quote from Pazcare within just an hour. We are ready to step in and streamline the process.