Table of Content

Group Health Insurance - 101 Guide

What is Group Health Insurance?

Group health insurance (GHI) is a type of health insurance that provides coverage to employees of a company or organisation. The group health insurance for employees is also known as corporate insurance plans or employee health insurance.

A group health insurance plan usually covers the employees and their dependent family members like spouses, children, parents and in some cases, it even covers the in-laws. The group health insurance plan after the pandemic mostly includes covid-19 insurance, maternity benefit, accidental insurance, etc.

The group health insurance policy is typically offered to the employees as a part of the employee benefits plan. Providing group health insurance not only benefits the employees during medical emergencies but also provide the employers with tax benefits.

Group health insurance (GHI) is a type of health insurance that provides coverage to employees of a company or organisation. The group health insurance for employees is also known as corporate insurance plans or employee health insurance.

A group health insurance plan usually covers the employees and their dependent family members like spouses, children, parents and in some cases, it even covers the in-laws. The group health insurance plan after the pandemic mostly includes covid-19 insurance, maternity benefit, accidental insurance, etc.

The group health insurance policy is typically offered to the employees as a part of the employee benefits plan. Providing group health insurance not only benefits the employees during medical emergencies but also provide the employers with tax benefits.

Simplify employee insurance with Pazcare

What makes a group health insurance plan different?

A group health insurance plan is different from the other health insurance plans available in the market for the following reasons.

  • In group health insurance, the insurer’s risk is spread among the fellow policyholders, in this case, the entire members of the organization. As a result, the employees receive it at lower premium costs compared to an individual health insurance plan. Hence, this makes them affordable and cheaper than any other individual health insurance plan available in the market.
  • A group health insurance policy can provide coverage to pre-existing diseases from day 1 with 0 waiting period, provide maternity insurance, covid-19 insurance, and many more.
  • Also, they differ in aspects like the insurer, the plan type, the cost, the terms and conditions, etc.

How does a group health insurance plan work?

The companies and organizations purchase the group health insurance plans from the insurer and offer them to their members or employees. A minimum number of employees is required for purchasing group health insurance.

A company with 7 or more members are qualified to purchase a group health insurance plan. However, if a company has <7 members also, they are eligible to purchase a group plan. For instance, Paz for startups provides group health insurance plans for organizations with just 2 employees.

A 70% participation by group members is mandatory for purchasing these group plans.  In most cases, a group health insurance policy covers not only individual employees but also family members like dependent parents, spouses and children. This coverage is provided as long as these employees are part of the company or organization.

Are group health insurance premiums tax deductible?

Health insurance tax benefit creates a win-win situation for the employee and employer under the Income Tax Act of 1961. Tax deductions for paying the health insurance premiums come under Section 80D and Section 17 of the Income Tax Act.

Health insurance tax benefit for an individual:

For an insurance premium paid for self, spouse and dependent children an individual can claim a deduction of Rs 25,000.
Also, an additional deduction on health insurance up to Rs 25,000  for parents’ are applicable if the parents are less than 60 years of age. When the age is more than 60 years, the deduction benefit increases up to Rs 50,000.
If both individuals and parents are 60 years or above, the maximum deduction available under this section goes up to Rs 1 lakh.

Health insurance tax benefit for an employer:

When an employer pays all the health insurance premiums of the employees, it comes under the business expense by the company. The employer can show this expense as a profit-loss account and is therefore eligible for tax benefits according to the Indian Income Tax Act, 1961.
Different types of employers like  

In the pandemic era

In the current situation, especially as the world is fighting a Covid-19 pandemic, health insurance has become the need of the hour. As a result, the government has made group health insurance for the employees mandatory as a part of post lockdown covid operating guidelines.

In the Insurance Regulatory and Development Authority of India (IRDAI) circular, it states that "Reference is invited to Order No. 40-3/2020-DM-I (A) dated 15th April 2020 issue as part of the Consolidated Revised Guidelines by Ministry of Home Affairs (MHA), GOI.

