Top employee pain points in group health insurance

Why employees still struggle even with group health insurance?

Group health insurance is one of the most important benefits a company can give its employees. It helps them and their families manage rising medical costs and gives them peace of mind during tough times. Employees also see it as a sign that their company cares about their wellbeing.

But just having a policy is not enough. Many employees still face problems like high out-of-pocket costs, delays in claims, or not knowing how to use their benefits. These issues can make the insurance feel less useful and even affect how satisfied employees are with their jobs. In fact, a study found that 83% of Indian employees are unaware of the healthcare benefits provided by their employers. This clearly shows that an employer’s responsibility goes beyond simply providing group health insurance - it extends to how effectively those benefits are administered and experienced by employees. When policies are difficult to use, lack transparency, or fail to cover evolving healthcare needs, they can directly impact not just satisfaction but also retention and overall workplace morale.

What are some common pain points experienced by HRs when it comes to  group health insurance?

For most organizations, offering group health insurance is no longer optional, it’s a baseline expectation. But simply having a policy in place doesn’t guarantee employee satisfaction. HR teams often find that gaps in coverage, poor service, or lack of awareness turn a well-intentioned benefit into a recurring challenge. Recognizing these pain points is the first step to designing a program that actually supports employees and strengthens retention.

Here are the top pain points HRs experience:

1. High Out-of-Pocket Expenses

Despite being insured, employees still spend heavily from their own pockets. In India, out-of-pocket expenses account for 62.6% of total health expenditure, among the highest globally. This happens due to restrictive sub-limits, non-network hospitals, exclusions, or rejected claims. In moments of medical stress, arranging money upfront can create a huge financial and emotional burden.

How HRs Can Reduce Out-of-Pocket Expenses:

HRs should ensure group health insurance policies offer maximum cashless treatment options to reduce employee burden. Cashless claims reduce upfront payments and are less likely to face deductions than reimbursement claims.

Partner with benefits partners like Pazcare for:

• Updated hospital networks
• PIN-code-based hospital search
• Digital health cards

Proactive measures like claim rejection reviews, guided claim submissions, and proper onboarding prevent documentation errors and unfair deductions.

Overall, these steps improve group health insurance utilization and enhance employee satisfaction.

2. Too many reimbursement claims

When employees cannot access a nearby network hospital or the cashless option is not available, they are forced to pay medical bills upfront and submit reimbursement claims. This process can take weeks to months, causing stress and inconvenience.

How can HRs improve cashless claim access?

• HRs and employers can reduce reimbursement claims by expanding cashless hospital networks with insurers and TPAs, especially in high-use areas.
  
  
• Many employees are unaware of how to use cashless facilities effectively, which leads to unnecessary reimbursements.
  
  
• Regular training, app notifications, and clear HR communication can guide employees to use cashless options.
  
  
• Using cashless treatments improves insurance utilization, reduces financial stress, and increases employee satisfaction.
  

3. Rising insurance costs‍

Medical inflation in India is currently 14%, the highest in Asia, pushing Insurance premiums up every year. This often forces employers to reduce coverage or opt for co-pay options, shifting costs onto employees, which directly impacts satisfaction. Rising costs also make it harder to expand benefits or include new-age coverage options

How can HRs use smart cost-control to optimize insurance?

• Introduce co-pays to encourage responsible insurance usage.
• Set caps on maternity, room rent, or specific treatments to prevent hospital overcharging.
• Implement preventive healthcare programs such as OPD coverage, lifestyle management programs, health screening camps.
• These measures reduce claims long-term and help keep premiums sustainable.‍

4. Poor support from the partners

Even if the policy is strong on paper, poor servicing can frustrate employees. Long turnaround times (TATs), delayed reimbursements, or unresponsive helplines damage trust and leave employees feeling unsupported in moments of need. For HRs, this creates escalations and additional workload in managing complaints.

How can strong partner support improve employee experience?

• Provide 24x7 assistance via phone, WhatsApp, and email.
  
• Enable self-service for tasks like downloading health cards, adding dependents, or finding hospitals.
  
• Use transparent ticket-based issue tracking to ensure accountability.
  
• Conduct regular data-driven reviews with TPAs and insurers.
  
• Offer structured onboarding, clear FAQs, and user-friendly digital platforms to reduce confusion and HR dependency.
  

5. Limited & outdated benefits

Many group health insurance policies have remained unchanged for years, offering only hospitalization cover. But today’s employees expect coverage for OPD visits, dental and vision care, mental health support, and fitness benefits. A lack of relevance reduces employee satisfaction, especially among younger employees who value preventive and lifestyle-related benefits.

How can HRs update benefits to meet employee needs?

• Regularly review and update benefits to match evolving employee needs.
  
• Include OPD cover, wellness programs, and preventive care for better health outcomes.
  
• Offer flexible perks like tax-saving allowances, subscriptions, fitness challenges, or digital healthcare solutions.
  
• Show commitment to holistic employee well-being to boost morale and engagement.
  

6. Low adoption of employee benefits

Even when companies provide comprehensive benefits, employees may not use them effectively. Studies reveal that more than 50% of employees are unaware of all the benefits their company offers. This happens due to lack of awareness, complicated processes, or scattered platforms where employees need to manage different benefits separately. For HRs, low adoption means wasted investment and reduced ROI on benefits programs.

How can HRs improve employee benefits adoption?

• Simplify access with a single integrated app for viewing and using all benefits.
  
• Conduct regular awareness sessions and send digital reminders to boost engagement.
  
• Use reporting dashboards to track usage and identify gaps.
  
• Offer flexible benefits platforms allowing employees to choose perks that matter most.
  
• Ensure higher satisfaction and utilization through clear communication and easy access.

How Pazcare helps

Pazcare solves the most common group health insurance pain points by combining smart policy design with an employee-first approach. It helps companies:

• Control costs – Pazcare negotiates competitive premiums using data insights, sets the right co-pays and caps, and reduces overcharging through better hospital tie-ups.
  
• Improve claims experience – With wider cashless hospital access, paperless claim submissions, and proactive claim reviews, employees get faster, stress-free settlements.
  
• Boost adoption of benefits – The all-in-one Pazcare app brings group health insurance, corporate wellness programs, and other benefits together in one place, making it simple for employees to access and understand their benefits.
  
• Support employees 24x7 – From WhatsApp and phone support to guided onboarding and FAQs, help is always available when employees need it.
  
• Offer flexible add-ons – HR teams can customize benefits with OPD cover, mental wellness programs, preventive care, and tax-saving allowances.
  

By addressing these issues, Pazcare helps HR leaders increase employee satisfaction, and deliver a group health insurance program that actually works for their employees.

Looking to solve these challenges at your workplace? Book a consultation with Pazcare today.