Everything you need to know about the benefits of an employer-sponsored insurance or policies that cover a defined group
Group Health Insurance (GHI) allows companies, organisations, banks, and even housing societies to procure health insurance for their entire staff or members.
Before we explore the advantages of investing in a group health insurance policy, let’s understand what group health insurance is in detail.
What is group health insurance?
Group health insurance is a medical insurance policy for employees or members of a company or organisation. A group health insurance plan typically provides coverage at a lower cost since the risk to health insurers is spread across the group health plan members.
Group health insurance can also be extended to people directly or indirectly related to the members insured. For instance, group health insurance for employees also extends to their spouses, children, and even parents.
Why buy group health insurance?
Group health insurance serves to be beneficial both for the employer and the employee; here’s how:
Group health insurance is one of the most basic ways for employers to make their team feel cared for. Here’s why employers/companies should provide group health insurance to employees:
- It helps retain employees: Studies show that a good group health insurance plan can make employees feel cared for, causing them to retain their position in a company. With organisations working towards becoming employee-centric, providing group health insurance is the best and easiest way to show that the team's well-being is important to the company.
- It's a cost-effective option due to lower premiums: The advantage of group health insurance is that it's bought in bulk, making it cheaper than an individual insurance purchase. For companies that want to take care of their employee's healthcare costs, providing group health insurance is way easier and more cost-effective than constantly reimbursing individual medical costs.
- Tax benefits: Group health insurance is 100% tax-deductible, as stated by the Income Tax Department of India. The entire amount the company pays as the premium is considered a business expense. This means companies get complete tax deduction benefits when paying for their employees' healthcare.
An employee can avail several additional benefits if their company provides a group health insurance policy. Here’s how:
- It’s cost-effective: With group health insurance premiums being paid by employers, employees get health insurance cover for themselves, free of cost. Coverage for spouses, children, and parents depends upon the insurance policy provided by the company.
- Coverage for pre-existing diseases: A major drawback of individual health insurance is the waiting period for coverage of pre-existing diseases (diseases the policyholder is already diagnosed with while purchasing the insurance). The waiting period for such diseases can last up to four years, depending upon the insurer. Luckily, group health insurance covers employees’ pre-existing diseases from day one, making it highly advantageous for all team members.
- There’s no initial waiting period: All types of individual health insurance have a waiting period of at least a month from the time of purchase. That is, once someone purchases a policy, they will have to wait for a certain amount of time (depending on the insurer) before they can avail of the insurance coverage. In contrast, an employee gets covered through the group health insurance policy provided by the employer from the day he/she joins the company.
- Easier enrolment and better claims experience: The biggest advantage of group health insurance? One does not have to undergo any initial screenings or formalities to qualify for the insurance. Employees are automatically enrolled once they are a part of the company. Not just that, given that the partnership is between insurance providers and employers, claims are settled more smoothly and hassle-free because of the relations and goodwill between the employer and the insurer.
Group Health Insurance v/s Individual Health Insurance
Founders and HRs often find themselves confused between providing a group cover for all their employees or letting employees choose individual plans and reimbursing them for the same. But here's the thing - group health insurance is always the better choice. Both for the employer and the employees. Here's how:
1. More cost-effective than individual health insurance
Individual health insurance tends to be more expensive than group health insurance. Insurers worry about the risk of adverse selection, which is less when a group is being insured, and hence prices are lower
2. Coverage for pre-existing conditions
A pre-existing condition is a medical illness or injury the policyholder had before purchasing the health insurance. Conditions like diabetes, high blood pressure, thyroid, and cancer are some common examples of pre-existing health conditions.
Almost all individual health insurance plans do not cover any treatments for pre-existing conditions. Certain individual health insurance plans may cover pre-existing conditions, but only after a long waiting period of approximately 4 years, i.e.the policyholder needs to continue with the same policy for 4 years to become eligible for a treatment associated with a pre-existing condition.
Coverage for treatment of pre-existing diseases is a must-have in the case of health insurance because it tends to be one of the most common medical expenses a person comes across, especially among older people or parents.
With group health insurance offered by Nova Benefits, pre-existing conditions are covered from day one of the policy.
3. Coverage for maternity
Coverage for maternity means one can file a claim for expenses including hospitalisation, pre-hospitalisation, and post-hospitalisation undertaken during pregnancy. Again, most individual health insurance plans don’t cover any expenses related to maternity. A few plans offer maternity as an add-on, but with a waiting period ranging from 9 months to 3 years.
The Indian government is doing its bit to ensure that organisations take care of their female employees by making minimum maternity leave compulsory. But organisations can go one step further to ensure their female employees have proper financial support in such a crucial time of their life.
With group health insurance offered by Nova Benefits, employees can opt for maternity benefits of different price ranges depending on where their team is located (since healthcare expenses vary by city) and their organisation's budget. Such maternity coverage starts from day one without any waiting period and covers any pre-natal and post-natal expenses.
4. Coverage for the baby since day one
Insurance plans have a lower age limit. According to this limit - a newborn baby can only be covered once he/she completes 90 days. That serves as a major drawback for parents. Why? Because most healthcare complications happen in the first few days and weeks of the baby's birth.
With the group health insurance policies offered by Nova, if employers choose to cover the children of their employees, they can opt for coverage for babies from day one. That is - there will be no waiting period of 90 days for the coverage of any baby's medical expenses after being born.
5. Coverage for parents
Lastly, an individual insurance plan allows policyholders to cover their spouse and up to four dependent children. Considering that parents are the ones that require health insurance the most, this limitation can be a major drawback.
Thankfully, with group health insurance offered by Nova, employers can allow their team members to cover their parents. They can either add their parents or their parents-in-law.
6. Waiting periods
Another drawback of individual health insurance is that they have a 2 to 4 years waiting period, even for treatment of certain common illnesses, excluding pre-existing conditions. A few examples of diseases that have a waiting period are cataracts, hernia, and piles.
Additionally, all individual health insurance plans have a waiting period of 30 days from purchase for all diseases and treatments. One cannot use their insurance for the first 30 days except for accidental cases.
With the group health insurance offered by Nova, teams can be covered from day one for all diseases and illnesses.
Comprehensive employer employee insurance plans are the best way for a company to protect its employees. If you are a company looking to secure its team members, Nova is here to help you find the best group health insurance and wellness benefits for your team.