According to that, All industrial and commercial establishments, workplaces, offices etc, shall put in place arrangements for the implementation of Standard Operating Procedure (SOP) before starting their functioning. As per clause no. 5 of Annexure-II of the said SOP for social distancing for offices, workplaces, factories and establishments,medical insurance for the workers to be made mandatory, as per the circular”

Further, the IRDAI press release issued on July 21, 2020, states: Insurers are allowed to offer covid insurance policyas a group product. The insurer needs to comply with the norms specified below for this product.

  • Insurers are allowed to use the standard product name for the group policy after adding the word “group”, provided all terms and conditions as applicable to the standard the individual policy remains the same except premium rate and specification on the operation of group policy.
  • The insurers shall determine the price keeping in view the cover proposed to be offered subject to compliance with the norms specified in the IRDAI (Health Insurance) Regulations, 2016 and Guidelines notified thereunder.
  • The product shall be filed on a use and file basis by duly complying with the norms specified in Chapter IV of Guidelines on product filing in the health insurance business as modified from time to time.
  • This group product shall comply with all the other applicable norms stipulated under “Guidelines on Product filing in Health Insurance business”.

In this regard, covid-19 insurance is being offered to the employees separately and also as a product of a group health insurance policy. It covers the hospitalization expenses, ICU and room rent, PPE kits, and many more.

Why should you buy group health insurance for your employees?

The world is still fighting against the Covid-19 pandemic, and purchasing a health insurance plan is no longer a luxury but a necessity for every individual. The government of India also states that group health insurance or coronavirus insurance is mandatory for every employee working in an organisation or a business institution.

So by purchasing a group health insurance policy, you create a sense of safety and provide financial protection against medical emergencies for the members of your organization. This will in turn boost their productivity at work.

Also, here are a few other reasons why GHI policy purchase for the employees might be a good idea.

Create financial protection during Covid-19 pandemic

From the time the Covid-19 pandemic struck the world, one common thing that was seen throughout any type of business was pay cuts. This created a downfall in the economy of the country while also affecting the finances of employees.

Hence, providing the employees with a group health insurance plan or a group covid insurance creates financial security to bear with the medical expenses that may arise due to the deadly coronavirus.

Enhancing employee retention

Individuals always value jobs that provide a sense of security to them. Providing group health insurance to the employees and their families, not only creates financial security but also creates overall contentment of the employees that the company cares about their wellbeing. Hence this boosts employee loyalty and thereby enhances employee retention.

Offering protection from severe illness

Lifestyle diseases is affecting more than 75% of the population in our country. The company More than 61% of illness hospitalization and death are also due to these conditions. The high-pressure jobs and lack of physical activity are some of the main causes of these illnesses. So group health insurance policy can safeguard your employees by ensuring coverage during diagnosis and treatment from these diseases at the earliest.

Boosting employee wellness and mental health

According to a study 74% of the people with financial constraints have poor mental health. As an employer when you provide an employee health insurance, you pretty much take care of the financial wellbeing of the employees during medical emergencies.

Providing health and wellness programs for employees withalong with a group health insurance plan can create wonders. A mentally healthy employee makes the organisation a productive workspace that creates successful companies.

What to look out for in a group health insurance?

As we saw a few reasons why group health insurance can be beneficial for the employees, here are a few things to look out for in a group health insurance policy.

Extended coverage for the family members

The group health insurance policy or the employee benefits insurance covers the employees and in most cases, it offers medical coverage to the employees’ dependent family members like parents, spouse, children. Since the healthcare costs are inflating it is always a good idea to cover the family members with an extra premium. This is one of the great advantages of a group health insurance policy.

Easy claim process

The health insurance claim process must be easy and simple. The turnaround time for the claim should be swift and hassle-free considering the legacy of the employee. Initiating cashless claims should be a small and easy process. For instance, showing the health insurance card provided by the insurer with a valid identity card should be sufficient to initiate the claim.

Covering pre-existing diseases

A group health insurance policy covers the diseases that are pre-existing in an employee at the time of policy purchase. A group plan makes sure that the pre-existing diseases are covered from day 1 with 0 waiting period.

Maternity coverage with maternity insurance

With a group health insurance policy in place, you can provide maternity insurance for the employees or their spouses. It can be one of the best advantages you offer to young employees. Most maternity insurance can cover both c-sections and normal deliveries along with newborn baby coverage for up to 90 days.

