How to Choose Health Insurance for Small Businesses
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In today’s rapidly changing work environment, employees have become critical assets and the workplace has become an integral part of an employee’s life. A recent survey revealed that 92 per cent of employees expect their employers to cover health risks by facilitating employer-sponsored insurance plans. That means if you want to stay competitive and see your business grow, you need to put your employees on a health insurance plan right away.
An employer-facilitated health insurance policy creates a win-win situation for both the employee and the employer. The employee benefits from an inclusive and cost-competitive employer-sponsored health insurance plan, while the employer benefits from employee wellbeing and loyalty.
When you offer your employees the benefits they value, they'll be more committed to meeting the company's goals, take fewer absences from work, be more satisfied, and be more likely to stay with the organization for long.
If you are planning on providing your employees with a health insurance policy, then put a lot of thought into it to ensure that your employees can extract maximum benefits out of the plan.
Consider the following factors when choosing a health insurance policy for your employees.
Match the Market Average Coverage
Medical inflation is on the rise at an alarming rate. One visit to the doctor can disrupt any middle-class family's monthly budget. So, you need to ensure that your employees have sufficient coverage. Do a market analysis and benchmark the average before deciding the sum insured. Most companies offer a health insurance cover of about INR 3-4 lakh on average. Try to match the market average, and as your organization expands, consider increasing the sum insured to INR 7-8 lakh.
Keep the Out-of-Pocket-Expenses as Low as Possible
If you want your employees to truly benefit from the health insurance policy, ensure that you keep their out-of-pocket expenses low or minimum. Features such as co-pay, room rent cap and treatment-specific limits, among others, put an unnecessary strain on the employees' pockets. So, try to keep these limits low or minimum. If possible, exclude them from the policy for employees to be able to get full value from their policy at the time of health insurance claim.
Let's explain how these limits affect the employees with the help of a case that happened with an employee of one of the top IT companies in India.
For the benefit of better understanding, let's address this employee as Mr X. So, Mr X, his family and his parents are covered through the employer-provided health insurance plan. So, when Mr X's mother had a head injury, he got her admitted in one of the best hospitals in the area to ensure that she gets the best treatment possible. The rent for a single air-conditioned room in the hospital was INR 6,400. The room rent was not particularly expensive but is a standard considering the hospital and the city. But, his insurance has a room rent cap of INR 2,400 for parents. And because he chose a hospital room that is above the room rent cap, the insurance deducted proportionately and asked the hospital to collect that amount from the patient. So, Mr X ended up paying 60 per cent of the total hospital bill from his pocket, and the rest 40 per cent was covered by the insurance provider.
Mr X's case totally destroys the company's good intentions of providing health insurance coverage for its employees and their families.
So, when you are deciding the room rent cap limit, take into consideration the standard room rent in a good hospital in that city. In a metro city like Bangalore, a standard air-conditioned room rent could be anything above INR 6,000. So, if you keep your room rent cap as per the standard room rent of that city, your employees can actually benefit from the healthcare coverage.
Consider Covering the Parents of the Employees
Most small business companies provide health insurance coverage to their employees, their spouses and children. Unfortunately, parents are ignored. However, parents are the ones who need medical care the most. So, when it comes to medical expenses, your employees probably spend most of their money on their parents.
When the employer-provided health insurance plan does not include parents, employees have to pay the medical expenses from their own pockets. This is why companies that offer coverage for parents easily win the trust of their employees and become a natural choice for the top talent in the industry.
Take Inputs From Your Employees
In most companies, no matter big or small, major decisions are taken by the top-level management in the human resources and finance departments. Employees working at the lower level in the hierarchy are not involved in such matters.
However, it would be a superior approach to follow if you could involve employees the insurance plans are actually meant for. This would allow you to share the details of the plan with them and take their feedback before deciding on the group policy.
By keeping the process transparent, you will be able to make your employees feel valued.
Make Employees a Co-owner of the Policy
A comprehensive plan includes many features and provides your employees with better coverage and benefits. If you plan on providing a comprehensive plan to your employees, but the premiums are way beyond your budget, make your employees a co-owner of the policy. At a nominal premium every month, deducted from their salary, your employees can enjoy premium benefits and better insurance coverage.
Cover Employees from Day 1
Many small business owners activate the employee health insurance plan after 6 to 12 months of joining. This makes the new employees feel that they are still not a part of the organization. While not providing health insurance coverage to new employees may save a little money in the short run, this penny-wise philosophy could dwarf your chances for great employee relationship in the long run.