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Group Health Insurance vs Individual Health Insurance: Which Health Insurance Plan is Better For Your Employees?

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Ryan Kennelly
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What is Group Health Insurance?

Group health insurance (GHI) is a type of health insurance that provides coverage to employees of a company or organization. The group health insurance for employees is also known as corporate insurance plans or employee health insurance. 

A group health insurance plan usually covers the employees and their dependent family members like spouses, children, parents and in some cases, it even covers the in-laws. The group health insurance plan after the pandemic mostly includes covid-19 insurance, maternity benefit, accidental insurance, etc. The group health insurance policy is typically offered to the employees as a part of the employee benefits plan.

Providing group health insurance not only benefits the employees during medical emergencies but also provide the employers with tax benefits.

What makes a group health insurance plan different?

A group health insurance plan is different from the other health insurance plans available in the market for the following reasons.
- In group health insurance, the insurer’s risk is spread among the fellow policyholders, in this case, the entire members of the organization. As a result, the employees receive it at lower premium costs compared to an individual health insurance plan. Hence, this makes them affordable and cheaper than any other individual health insurance plan available in the market.
- A group health insurance policy can provide coverage to pre-existing diseases from day 1 with 0 waiting period, provide maternity insurance, covid-19 insurance, and many more.
- Also, they differ in aspects like the insurer, the plan type, the cost, the terms and conditions, etc.

How does a group health insurance plan work?

The companies and organizations purchase the group health insurance plans from the insurer and offer them to their members or employees. A minimum number of employees is required for purchasing group health insurance. 

Typically, a company with 2 or more full-time W2 employees are qualified to purchase a group health insurance plan. However, if a company has 5 or more employees, they are eligible to purchase a level-funded group plan. 


A 50% participation by group members is mandatory for purchasing these group plans. In most cases, a group health insurance policy covers not only individual employees but also family members like dependent parents, spouses and children. This coverage is provided as long as these employees are part of the company or organization.

Group Health insurance tax benefit

Health insurance tax benefit creates a win-win situation for the employee and employer under the Income Tax Act of 1961. Tax deductions for paying the health insurance premiums come under Section 80D and Section 17 of the Income Tax Act.

Health insurance tax benefit for an individual:
‍
For an insurance premium paid for self, spouse and dependent children an individual can claim a deduction of Rs 25,000.
Also, an additional deduction on health insurance up to Rs 25,000  for parents’ are applicable if the parents are less than 60 years of age. When the age is more than 60 years, the deduction benefit increases up to Rs 50,000.
If both individuals and parents are 60 years or above, the maximum deduction available under this section goes up to Rs 1 lakh.

Health insurance tax benefit for an employer:

When an employer pays all the health insurance premiums of the employees, it comes under the business expense by the company. The employer can show this expense as a profit-loss account and is therefore eligible for tax benefits according to the Indian Income Tax Act, 1961. Different types of employers like 
Sole Proprietorship
Partnership Firms
Public Companies
Private Companies
Start-ups, mid and enterprise-level companies are eligible for tax benefits of group health insurance.  

Group Health insurance tax benefit

In the pandemic era

In the current situation, especially as the world is fighting a Covid-19 pandemic, health insurance has become the need of the hour. As a result the government has made group health insurance for the employees mandatory as a part of COVID operating guidelines.

In the recent Insurance Regulatory and Development Authority of India (IRDAI) circular, it states that "Reference is invited to Order No. 40-3/2020-DM-I (A) dated 15th April 2020 issued as part of the Consolidated Revised Guidelines by Ministry of Home Affairs (MHA), GOI. As per the said order, inter alia; the following are stipulated:

All industrial and commercial establishments, workplaces, offices etc. shall put in place arrangements for the implementation of Standard Operating Procedure (SOP) before starting their functioning. As per clause no. 5 of Annexure - II of the said SOP for social distancing for offices, workplace, factories and establishments, medical insurance for the workers to be made mandatory, as per the circular”

In this circular, the insurers have been advised to offer comprehensive health insurance policies to individuals or groups to enable the organizations to fall in with the Government’s directions. Also the regulatory board has advised that these comprehensive health insurance plans be created with simple wordings and conditions and at an affordable cost for the stated organizations.

It is noted that under Covid-19 coverage a variety of Insurance providers cover hospitalization charges, treatment expenditure, ICU expenses and many more.