Group Health Insurance vs Individual Health Insurance (GHI vs HI)

Getting health insurance for oneself and their family is always a great idea. A medical emergency can wipe out our savings, a robust health insurance policy offers solid protection from this scenario. Hence, a health insurance plan is a long term investment. In the current scenario, there is a pool of top health insurance companies offering a bunch of different health benefits plans.  

Often one can be confused about a group health insurance policy and an individual health insurance policy. Also have questions like, is a group plan better than an individual health insurance policy?

Let’s analyse and find out key differences between group health insurance and individual health insurance.

Breaking down: a GHI health plan vs Individual health plan

Even if there is a similarity between group health insurance and individual health insurance, a GHI health insurance policy has many other advantages. Let’s see them one by one.

Company pays the premium

The company provides the group health insurance and pays the premium towards it. So it means the company covers the medical expenses created by the employees and their families during the employees’ employment tenure in the organisation. Hence, it makes the insurance free.

Extended coverage

When an employee is getting covered in group health insurance, the company will mostly cover the extended family members as well. Maternity insurance is also offered for the employees and their spouses, but an individual health insurance policy may not offer that. Maternity health insurance can be an extra add-on to the current health insurance plan.

Zero waiting period

The group health insurance plan offers coverage to pre-existing diseases from day 1 of the policy purchase. This means there is 0 waiting period for getting medical treatment for these conditions. Pregnancy is considered a pre-existing condition by the insurers. So it means that in an individual health insurance plan, one has to wait for a certain period to cover pregnancy. But in a group plan, no such waiting period is required.

Medical check-up requirement

The biggest gain of this group health insurance policy is that pre-existing disease is covered from day 1. Also, there is no necessity of undergoing a medical check-up before enrolling on a group health insurance policy. Whereas, individual health benefit policies require mandatory health check-ups.

Assistance of a relationship manager

Often, insurers assign a relationship manager to the employees to assist with paperwork, answer queries and apprehensions. In individual health policy, this is not the case.

Co-pay option

In individual health plans, one is often required to copay the dependents over 60 years of age. But in a group insurance plan, the employees can pay an extra premium to cover the dependents over 60 years of age and not opt for a co-pay option.

Limitations

However, there are certain limitations in group health insurance over individual health insurance plans. They are

  1. A group health insurance policy becomes invalid after retirement.
  2. Sometimes cost-conscious companies may ask the employees to pay the premium
  3. Some organizations may not offer coverage to dependent family members.

Group Health Insurance vs Individual Health Insurance: a comparison table

If we draw a comparison table between a group health insurance policy and an individual health insurance policy based on various key factors like age, power of cancellation, employment tenure etc., this is what we obtain.

Factor Group Health Insurance Individual Health Insurance

Cost of premium

In a GHI policy, the cost of the premium doesn’t increase with the age of the employee. In an individual health insurance plan, the cost of premium increases with the age of the insured.

Power of cancellation

The insurance company holds the power to cancel the policy. The power of cancelling a policy lies with the policyholder.

Employment tenure

The coverage of the policy is valid only till the employee is part of the particular organisation. The employment tenure has zero effects on an individual health insurance policy.

Contract holder

The company holds the contract of the insurance company and the employees are distributed with the insured certificates. The policyholder withholds the contract of the insurance policy.

Conditions

It depends on the financial stability of the employer or the organisation. It depends on the age and medical conditions of the individual as the health insurance company will consider all risk factors.

Group Health Insurance (GHI) for employers - why?

Good health and wellbeing help people to work productively and efficiently towards the business goals and objectives of the organization. In the current scenario, lifestyle diseases are taking a toll on the health and wellbeing of an individual. The ongoing Covid-19 pandemic scenario is making healthy people sick. Basic health requirements are becoming costlier. The increase in healthcare expenses and diseases has made the need for health insurance policy inevitable for having strong finances at tough times. As an employer, you can uplift your employees by having group health insurance in place.

Also providing group health insurance to employees can not only benefit them but also greatly benefit the organization or the employer. Let’s see how.

