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Tata Capital > Blog > Insurance > Group Health Insurance: Meaning, How It Works, Benefits


Group Health Insurance: Meaning, How It Works, Benefits

Group Health Insurance: Meaning, How It Works, Benefits

As an employer, you're well aware of the importance of attracting and retaining top talent. And what better way to do so than by providing health insurance for your esteemed employees?

And if this seems like a tall ask, then you are mistaken! With financial institutions offering comprehensive group health insurance, providing health insurance to all your employees is easier than ever.

Group health insurance not just provides free coverage for employees but also provides maternity and new-born baby coverage, coverage for employees’ family members, and many more.

In this article, we will explore in detail what group health insurance is, how it works, and its benefits. So, let’s get started.

What Is Group Health Insurance?

Group health insurance are plans sponsored by a business or a group that offers healthcare to its employees or members and their families. As per IRDA, organisations or groups with over 20 employees can opt for a group medical plan. However, micro-insurance plans are available to groups with a minimum of 5 members.

This health insurance policy works similarly to an individual or family health insurance policy (depending on who all are covered by the same), with the significant difference being that the employer pays the premium, and the policy benefits end if the individual leaves the organisation. Simply put, when employees leave the job, they cannot take the benefits with them.

In terms of coverage cost, since the risk is spread among the group members, the coverage cost of group medical insurance is typically lower than that of individual plans. But while taking out a group medical plan, keep in mind that there are numerous differences between plans in terms of costs, terms, and conditions, and plan kinds, so choose wisely.

How Does Group Health Insurance Work?

The workings of group medical insurance are similar to that of the individual with few exceptions. Only groups, not individuals, are eligible for group medical insurance plans. Moreover, the group cannot be just a random group. People in a group must have something in common other than a need or desire for health insurance for group health insurance to be implemented.

This is why businesses and organisations mainly take these types of insurance. They purchase group health insurance policies to give medical coverage to their employees. Employee-employer group insurance frequently covers employees, members, spouses, and families. The ability to enrol in group medical coverage is often given as part of an employee benefits package or as an incentive to become a part of their firm.

Individual employees do not sign up for group medical insurance policies on their own. Instead, the master policyholder, such as a corporation's human resources department, engages with the insurance provider on behalf of the individuals covered by the policy.

Following the selection of a plan by the organisation, group members are given a choice to accept or deny coverage. In some cases, policies may be separated into tiers, with insured parties able to pick between basic coverage and advanced insurance with add-ons. Premiums are shared between the organisation and its members based on the plan.

However, in any case, if an employee pays a little extra premium cost, then the health insurance coverage may be extended to the employee's immediate family and/or other dependents. This is, however, not true for every organisation.

Aspects Covered Under a Group Health Insurance Policy?

1. Post-hospitalisation and pre-hospitalisation expenses

Before hospitalisation, individuals often encounter various medical expenses such as diagnostic tests and investigative procedures. Even after being discharged, there may be additional expenses for follow-up tests. Thankfully comprehensive group health insurance covers all of these costs.

2. Health coverage of parents, kids and spouse

You can add family members of the employees to the group insurance policy for employees. For example, you can choose to have your spouse and parents covered by the policy in the event of a medical emergency.

3. Cashless hospitalisation at network hospitals

The cashless approach allows the insured to be treated at any network hospital without having to pay anything upfront. This allows your employees to be treated for illnesses without incurring financial costs.

4. Maternity expenses

A group health insurance also covers maternity-related expenses. This includes surgery expenses, normal and C-section deliveries, etc. Similarly, some health insurance also covers a new-born’s health expense for up to 90 days.

What Are the Benefits of Group Health Insurance?

1. Boost employee retention

A group health insurance plan provides your employees and their families with financial stability and also assures them that their employer genuinely cares about them. This sense of care and security amongst your employees will boost the employee retention rate in your organisation.

2. Savings in taxes

Employers who provide group health insurance to their employees are eligible for tax breaks under various sections of the Income Tax Act. The premiums you pay on behalf of your employees are considered fringe benefits and can be classified as a business expense as an employer.

As a result, if you pay the entire premium payment, you can take advantage of the group mediclaim policy tax benefit on the entire amount. It's a win-win situation for the organisation because you can save money on taxes while still caring for employees.

3. Protect employees from severe health conditions

As per a research publication in “Body Burden: Lifestyle disease”, lifestyle-related disorders account for more than 61% of hospitalisations and deaths in India. You can protect your staff from these and other ailments with group health insurance.

It will help your employee identify these problems sooner.  The sooner these problems are identified, the sooner they may be treated and resolved.

4. Improve the employees’ mental health

Financial pressures stemming from medical expenses often lead individuals to experience significant stress, ultimately resulting in low productivity levels within the workplace. However, with the correct support, a group medical insurance plan will protect their finances, reduce their stress and improve their general mental well-being.

5. Boosting goodwill

In today's world, any company must have a good reputation inside and outside the organisation. A compelling set of corporate health insurance benefits, in addition to a good workplace environment and growth rate, ensures that the organisation's overall goodwill in the market grows.

To End

Group medical insurance plans are among the most affordable types of health insurance plans available. It is beneficial for both the employers as well as the employees. So, if you wish to invest in group health insurance, opt for Tata Capital to cover your employees’ various health needs. 

Make your employees’ future secure. Visit our website to know more.

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