Group health insurance(GHI) or corporate health insurance policies are purchased as employee benefit packages by the employer. The cost of the premium is much lesser in the Group Health Insurance policy when compared to an Individual health Insurance policy. This is because the insurer’s risk is spread among the fellow policy holders. In the current Covid-19 pandemic era a Group Health Insurance policy can cover from hospitalization to treatment for Covid-19 which can make an employee be less worried about him and the family and focus on the long term goals of the company.

Why should you buy GHI for your employees?

The world is fighting against Covid-19 pandemic, and as a result Health Insurance has become mandatory for every individual. The Government has also stated that Group Health Insurance (or Covid Insurance ) is mandatory for every employee working in an organization or a Business institution. This was announced as a part of post-covid operating guidelines.

Hence it is observed that when a GHI health insurance is purchased for the members of the organization, a sense of safety is created among  employees boosting their confidence at work helping them stay more inclined towards the goals of the company.

Here are a few other reasons why GHI policy purchase for the employees might be a good idea.

Create financial protection during Covid-19 pandemic

From the time Covid-19 pandemic struck the world, one common thing that was seen throughout any type of business was pay cuts. This created a downfall in the economy of the country  while also affecting the finances of employees.

Hence creating a financial security to bear with the medical expenses that may arise due to the deadly coronavirus. (Corona Kavach Policy) This can make them medically and financially secure.

Enhancing employee retention

Jobs that provide a sense of security are always valued by individuals. When a company provides GHI health insurance to its employees and their families, it not only provides them with financial security but also creates an overall contentment about the fact that the company cares about their employees as well. Hence this boosts employee retention and loyalty.

Offering protection from severe illness

In our country more than 75% percent of the population is getting affected by lifestyle diseases. The high-pressure jobs, lack of physical activity are some of the main causes. Further it is also noted that more than 61% of illness hospitalization and death are also caused by lifestyle diseases.

So GHI health insurance can safeguard  employees from these diseases at the earliest. GHI can come handy during diagnosis and treatment of these diseases.

Boosting employee motivation and mental health

Just like Happy wife, happy life, a mentally healthy employee makes the organization a happy workspace which creates successful companies. Humans are motivated when they are provided with security and happiness. This will increase their working efficiency. This further boosts employee mental well-being.

When employees are subjected to stress due to their financial status and  personal problems, these perks can offer them mental peace to a larger extent. Thus, increasing the productivity in their workplace.

Source: Northwestern medicine

What to look out for in a group health insurance?

As we saw a few reasons why group health insurance can be beneficial for the employees, here are a few things to look out for in a group health insurance policy.

Extended coverage for the family members

The group health insurance policy or the employee benefits insurance covers the employees and in most cases, it offers medical coverage to the employees’ dependent family members like parents, spouse, children. Since the healthcare costs are inflating it is always a good idea to cover the family members with an extra premium. This is one of the great advantages of a group health insurance policy.

Easy claim process

The health insurance claim process must be easy and simple. The turnaround time for the claim should be swift and hassle-free considering the legacy of the employee. Initiating cashless claims should be a small and easy process. For instance, showing the health insurance card provided by the insurer with a valid identity card should be sufficient to initiate the claim.

Covering pre-existing diseases

A group health insurance policy covers the diseases that are pre-existing in an employee at the time of policy purchase. A group plan makes sure that the pre-existing diseases are covered from day 1 with 0 waiting period.

Maternity coverage with maternity insurance

With a group health insurance policy in place, you can provide maternity insurance for the employees or their spouses. It can be one of the best advantages you offer to young employees. Most maternity insurance can cover both c-sections and normal deliveries along with newborn baby coverage for up to 90 days.

Group Health Insurance vs Individual Health Insurance (GHI vs HI)

Getting health insurance for oneself and their family is always a great idea. If you are reading this, you probably know the benefits of having health insurance and how it comes handy during medical emergencies, allowing us to get the best medical help possible rather than waiting to get the finances ready for the treatment.

In the current scenario, there are a pool of health insurance companies offering a bunch of different health benefits plans. A medical emergency can wipe out our savings, a robust health insurance policy offers solid protection from this scenario and helps us make decisions about long-term investments.

Having said this, we are often confused about opting a Group Health Insurance policy or buying an Individual health insurance policy. What if you are included by your employer in a group health insurance policy? Is it better than an Individual health insurance policy? Let’s analyze and find out key differences behind group health insurance vs individual health insurance.