Lower tax benefits

As stated earlier, according to the Income-tax regulations in India, if the employer pays the group health insurance premium on behalf of the employees, then employers are eligible to claim the entire premium amount and avail tax benefits.

The Income Tax Act states that “Any amount paid by the employers for the employees’ benefit will be treated as Profit instead of salary”. The premium amount paid mostly comes under the category of general business expenses. These tax benefits can be availed by different business types like a sole proprietorship, partnership firms, companies (public or private), etc.

Happy workplace creating happier employees

There is no greater wealth than being healthy and happy. Mental well being and happiness are considered very important owing to the stress that one undergoes every day. Having group medical insurance cannot guarantee the good health of the employees but can support and provide financial assistance during tough times. Hence it empowers them and shows that the organisation cares for their employees.

Loyalty and retention of employees

Happy employees make happier workplaces. Employees are inclined towards jobs that provide them security and benefits. Providing group health insurance as an employee benefit can help the company to retain these talents. They will be happy which makes the possibility of them leaving the company lesser.

Goodwill generation and upliftment

There is nothing better than hearing “this is a healthy workplace” from the employees themselves. Providing an insurance cover can uplift the employee and also create a good brand name for the employer in the industry. This promotes the goodwill of the company and makes existing employees feel cared for. Thus creating a positive outlook.

Convenient and Economical

The employer does not need to worry about managing insurance-related processes as the insurance companies are tech-savvy. In the current scenario, the digital-first insurance companies have made policy purchases, customer service, and claims settlement easy and convenient. An employer can pay the premium on a monthly, quarterly or yearly basis based on the convenience of the organization.

For instance, Pazcare makes administering employee benefits and group health insurance policies easy. One can use the employer experience dashboard to add or remove employees, track claims, integrate with an HRMS tool, etc. Whereas the employees can use the employee experience dashboard to raise claims, access plans, know about coverage, and many more

Choosing the right group health insurance plan for your remote team

Group health insurance is one of the affordable health insurance plans available in the country. As per the post-Covid-19 lockdown guidelines, employers/organizations must offer the employee's group health insurance. Thus, it makes it important for the employer to understand the group health insurance plans and how it works. Few important aspects like terms and conditions associated with the policies, calculating the health insurance premiums have to be studied carefully to choose the best health insurance plan.

With the shift in working conditions from an office to working remote, here are a few things to keep in mind before buying group health insurance for your remote team.

Effectiveness of communication

While purchasing a group health insurance from an insurance company, it is important to see how the insurer responds and effectively communicates during the ongoing insurance tenure. During times of need, an employee must be able to communicate with the company with ease.

In most cases, the insurance company hires a third-party administrator or a TPA in health insurance for communication purposes and one has to make sure that the respective third-party administrator is good enough or not.

An insurance company with a good service track record would be able to add and delete employee records in the policy books, with minimal intervention from your side.

The Health Insurance premium

While deciding about the insurance company, it’s important to understand the premium, product and service aspects. Get to know how the company calculate the health insurance premium. Group health insurance plans are tailor-made according to the needs of the organization. It is important to conduct reference checks with the current group health insurance clients and understand their service levels. An efficient insurance company can provide the employees with the best deals.

Choosing the sum insured

It is essential to compare two health insurance plans. One such point of comparison is the sum insured. The sum insured is the maximum amount of money per individual that will be paid by the insurance company, in case the employee is hospitalized.

The important points to be noted while deciding the sum insured for group health insurance are the type of hospital the employee might prefer and the rising medical inflation costs. The additional sum insured goes cheaper as the premium goes up. For example, a 6 lakh cover costs as much as a 3 lakh cover. The premium costs for the high sum insured and the additional money spent if insured a lower sum might be equal.

Network hospitals

Accidents and diseases can take place anywhere in the world. Hence, while choosing a group health insurance, it's important to know if it covers the entire country or not. So, make sure the insurer has a large geographical coverage of hospitals also known as network hospitals. The list of hospitals gets updated every policy year. If it covers the entire country, then one has to know the list of network hospitals available in the city where they live. This becomes even more crucial if the company is based in a non-metro city.

