As a company that aims to provide a platform to ensure best health and wellness benefits to employees, we as founders try our best to provide such benefits to our team as well. Last month, we took Nova’s own group health policy and were lucky enough to get it done on time. (Since then we've had medical situations in the team where the insurance policy has provided security)
To provide context regarding when we chose this plan for Nova:
- We were a Bangalore based tech company with 25 team-members.
- While most team-members were below 30 years we do have a few members above said age.
- Our male to female gender split was 75-25 and we're looking to balance this further.
- 10% of our team-members were married.
- Median income was 50K per month.
OUR POLICY TERMS
After careful evaluation, we finalised on a policy with the following terms when we were a team of 25 members:
- Sum-insured: 3,00,000
- Employee + Spouse + 2 Children + Parents (or parents-in-law)
- Maternity limit of 50,000 for regular deliveries and 50,000 for C-Section Deliveries
- No capping on room-rents per day
- 20% co-pay on parental claims only
QUESTIONS EACH COMPANY SHOULD ASK BEFORE PURCHASING GROUP HEALTH INSURANCE POLICY
Our company’s policy terms were finalised on the basis of a set of questions that we feel every company should ask before buying their own policy. The questions were as follows:
Should we cover parents?
Many policies provide the ability to extend insurance coverage to parents of the policy holder. Less than 30% companies purchasing health insurance opt for parental coverage. Taking coverage for parents increases the premium by 2.5X but overall cost of the insurance is still about 1-1.5% of CTC. We thought this was worth the tradeoff as it provides better security to our employees by safe-guarding their family. However, we wanted to be ahead of the curve. 70% companies only take an Employee only or Employee + Spouse + Children policy
Should we provide maternity cover?
Maternity cover refers to covering charges for both regular and C-Section Deliveries to a certain limit. Although no member of our company was planning to immediately have a family anytime soon, we had no way of confirming this. Additionally, we wanted the policy to be a forward looking one, not just to take into accounts the needs for current team-members but also new joiners. We also want to build a company where team-members stay with us for four years and beyond and feel comfortable starting families. We also plan to hire members who are in the 25-35 age-group for whom this clause might be important, which is why we considered this to be a necessary inclusion in our employee policy plan.
What should the room-rent limits be?
Room-rent limits directly impact what % of the medical bill is paid by the insurer vs the team-member. This is a very important clause to be considered. We opted to have no-room rent limits as it serves to be more beneficial for our members during the time of claim. Another alternative to no-room rent limit is to have high room-rent limits in the Rs 6000-10,000 range
What should the coverage amount be?
Coverage amount refers to the maximum amount you can claim as compensation in case of any medical issues. Majority companies take a 3 Lakh coverage. Some also opt for a 5 Lakh coverage and beyond. Here we wanted to stay in the median and therefore we went with a 3 Lakh coverage with a probable upgrade to 5 Lakh in the coming year
How do we ensure our policy does not become too expensive next year?
One of the things you sign up for when you add parents to the policy is that claims can go high. We have 40 parents insured. If three of them make claims of 3 Lakh each (unlikely but possible) we're looking at a minimum of 10-12 Lakh health insurance cost next year.
More than 50% claims are made by parents. To mitigate this, we opted to have a co-pay of 20% on parental claims. This means for every 3 Lakh claim, 60,000 would be paid by the team-member and only 2.4 Lakh by the insurance.
This would also mean our insurance premium would be lesser. By having a co-pay clause, team-members would be more discerning on the medical cost since they have some skin in the expenditure as well. We were confused between having a co-pay clause vs having a room-rent limit as a cost mitigating measure. Finally, chose to go with the co-pay on parental claims since we believed providing parental coverage is a great thing to do for the team. Additionally, adding some co-pay would balance providing the benefit but also containing the cost.
WHY ARE THESE QUESTIONS IMPORTANT FOR EVERY COMPANY LOOKING TO BUY EMPLOYEE HEALTH INSURANCE?
It is vital for every company to ask themselves these basic set of questions before finalising their policy terms. These questions should be answered keeping in mind the well-being of both the company as well as its team members. Employee Health Benefits have become an important part of every organisation and therefore need to be given considerable thought before finalisation.