Breaking down: a GHI health plan vs Individual health plan

The company provides the group health insurance, thus the company covers the medical expenses created by you and your family during your employment tenure in the organization.

Even if there is a similarity between a GroupHI health insurance and individual health insurance, a GHI health insurance policy has many other advantages. Let’s see them one by one.

Company pays the premium

In a group health insurance plan, the the bulk of the premium is paid by the company and not the employee. Hence, it makes the insurance more affordable and a job incentive.

Extended coverage

When an employee is getting covered in a GHI health insurance, it also means that the privilege is extended to your family members as well. Maternity coverage is also offered for the employees and their spouses, but an individual health insurance policy may not offer that.

Zero waiting period

In a group health insurance the health cover offered by the company is determined by the company. The waiting period could be the first day of employment or up to 90 days after your date of hire.  

No pre-existing condition exclusions

The biggest gain of this group health insurance policy is that pre-existing illness is covered from day 1. Also there is no necessity of undergoing a medical check-up before enrolling to a group health insurance policy. 

Assistance of a relationship manager

Often, insurers assign a relationship manager to the employees to assist with paperwork, answer queries and apprehensions. In individual health policy, this is not the case. In individual health plans, one is often required to co-pay the dependents over 60 years of age.

Limitations

Like there are two sides in a coin, there are certain limitations in Group health insurance over Individual health insurance plans. Like the following.

  1. A group health insurance policy becomes invalid after retirement.
  2. Sometimes cost conscious companies may ask the employee to pay the premium and sometimes may not offer coverage to family members.
  3. In a group health insurance policy, one cannot customize the plan according to individual needs.

Group Health Insurance vs Individual Health Insurance: a comparison

If we are to draw a comparison table about a group health insurance policy and individual health insurance policy based on various key factors like age, power of cancellation, employment tenure etc., this is what we obtain.

Factor Group Health Insurance Individual Health Insurance
Cost of premium In a GHI policy, the cost of the premium doesn’t increase with the age of the employee. In an individual health insurance plan, the cost of premium increases with the age of the insured.
Power of cancellation The insurance company holds the power of cancelling the policy. The power of cancelling a policy lies with the insured.
Employment tenure The coverage of the policy is valid only till the employee is part of the particular organization. The employment tenure has zero effects on an individual health insurance policy.
Contract holder The company holds the contract of the insurance company and the employees are distributed with the insured certificates. The policy holder holds the contract of the insurance policy.
Conditions It depends on the financial stability of the employer or the organization. It depends on the age and medical conditions of the individual as the health insurance company will consider all risk factors.

Group Health Insurance (GHI) for employers - why?

Good health and wellbeing helps people to work productively and efficiently towards the business goals and objectives of the organization successfully. In the current scenario, lifestyle diseases are taking a toll on the health and wellbeing of an individual. The ongoing Covid-19 pandemic scenario has even made healthy people sick.

Basic health requirements are becoming more costly. The increase in healthcare expenses and diseases has made the need for health insurance policy inevitable for having a strong finances at tough times.

Providing a Group health insurance to employees can not only benefit them but also greatly benefit the organization or the employer. Let’s see how.

Lower tax benefits

According to the Income tax regulations in India, if the employer pays the group health insurance premium on behalf of the employees, then employers are allowed to claim the entire premium amount and avail tax benefit.

The Income Tax Act states that “Any amount paid by the employers for the employees’ benefit will be treated as Profit in lieu of salary”. The premium amount paid mostly comes under the category of under general business expenses. These tax benefits can be availed by different business types like sole proprietorship, partnership firms, companies (public or private), etc.

Happy workplace creating happier employees

There is no greater wealth than being healthy and happy. The mental well being and happiness are considered very important owing to the stress that one undergoes everyday.

Having medical insurance cannot guarantee good health but can support and provide financial assistance during any tough times. Hence it empowers them and also makes them feel they are cared for.

Loyalty and retention of employees

As mentioned earlier, happy employees make happier workplaces. Employees are inclined towards jobs that provide them security. Providing group health insurance can help the company to retain these talents as they will be happy which makes the possibility of them leaving the company lesser.A successful company can be made as the employees are loyal and happy, increasing the employee retention rate.

Goodwill generation and upliftment

There is nothing better than hearing “this is a good workplace” from the employees themselves. Providing an insurance cover can uplift the employee and also create a good brand name for the employer in the industry. This promotes the goodwill of the company and makes existing employees feel appreciated and cared for. Thus creating a positive outlook.