Claim settlement ratio

An insurance claim settlement ratio is the ratio between the number of claims settled to the number of claims made in a financial year by an insurance company. This is an important aspect to consider before you purchase a group health insurance plan from any insurer. Higher the claim settlement ratio, the higher the possibility of the claims getting settled.

Extended coverage and benefits

The employees will love it if the group health insurance coverage is extended to/her dependent family members. However, think twice about this as the comprehensive coverage of the employee’s families may cost twice the premium costs.

Opt for a group health insurance plan with maternity insurance for the employees or their spouses especially if you have a young team.

Also, with the current covid-19 pandemic, make sure the plan comes with coronavirus insurance for covering your employees against all covid related medical expenses.

Waiving off waiting periods

The waiting period taken by the employees to undergo certain types of treatments has to be waived off. The waiting periods are categorised into

  1. Initial waiting period

    The initial waiting period is mostly 30 days. In the first 30 days of insurance policy purchase, one can take claims only for accident-related hospitalization. No illness/diseases will be covered in these first 30 days.

  2. Pre-existing disease waiting period

    Pre-existing diseases are specific diseases like diabetes, blood pressure, thyroid etc., which exist at the time of policy purchase. The waiting period here is about 3 to 4 years typically. Insurers will cover these diseases only after this waiting period.

  3. Mostly a group health insurance plan comes with 0 waiting period. In the rare case scenario if there is any waiting period one can choose to pay a high premium to waive off any waiting periods. This is a major advantage in the GHI plan when compared to other individual health insurance plans.

Staying informed

There are plenty of customization options available in the market to purchase the right group health insurance plans for your remote team. The right service, expert advice, purchase assistance and easy policy renewal terms are a few important aspects of any group health insurance policy.

If you are an employer who is in search of a good group health insurance plan for your employees, make sure to read the fine print of the insurance policy to understand the coverage in detail. The provider must be able to clear any doubts and give clarity regarding the same.

FAQ’s

For Employers

Q1. What is Health Insurance?
Health Insurance is a type of insurance product that covers your medical expenses in case of emergency. These expenses could be hospitalization costs, cost of medicines, or doctor consultation fees.
Q2. Why is Health Insurance important?
Medical Care is generally expensive. Buying health insurance can help you and your family during emergencies.
Q3. How does Health Insurance work?
Health Insurance is a piece of contract between the policyholder (you) and the insurer. The policyholder pays a small premium and in turn, the insurer takes care of your medical expenses. Ie: Hospitalisation Costs, Doctor consultation fees etc etc.
Q4. How to claim Health Insurance?

5 steps to claim your health insurance

  • Fill your claim form thoroughly.
  • A signed medical certificate from your doctor.
  • Discharge Summary (Original)
  • Hospital bills & receipts (Original)
Q5. Is Health Insurance tax deductible?
Yes, under section 80D of the Income Tax Act, the premium paid towards health insurance is tax-exempt.
Q6. What are the benefits of Health Insurance?
  • Cashless treatment.
  • Medical expenses are covered.
  • Long-standing critical illness is taken care of.
  • Tax exemptions.
Q7. What is the restoration benefit in Health Insurance?
Restoration benefit is something that an insurer offers once you exhaust your premium (after a medical emergency). The insurer restores your original sum that was previously insured.
Q7. What is the restoration benefit in Health Insurance?
Restoration benefit is something that an insurer offers once you exhaust your premium (after a medical emergency). The insurer restores your original sum that was previously insured.
Q8. Which Health Insurance is best in India?
There is not one but many health insurance policies provide great benefits to policyholders. To name some of them - ICICI Lombard Complete Health Insurance Plan, Star Health Family Optima Plan, Max Bupa Health Companion, Star Health Comprehensive Plan.
Q9. Will I be allowed to cover my family under my health insurance?
No, you cannot cover your family under your insurance. You can however buy a separate family/group insurance policy.
Q10. What are the types of health insurance plans I can buy?
  • Individual Health Insurance
  • Family Floater Health Insurance
  • Critical Illness Insurance
  • Hospital Daily Cash Benefit Plans.
  • Senior Citizen Health Insurance Plans
  • Group Health Insurance
Q11. How is health insurance different from life insurance?
In a life insurance policy the dependents/nominee are paid a lump sum of money on the event of your death whereas a health insurance policy offers financial assistance during diseases or hospitalization.
Q12. Is my health insurance policy valid throughout India?
Medical emergencies can happen anywhere around the world. Most health insurance plans cover anywhere in India, make sure you read all the documents related to the network hospitals provided throughout the country.
Q13. What are the documents required to obtain a health insurance claim?
The mandatory documents required are a valid identity proof, the health insurance card, hospital bills etc., during the time of claim. In the case of cashless claims a pre-authorization form is required.
Q14. What if I am admitted to a non-network hospital?
Treatment in a non-network hospital might not be valid for a claim right away. It works in a reimbursement process, where you have to pay the medical bills and then ask for a reimbursement from the respective insurer with all the valid documents.
Q15. How many claims are allowed in a year?
Any number of claims are allowed in a specified year unless there is any specified number of claims mentioned in the policy. However, the sum insured is the maximum limit of money that can be claimed.
Q16. What is a waiting period in a health insurance policy?
A period of 30 days is the waiting period from the date of policy purchase, it simply means it takes 30 days time to get into effect. During this period any hospitalization charges incurred are not payable by the insurers.

