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
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.
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.
Why should you buy GHI for your employees?
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.
Enhancing employee retention
Offering protection from severe illness
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
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.
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.
Breaking down: a GHI health plan vs Individual health plan
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.
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.
Like there are two sides in a coin, there are certain limitations in Group health insurance over Individual health insurance plans. Like the following.
Group Health Insurance vs Individual Health Insurance: a comparison
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.
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
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
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
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
The Health Insurance premium
Choosing the sum insured
Geographical coverage of hospitals
Extended coverage and benefits
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
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.