Convenient and Economical

The employer does not need to worry about managing insurance-related processes as nowadays the insurance companies are tech-savvy. In the current scenario the digital-first insurance companies have made policy purchases, customer service, and claims settlement easy and convenient. An employer can pay the premium on a monthly, quarterly or yearly basis based on the convenience of the organization.

The group health insurance is carefully curated in such a way that it benefits several members of the organization. This makes the cost of the premium to be paid lesser as the risk involved is spread across different members of the company, hence making the group insurance plan cheaper and economical than an individual health insurance plan.

Being aware

If you are an employer who is in search of a good group health insurance plan for your employees, make sure to read the fine print of the insurance policy to understand the coverage in detail. The provider must be able to clear any doubts and give clarity regarding the same.

Choosing the right group health insurance plan for your remote team

Group health insurance is one of the affordable health insurance plans available in the country. As per the post Covid-19 lockdown guidelines, it is mandatory for employers/organizations to offer the employees group health insurance.

Thus, it makes it important for the employer to understand the group health insurance plans and how it works. Few important aspects like how the premiums are calculated, terms and conditions associated with the policies have to be studied carefully.

Employees highly value the benefits of group health insurance. Group health insurance helps the company to identify and solve the risks faced by the employees. The rise in the cost of healthcare and hospitalization can lead to financial instability and group health insurance can largely help the employees during this crisis.

Here are a few things to keep in mind before buying a group health insurance for your remote team.

Effectiveness of communication

While purchasing a group health insurance from an insurance company, it is important to see how the insurer responds and effectively communicates during the ongoing insurance tenure. During the times of need, an employee must be able to communicate with the company in ease.

In most cases the insurance company hires a third party for communication purposes and one has to make sure that the respective third-party administrator is good enough or not.

An insurance company with a good service track record would be able to add and delete employee records in the policy books, with minimal intervention from your side.

Source: JotForm

The Health Insurance premium

While deciding about the insurance company, it’s important to understand about the premium, product and service aspects. When an insurer offers lower premium plans, there are chances that they might have a poor customer service.

It is important to conduct reference checks with the current group health insurance clients understand regarding their service levels. An efficient insurance company can provide the employees with best deals.

Choosing the sum insured

The sum insured is the maximum amount of money per individual that will be paid by the insurance company, in case the employee is hospitalized. The important points to be noted while deciding the sum insured for group health insurance are the type of hospital the employee might prefer and the rising medical inflation costs.

The additional sum insured goes cheaper as the premium goes up. For example, a 6 lakh cover costs as much as a 3 lakh cover. The premium costs for the high sum insured and the additional money spent if insured a lower sum might be equal.

Source: SCB

Geographical coverage of hospitals

Accidents and diseases can take place anywhere in the world. Hence, while choosing a group health insurance, it's important to know if it covers the entire country or not.

The list of hospitals gets updated every policy year. If it covers the entire country, then one has to know the list of network hospitals available. This is crucial if the company is based in a non-metro city.

Extended coverage and benefits

The employees will love it if the group health insurance coverage is extended to his/her dependent family members. One has to think twice about this as the comprehensive coverage of the employee’s families may cost twice the premium costs.

Opting for a group health insurance plan that provides maternity coverage for the employees or their spouses is crucial especially if you have a young team.

Source: Bajaj Allianz

The main purpose of a group health insurance plan is to provide employees with healthcare benefits and employees must find those benefits actually valuable. The type of benefits provided in a group health insurance plan should be carefully taken into consideration when choosing the best group health insurance plan for your employees. 

 

Waiving off waiting periods

The waiting period taken by the employees to undergo certain types of treatments has to be waived off. The waiting periods are categorized into

    1. Initial waiting period

      The initial waiting period is mostly 30 days. In the first 30 days of insurance policy purchase one can take claims only for accident related hospitalization. No illness/diseases will be covered in these first 30 days.

    2. Pre-existing disease waiting period

      In group plans, there are no pre-existing exclusions for specific diseases like diabetes, blood pressure, thyroid etc., which exist at the time of policy purchase. 

It is advised that the group health insurance plan be carefully chosen and one can choose to pay a high premium so as to waive off any waiting periods. This is a major advantage in the GHI plan when compared to other individual health insurance plans.

 

Staying informed

There are plenty of customization options available in the market to purchase right group health insurance plans for your remote team. The right service, expert advises, purchase assistance and easy policy renewal terms are a few important aspects of any group health insurance policy.

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