For Employers

Q1. What is Group Health Insurance?

Group Health Insurance is an insurance policy offered by the company to its employees. All employees will get a health insurance policy with the same coverage that the company decides.

Q2. Is group health insurance mandatory for employees?

Yes, according to IRDAI Order No. 40-3/2020-DM-I (A)

Q3. Can independent contractors be insured under Group Health Insurance?

With Pazcare, you can have contractual employees included in group health insurance which is unlikely if you try getting a GHI policy directly from an insurer.

Q4. How much of the premium should an employer have to pay?

In most cases, the employer pays the full premium. However, employer can choose to copay, where employees and the employer share the premium.

Q5. Are pre-existing conditions included in the coverage?

Yes, all pre-existing conditions are covered in group heath insurance.

Q6. Can group health insurance be ported?

You cannot port from one insurer to another in a year. However, you can come onboard with Pazcare with your existing insurer.

Q7. Which government regulate group health insurance

Insurance Regulatory and Development Authority, Government of India regulates insurance including group health insurance

Q8. Minimum number of employees required for group health insurance in India?

According to IRDAI, a minimum of 20 employees if required. However, with Paz for startups even a minimum two employees are qualified for a group health insurance policy.

Q9. What to add in your group health insurance policy?

Apart from the standard inclusions a group health insurance policy also covers.

  • Add parents/children and spouse
  • Mental wellness
  • Maternity coverage
  • Dental cover

Q10. Can you cancel group health insurance at any time?

Yes, in the free-look period of 30 days, you can get upto 100% of the refund. If cancelled within 1, 3 and 6 months after the free-look period, you can get 75%, 50% and 25% of the premium respectively.

Q11. Is a medical examination required for the employees for a GHI policy purchase?

No medical check up required for GHI. All pre-existing diseases are covered.

Q12. How does a company benefit from buying a GHI policy?

A company can avail tax-benefits, pay low cost premiums and create a goodwill generation among the employees on opting for a GHI plan.

Q13. Does the price of the premium in a GHI plan vary?

Yes, the pricing of a GHI plan can vary from company to company as the number of employees employed in each company is different.

Q14. Is it possible to buy a GHI plan for small business owners with 10 employees?

Yes! Check out Paz for Startups.

Q15. How is the premium amount calculated for a GHI plan?

Premium in group health insurance is calculated based on the age of the employees, location, the number of dependents and the type of coverage required in the plan.

Q16. How can I get group health insurance

Get in touch with Pazcare with your requirements. We will get you the best quotes from different insurers and you can choose one. Check 5 easy steps to get group health insurance for your team

Q17. Why group health insurance rates increase annually

The overall expenses of hospitals and medicines increases every year and hence insurers increase their premium to cover it. In GHI, your claim record and avarage age of employees plays a significant role in impacting your premiums. This year, if you have more claims from your employees, it might increase your premium next year.

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