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Group Health Insurance

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Group Health Insurance Premiums

Premium is the money you pay to get group mediclaim policy. Premiums are paid yearly. That is, you pay a premium for insurance that lasts one year and payment is made once a year. The premium for group health insurance is paid by the employer. However, the employer can make the employees pay a certain percentage of the premium as well. Here we have talked in detail about how premiums work in group health insurance

How are premiums calculated for group health insurance?

The health insurance premium for your group plan is calculated based on various factors like

The average age of your employees

Your insurer calculates the group health insurance premium based on the average age of your employees. As the average age of your employee increases the premium you pay towards your group health insurance policy increases.

The type of plan you choose in GMC

In a group health insurance plan, you have option of choosing

  1. E - Employee only
  2. ESC - Employee, spouse and children
  3. ESCP - Employee, spouse, children, parents or in-laws.

The premium increases according to the increase in the dependent members.

For instance, the premium paid towards the ESCP plan will be higher than the E-only plan as there are fewer lives covered. Hence, your group health insurance premium varies based on the type of group health insurance plan you choose.

The sum insured

The sum insured is the maximum amount the insurer will pay the policyholder in case of any unforeseen events.

You can choose this based on the type of hospital your employees choose, the number of dependents covered, etc. You can choose the sum insured from as low as Rs.50,000 to Rs.10,00,00 or more.

Yes, the premium increases with a higher sum insured but the increase is not directly proportional.

For example, let us assume that the premiums for the respective sum insured are

Sum Insured (₹) Premium (₹)
50,000 100
1,00,000 120
3,00,000 150
4,00,000 200
10,00,000 230

So, you can see there is no linear increase between the premiums of Rs.50,000 and Rs.10,00,000.

Nature of job

The type of job also influences the premium for your corporate health insurance policy. If the health risk associated with your job is high, then the premiums you pay towards the plan may also increase.

For instance, if you work in the mining industry, your health insurance premium may be slightly higher than that of the employees working in the IT industry.

What impacts an increase in the premium year-on-year?

Healthcare inflation

As the country's medical costs go up, insurance premiums also will go up. The coverage you offered last year may not be sufficient this year considering the costs of healthcare. Companies generally follow a benchmark in their industry when it comes to coverage to avoid offering something too low or high for their team.

Add-ons opted

The concept of health insurance is changing dynamically. Today companies want to offer something that not only pays your medical bills but also covers other health-related expenses. Now, these benefits are add-ons in an insurance policy.

You can choose additions to your group health insurance plan like maternity insurance, health and wellness programs, dental insurance, doctor consultations, room rent capping, and many more.

Your premiums increase based on the add-ons you choose.

Claim history

If you are purchasing group health insurance for the first time for your organization, then you need not worry about this. However, if you are not new to purchasing a group health insurance plan for your team, then your insurer may look at the claim history you had in the past to decide your premium.

In case, you have a higher number of claims raised in the previous financial year, then it may lead to slightly higher premiums for the next financial year.

Age of employees

According to the insurer, as the age increases, the medical risks associated with the employees go up.

So your insurance company raises the premium to compensate for the risks.

According to this, a company with a younger workforce where the average age of employees is between 20 to 30 may pay lesser premiums than the ones with an average age of 45.

Frequently asked questions

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