Minimum Number Of Employees For Group Health Insurance In India

As per Insurance Regulatory and Development Authority of India (IRDAI), a company with 7 or more lives is qualified to get group health insurance. However, it is up to the insurers to decide the minimum size they want to cater to. Commonly public insurers prefer offering group health insurance to companies with more than 100 lives and private insurers offer it to companies with more than 50 lives.

What does IRDAI say about the minimum number of employees for group health insurance in India?

According to the Insurance Regulatory and Development Authority of India (IRDAI), a group must have a minimum of 7 lives to be eligible for group health insurance.

Important clarification:

IRDAI uses the term “lives”, not “employees.” This distinction is extremely important and often misunderstood.

• A life refers to any individual covered under the policy
• An employee refers only to the person on the company payroll

Because of this, companies can meet the eligibility requirement even with a smaller number of employees by including dependents.

Minimum Number Of Employees For Group Health Insurance In India (IRDAI Guidelines)

Minimum number of employees for group health insurance in India: How insurers actually work

While IRDAI provides the regulatory framework, insurance companies are free to decide the minimum group size they want to insure based on their risk appetite.

In practice, the minimum size varies as follows:

• Public sector insurance companies generally prefer groups with 100 lives or more
• Private insurance companies usually start offering group health insurance from 50 lives
• Startup- and SME-focused insurers may offer group health insurance starting from 7 to 10 lives

The biggest exception: Lives are not the same as employees

One of the most important aspects of group health insurance eligibility is that insurers count lives, not employees.

This means employers can include:

• Employees
• Spouse of employees
• Dependent children
• Parents (subject to insurer terms)

Example:

Suppose your company has:

• 5 employees on payroll
• An insurer requires a minimum of 7 lives

You can meet this requirement by:

• Adding parents of 2 employees, or
• Adding spouses of employees

This flexibility allows even small companies to qualify for group health insurance in India.

Parental inclusion rule

For companies with less than 200 employees, insurers often require 100% parent enrollment if parents are included in the policy. Partial inclusion of parents may not be allowed.

Can companies with less than 7 employees get group health insurance?

In some cases, yes.

If your company has fewer than 7 employees, insurers may still consider offering employee health insurance if:

• The workforce consists largely of contractual or non-permanent employees
• The employer agrees to 100% enrollment of eligible members
• The insurer follows flexible underwriting norms

Over the last few years, many insurers have become more open to covering contractual employees, especially for startups and project-based companies.

Are part-time and contractual employees eligible for group health insurance?

Part-time employees

Traditionally, part-time employees are not eligible for group health insurance because:

• Their employment is not continuous
• Their income structure may not meet insurer criteria

Contractual employees

Today, many insurers allow coverage for:

• Contractual employees
• Fixed-term employees
• Project-based staff

Eligibility depends on:

• Length of contract
• Employer-employee relationship
• Insurer underwriting rules

Age limit in group health insurance policies

As per standard group health insurance norms:

• Individuals above 65 years of age are generally not eligible

However, this is not an absolute restriction.

If your workforce is primarily senior or includes older dependents:

• Insurers may offer custom employee health insurance solutions
• Special underwriting and premium loading may apply

These cases are evaluated individually rather than through standard plans.

How number of employees impact your group insurance premium?

When you go to a wholesale shop and buy 200 notebooks, you can ask the shopkeeper for a discounted price. Let’s say 200 notebooks cost Rs 2000 and you get a discount of Rs 100. If you buy just 10 notebooks, then you will hardly get any discount. This is the same way group insurance work.

When you have a big employee strength, you can negotiate the price better. However, it is also important that with a bigger employee strength, comes a bigger claim dump. If many employees claim huge amounts in a year, then the next renewal might get a bit expensive as insurers would want to compensate for the money spent on settling claims.

Also read: Group health insurance premiums

What happens if the employee size goes lesser than the minimum size after group health insurance is issued?

The limit applies only at the time of issuance of a group medical insurance policy. If the number decreases after you get your group health insurance it won’t be a problem. However, when you go for renewal, which happens annually, you need to have the minimum size that your insurer dictates.

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