Buying health insurance for your employees

Unlike individual health insurance policies which get costlier as the insured gets older, the group health insurance caters to employees of all ages without the stress of the policy getting exponentially expensive. The latter sends a message that an organisation cares for their wellbeing and does not treat them as just a resource.

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To any organisation, employees are one of their most important assets, and like every other asset, they should look forward to insuring them. The latter sends a message that an organisation cares for their wellbeing and does not treat them as just a resource. "Health is a very important element. If something serious happens and the person doesn't have an insurance cover, it affects not just his performance but the overall performance of the company. In that sense having group insurance by employer is a wise thing," says TA Ramalingam, Chief Technical Officer, Bajaj Allianz General Insurance.

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The Covid-19 pandemic changed everything, and one of them is how we look at health. With a number of people falling prey to the infection, organisations realised that a group plan covering employees is the second best thing next to monetary compensation. Says Raghuveer Malik, head, Corporate Business, Policybazaar.com. "In today's post-Covid-19 times, offering group health insurance is a win-win game for both the startup/organization and its employees.Under this single umbrella, the organisations can avail of several benefits like a healthy workforce which is considered the fuel of a productive workplace. Group health insurance plans offer high employee attraction and retention as it gives the feeling of belongingness and a sheer sense of being taken care of. Simultaneously, if the organizations take care of their employees, they will take care of the organization's clients which ultimately results in increased performance."


What is group insurance
As the name suggests, a group health insurance provides coverage to specific groups of people such as employees who belong to the same organisation. Under this plan, members get insurance cover at a reduced price as the provider's risk is spread across a larger group of policyholders. This scheme covers unexpected health issues, accidents or any mishaps. There are different variants available in group plan: ones covering only employees, those covering employees, spouses, and up to four dependent children, and then there are those that give the option of also covering either parents or in-laws.

"Since the cost of medical care is skyrocketing, to ensure minimum financial strain on employees, group policies are now covering OPD (out-patient department) expenses as well. Inclusions like mental healthcare, alternative medicines covering Ayurveda, Unani, naturopathy, or oriental medicine are even offered for overall employee protection by the group plan or corporate wellness covers. The option to add coverage for pets is even available to the employees now," adds Malik.

However, unlike individual health insurance policies which get costlier as the insured gets older, the group health insurance, on the other hand, caters to employees of all ages without the stress of the policy getting exponentially expensive. It also covers pre-existing medical ailments, and maternity. So, employees who might not be eligible for an individual insurance policy can also enjoy the benefits of medical insurance. Moreover, the employee doesn't have to wait and is insured from the very first day of buying insurance.

Another benefit of a group health insurance cover is faster processing due to absence of medical underwriting. However, getting individual health insurance takes up to 6-8 weeks apart from the waiting time, from the start of the application process until the policy gets approved and finalised. Individual insurance plans often have a waiting period ranging from two to four years for treating common illnesses, even if they are not pre-existing.
The premium of a group health plan is based on coverage, number of employees and benefits opted for. It is usually five to seven times cheaper than the individual plan. The employer can choose the corporate wellness cover based on their financial capacity as there are plans with different benefits, so the premium prices also vary depending on the employer's preference.

Besides state-run insurers, a number of private insurers like Acko, Star Health, Bajaj Allianz, Tata AIG, ICICI Lombard have group health insurance on offer. "The awareness about health has increased. And post-pandemic, the scene has changed a lot. We are seeing a lot of queries from the employers about group coverage to make sure that the coverage is large enough. Even those who were not willing to go for it earlier are thinking about it now," adds Ramalingam. "I am considering buying a group cover for my employees as it brings a sense of belongingness towards the company and adds to their retention," says Prashant Verma, who runs a small media buying agency in Delhi.

So, how many employees does an organisation need to have to consider group plans for its employees? According to the Insurance Regulatory and Development Authority (IRDAI), any group with seven or more members can get group health insurance. Even with less than seven employees, group health insurance policies can still be issued if employers add the family members of the employees. They've also given the liberty to the insurance providers to determine the size of the group they'd want to provide insurance to.

Most health insurers offer group insurance for a minimum of 20 employees, however it varies from insurer to insurer. ICICI Lombard, for instance, offers plans to organisations with a minimum of 10 employees. However, it has been observed that small businesses & startups in India struggle to offer health insurance due to low employee count. To solve this issue, some of the fintechs like Razorpay and insurance platform Plum provide a comprehensive and affordable group health insurance for companies with a team size of just two employees. "On Plum platform, group health insurance is available on a subscription basis. This is especially useful to organisations who have just started out and evolving. They don't have to deal with any lock-in period in case of exit by employees," says Abhishek Poddar, Co-founder and CEO, Plum.


Tax benefit
As per Section 37(1) of the Income Tax Act, 1961, a company can apply tax exemption for the premiums paid towards the group plan. and can be declared under business expenses, and can be availed as monetary benefit.

Enhancing coverage

To help employees enhance their coverage, companies can arrange for a group top-up plan in addition to the regular one. Not only it is cheaper because of bulk buying, but typically does not have any waiting period. Since the premiums are paid by employees, they can avail tax benefits for the same under section 80 D.

There are two types of top-up plans, standard top-up and super top-up. Under the standard plan, the deductible is applied on each and every claim, whereas in the super top-up plan, the aggregate expenses incurred in the policy year are counted towards the deductible.

Experts also advise employees to have their own individual cover in addition to having a corporate one. "A group health plan is valid only for a certain period during which an employee is working with the company. Therefore, it is better to have an individual cover, bought at an early age," adds Ramalingam.