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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 group medical insurance’s meaning, 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 Insurance Regulatory and Development Authority of India (IRDAI), organizations 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 five 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 organization. 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 cost of group medical insurance coverage is typically lower than that of individual plans. But while taking out a group medical insurance 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 organizations 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 enroll 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 organization, 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 organization 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 organization.

Eligibility criteria for group health insurance in India

Here are the eligibility criteria for buying a group health insurance policy in India:

  • Any business organization, group with a common interest, or cultural or social association can purchase group health insurance.
  • According to IRDAI, for the purpose of group health insurance, a group is defined as an employer-employee group or a non-employer-employee group. In the case of non-employer groups, members must share a clearly defined and verifiable common interest.
  • Companies with at least 20 employees are generally eligible to buy standard group health insurance.
  • Small businesses with fewer than five employees can also opt for micro group health insurance.

Types of groups eligible for group health insurance

Here are the main types of groups that can qualify for group health insurance:

1. Employer-employee groups: In this case, an organization purchases group medical insurance for its employees. It can apply to companies of different sizes. Large organizations with 20 or more employees are typically eligible for standard group health insurance. For small businesses with fewer than five employees, regular group medical insurance may not always be available. However, they can opt for micro group medical insurance coverage.  

2. Non-employer-employee groups: These groups are connected through a shared interest. Examples include members of a cultural or social association, sports club, credit card holders of a specific bank, etc.

What are the benefits of group health insurance?

Here are some benefits of a group mediclaim policy:

1. Post-hospitalization and pre-hospitalization expenses

Before hospitalization, 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 hospitalization 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.

5. 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 organization.

6. 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. Group health insurance benefits the organization because you can save money on taxes while still caring for employees.

7. 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 hospitalizations 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.

8. 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.

9. Boosting goodwill

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

Limitations and exclusions in group health insurance policies

Here are some common limitations and exclusions under group medical insurance coverage:

  • Diseases caused by excessive alcohol consumption, smoking, tobacco consumption, or vaping are usually not covered.
  • Pre-existing conditions may be excluded or covered only after a specified waiting period.
  • Cosmetic treatments such as plastic surgery, Botox, or dermal fillers are not covered under group health insurance, unless required due to an accident.
  • Mental illness and substance abuse-related treatments may be excluded in some group medical insurance policies.
  • Expenses arising from self-harm or suicide attempts are not covered.
  • Dental, eye, and ear treatments are excluded unless caused by an accident.
  • Maternity and newborn expenses are covered under group health insurance only after a waiting period, while infertility treatments and abortion are excluded.

Difference between group health insurance and individual health insurance

Group health insurance covers a group of people, usually employees of an organization, while individual health insurance covers a single person or family. Individual health insurance typically offers a higher sum insured, whereas group medical insurance plans have a fixed and often lower sum insured decided by the employer.

Additionally, individual plans usually provide more comprehensive coverage across a wider range of illnesses and treatments. Group medical insurance coverage may have certain limitations and exclusions. Premiums for individual health insurance are generally higher due to broader coverage, while group medical insurance premiums are lower and more affordable.

Renewal terms for group health insurance

Group health insurance usually has short policy terms based on the employer’s or group head’s requirements. The employer or group administrator must renew the policy once it expires. However, renewal depends on whether the covered members are still part of the organization or group at the time of renewal.

Customization options and add-ons 

Employers or group heads can customize the group health insurance plan based on their group’s needs. They can decide the number of people covered, opt for specialized coverage, and add riders to enhance the plan’s benefits. They can also choose a suitable policy tenure, subject to the insurer’s terms and conditions.

To end

Group medical insurance plans are among the most affordable types of health insurance plans available. Group health insurance benefits 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.

Apply for group health insurance now!
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FAQs

What is group health insurance, and how does it differ from individual health insurance?

Group medical insurance covers a group of people connected through employment or an association and is offered by the employer or group head, while individual health insurance is purchased by individuals to cover themselves or their families.

Who can be included under a group health insurance policy in India?

In India, group health insurance can include employees of the same organization, their dependents, and members of recognized groups such as professional, cultural, sports, or other registered associations.

Are pre-existing conditions covered under group health insurance in India?

Pre-existing conditions may be covered under group health insurance in India. However, there may be a short waiting period before a claim can be made for the treatment of such diseases, depending on the policy terms.

Can family members of employees be covered under a group health insurance policy?

Yes, many group health insurance policies allow employees to include dependent family members such as a spouse, children, and parents, subject to the policy terms.

What are the tax benefits available for employers and employees under group health insurance?

Under group health insurance, employers can claim premiums as business expenses under Section 37 of the Income Tax Act, while employees contributing to the scheme can claim deductions under Section 80C for their share.

What is the minimum number of members required for group health insurance in India?

In India, group health insurance requires a minimum of 20 members for large organizations or groups, while small groups can enroll with at least 5 members.

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