What you need to know about Group Health Insurance
Insurance is the need of the hour. As the world is inching towards a new normal, the face of insurance also promises to change drastically. The insurance industry is diversifying in expected and unexpected ways to handle risks of new kinds as well as to combat old risks in new and more efficient ways. Health insurance providers too, are adapting and diversifying their policies so that customers have a variety of options to choose from.
When health insurance was first introduced in India, there was just one type of policy- The standard individual plain-vanilla health insurance policy. Now, we have various policies like critical illness policy, pre-existing disease policy, group health insurance policy, and more. Along with the host of options; insurance companies also offer add-on policies like the personal accident cover. Moreover, all of these policies are customizable so that the customer can pick and choose features that suiting their personal preference and needs.
While most policies are self-explanatory, the concept of group health insurance can raise a few questions. Are the same benefits applicable to all members of the group? How to decide between individual and group policies? What are the pros and cons of having group health insurance?
Here’s all that you need to know about group health insurance:
What is Group Health Insurance?
A group health insurance policy is one that offers health insurance coverage to a group of people. It is usually offered by employers (banks, corporates), housing societies/corporations, and other organizations. The premiums are paid by the organization where the insured persons work/live. Most often, when we talk about group health insurance we are talking about employer-sponsored health insurance.
It is the most common form of group health insurance. Employer-sponsored health insurance covers the employee and immediate family with a fixed sum-assured in event of an accident or health emergency. The amount of sum-assured depends on multiple factors like salary package, the number of years worked, etc.
What is the coverage under group health insurance policies?
The standard coverage under group health insurance policies include:
- Pre/post hospitalization charges
- In-hospitalization charges (Surgery charges, doctor’s fees, test costs, room charges etc)
- Domiciliary expenses
Most employers customize the coverage that they opt for based on their preferences.
Why do employees offer group health insurance policies?
It makes sense for employers to opt for group health insurance policies for their employees as having individual policies would not be cost effective. Premium payments for group policies are also flexible. These can be annual, half-yearly or quarterly payments. Other advantages for employers providing health insurance to their employees include tax benefits, employee retention and employee loyalty. Being secured with health insurance makes employees feel safe and they can focus on work leading to more productivity and better manpower efficiency.
How is Group Health Insurance different from Individual Health Insurance?
The major difference between group and individual health insurance is that group health insurance is not personalized according to the health status, age or medical history of the person who is insured. Instead, the coverage and benefits are determined by the finances and the affordability of the employer. The premiums are taken care of by the organization / employer as compared to the insured person paying premiums.
Another major difference is that insurance coverage for group insurance policies is assured as long as you are on the rolls of that organization. With an individual health insurance policy, one can cancel the policy whenever they wish and employment tenure does not affect the policy. Additionally, with a group health insurance, you do not get the policy document as it remains with the employer. Instead, the employees are issued with certificates and insurance ID cards so that they can avail insurance benefits when the need arises; normally on a cashless basis.
Benefits of Group Health Insurance
Group Health Insurance has a number of benefits:
No premium payments – The best benefit of having an employer-sponsored group health insurance is that the individual does not have to worry about paying premiums. This is because premiums are paid by the employer as a welfare token for employees. So, when you join the company you are registered for a health insurance plan by default. This is great for people who want to be insured but don’t have the funds to pay premiums.
No pre-medical tests – Group health insurance policies generally do not require pre-medical tests. One of the reasons is because the exclusions, benefits, terms of the policy are the same for every employee in the same salary bracket and there is no customization. Not having to undergo pre-medical tests is a major advantage for two reasons. Firstly, pre-existing illnesses will also be covered under the insurance policy and secondly, one won’t have to go through the hassle of medical tests.
No waiting time – Group health insurance is usually applicable right from the start date of employment. Thus, the waiting period is completely waived off and you will get benefits for any emergency or hospitalization; even if that was to occur right away. This is a huge convenience offered by group health insurance policies
Easy claim process – Since the premium for the coverage is paid for by the company, the claim settlement process is quick and easy. The company’s reputation is taken into consideration and you generally will only have to show the health card along with your office employee ID and hospitalization documents to get the benefit. Often, the company takes care of the claim filing process and all you have to do is intimate your employer.
Coverage for domiciliary expenses – Group health insurance allows you to claim expenses incurred on minor illnesses like dentist visits, OPD appointments etc. This is an advantage as individual health insurance plans usually only cover for major illnesses that require hospitalization.
Maternity Benefits – With group health insurance, you can avail of maternity benefits (if they are included in the policy) as soon as the policy is activated. This is because there is no waiting time before you can start availing of benefits. It’s beneficial as maternity insurance generally has waiting periods ranging from 3-4 years before the policyholder can claim maternity benefits.
Disadvantages of group health insurance policies
Group health insurance policies also have certain disadvantages-
Insufficient coverage: A major disadvantage of group health insurance policies is that they tend to offer insufficient coverage. This is more so when compared with individual health insurance policies or even family floaters. If you have only company-sponsored health insurance, you might run into trouble with coverage during a health emergency as major illnesses are not usually covered under group health insurance. Also, this will not work once you resign.
Employer sponsored health insurance is only valid till you work for the organization. It is terminated upon the termination of your employment; in fact, the facility is withdrawn the moment you submit your resignation to the employer. This is an inconvenience as you would have to hurry and get yourself insured in spite of dealing with the stress of job loss or job switch.
However, you have an option of transferring the group health insurance to individual health insurance from the same insurer. Most insurance companies offer this benefit. It is just that, now you have to pay the premiums yourself. This is a very simple procedure. Depending upon the terms and conditions of the group health policy, the insurer will be able to work out a policy that works the best for you.
Can I modify the coverage under my group health insurance policy?
No, all policyholders under one group health insurance policy have the same benefits, exclusions, terms, and conditions. These are selected based on the discretion of the employer on factors like budget, salary, etc. You cannot avail of different or additional benefits under the same policy. But you might have the option of increasing your coverage by paying an extra premium. This is subjective and you have to discuss with your employer the way to take it forward.
Do I get tax benefits for my employer-sponsored health insurance?
No, tax benefits are only applicable under Section 80D of the Income Tax Act, 1961 if you are paying insurance premiums yourself. Since the employer pays premiums for all the members covered under particular group insurance, the employer/company is eligible for tax benefits and not individual policyholders. The employer can write off the group insurance expenses in their P&L account and claim tax benefits accordingly.
Are group health insurance policies cashless?
Yes, most insurance companies have cashless facilities through Third Party Administrators (TPAs). This allows you to avail treatment without having to pay any cash as the expenses are taken care of by the TPA appointed by the insurance company. This system is applicable for the expenses that come under the terms and conditions of the policy. If there are costs that exceed the limit then you will have to settle it independently at the hospital. Another point to be noted is that most cashless facilities are available at network hospitals of the insurance company.
In a nutshell, group health insurance is most beneficial as add-on insurance along with an existing individual or family health insurance policy. This allows you to be covered on all fronts as the disadvantages of both policies cancel each other out. Employer-provided health insurance is a boon in itself and you can reap maximum benefits from it by using it wisely.