Group Health Insurance

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  • What is Group Health Insurance?

    As the term suggests, group health insurance is a protection plan that provides healthcare coverage to a specified group of individuals such as the employees of a company. Here insurance is offered for a group of individuals rather than to individuals. Under a group plan, certain health insurance benefits are offered to individual employees (in cases to their families as well) by a company or employer.

    This type of insurance is also sometimes referred to as employee health insurance. Group health insurance is offered as one of the perks of the job in the same way as other perks such as housing, a company car or other perquisites may be a part of the remuneration package. Group insurance packages are often purchased by companies as a device to attract and retain talent. Though used interchangeably with the term employee health insurance, group health insurance may also be offered in respect of other groups such as the members of an association or a social/ cultural group or holders of certain credit cards, types of bank accounts etc.

    Typical features of group health insurance

    • Group health insurance is a form of insurance purchased by companies, institutions, associations or employers. This type of insurance is not available for purchase by individuals; who have the option of buying other health insurance products. Not all employers offer health insurance and within an organization as well, the type and quantum of health insurance offered may differ as per the position of the employee. For instance, those in managerial positions may receive comprehensive coverage as against limited coverage for those in clerical positions. Health insurance coverage often improves as a person advances within a company.
    • Usually, group policies offers benefits of a general health insurance policy such as hospital expenses including room rent, surgery, consultation and specialist charges, anesthetist fees, diagnostic fees as well as pre and post hospitalization charges. Cashless facilities are usually offered so that the insured individual can start to receive treatment without having to make or arrange upfront payment at the time of hospital admission.
    • Group health insurance is a flexible type of insurance and can be customized as per requirements and to offer the sort of coverage required.

    Special features of group health insurance

    • The inclusions and exclusions of a given group plan may vary significantly from one to another company. Additional features can be added to the policy to cater to specific employee requirements.
    • Some policies (and employers) offer maternity benefits under a group policy and may also cover specified daycare procedures that do not require 24 hours hospitalization (such as minimally invasive treatment, minor or keyhole surgeries etc).
    • Group policies may offer coverage for preexisting diseases or domiciliary hospitalization costs as well; however this could mean higher premiums for the employer/ company.
    • Many group policies waive waiting periods for making claims. Typically, health checkups are not mandatory.
    • Group policies may cover not only the individual employee but also their spouse, dependent child / children and dependent parents. In some cases, such coverage for the employee's family may be optional. The employee may be offered such coverage for part payment of policy premium. (Some companies require employees to contribute to premium payment to avail this additional coverage).
    • Health insurance providers typically issued one master policy that covers every individual of the group. Under this single policy, a single premium is paid; there is no need for paying separate premiums for each covered person.
    • A group plan can be created specifically and customized for a given company and its employees keeping in mind the nature of work, work related risk, the number of people covered, their age, existing medical conditions and other factors.

    From the foregoing it becomes clear that group health insurance can be a mutually beneficial for companies and employers as well as their employees.

    Eligibility for Buying Group Health Insurance

    The terms ‘group health insurance’ and ‘employee health insurance’ are often used interchangeably, since group health insurance is usually brought by employers to secure the health of their employees. In fact group health insurance products are specifically designed for small or large companies wishing to offer their employees extra perks in the form of the security accorded by health insurance. We look at eligibility and ineligibility for buying health insurance.

    Individuals are not entitled to buy group health insurance

    Since group insurance is rather like buying in bulk, it becomes feasible for insurance companies to lower their premiums. Hence, since group insurance can be cheaper than buying individual health policies to cover each employee separately, individuals may wonder if it is possible for them to buy group health insurance for their family and so on. However, group health insurance is not meant for individuals. Individuals are free to opt for individual health plans, family floater plans and so on.

    Group insurance is a pre-planned or a customized health insurance policy that a business or other organization can buy from the insurance company. The insurance policy would offer protection to specified employees to the extent of the sum assured and for ailments /accidents as are set out in the policy document. Companies, cultural organizations, clubs, proprietorships, partnerships, corporate entities or anyone who employs a certain number of people can buy health insurance for their employees.

    Eligibility for buying group health insurance

    The eligibility factor can be variable. Group policies may be offered for any group of people as specified by the insurance company. For instance while many group plans require groups of 20 or more people, some companies such as Star Health offer policies for corporate bodies or institutions with as few as 8 or more employees.

    Fledgling or small organizations with limited resources and few employees may be unable to buy group health insurance or may not be able to afford it. Startups and similar small organizations with limited resources may want to consider whether they can afford group health insurance. For small organizations with the resources but without the number of employees needed for meeting the criteria for eligibility to buy health insurance, it may be advisable to buy a group policy where not merely the employees but also their immediate family members are covered by the group policy.

    While for employers it may be desirable to retain talent within an organization by offering employee health insurance, it is also important to examine one’s resources, and then decide about buying group health insurance.

    Documents Required For Group Health Insurance

    One of the principal reasons for companies and employers to invest in group or employee health insurance is to offer an additional perk and a sense of security to valuable employees. This is seen to be a prudent investment aimed at improving employee morale and hence productivity. It is a very effective way in which to retain valuable talent within the organization and to attract new talent to the organization. Buying group health insurance is largely a simple, online process and is so by companies looking to make it easier for more people to buy group insurance. Here is what you need to get you started:

    Find out more group health insurance and choose wisely

    It is possible to buy the amount and the type of group health insurance that your organization requires in terms of features, coverage and premium payable. Employers can also decide whether they want to offer insurance, only for the individual employee or for their family; in the latter case, employees can be asked to contribute a portion of the premium amount in order to secure the health of their families. The documents required may vary accordingly from plan to plan.

    Choose the right health insurance provider to buy group plans: look for a company with a good record and customer service, an insurance provider who is willing and able to tailor a plan to your requirements. It is also important to look for features such as graded cover (to cover different grades of employees) and functionality to easily add and delete employee records on the policy books in an efficient and streamlined fashion.

    A well thought out employee insurance plan can help employers save money, increase productivity and lose less money by way of sick leave and workers’ compensation. Add riders or additional coverage features depending upon the nature of work employees engage in, their average age (which helps decide whether critical cover is necessary), gender ratio (to decide whether or not maternity benefit is a key inclusion), income, standard of living etc.

    Documents required for buying group health insurance

    Health insurance providers offer the option of standard group health insurance or the option of creating a plan tailored to your requirements. The required documents could vary based on the insurance service provider’s rules and regulations, the number of people covered by the policy, the size of the organization and the nature of work (whether hazardous processes or substances are involved), whether accidental death cover is opted for and based on the age range of employees.

    Most insurance providers do not require much in the way of documentation to issue a group health policy. Once a plan is chosen and customized as per requirements, the policy buyer should thoroughly read and check the terms and conditions of the policy document and then fill out the application form with all required details accurately and precisely filled in.

    In most cases, when the insured individuals are below the age of 50, medical checkups are not required. Details about the covered individuals, their age and ID proof, details about their employment may need to be submitted along with the form. However, this also may vary from plan to plan and from one to another insurance provider and another.

    In any event, the insurance company will typically require the policyholder to make certain declarations about the health and wellbeing of the covered individuals and to declare any material details about their health such as relevant medical history, preexisting diseases if any. The failure to make full disclosure of all pertinent could mean problems with the claims process.

    Documents required for making group health insurance claims

    While insurance companies require few documents at the time of creating and selling a group health insurance policy, set procedures have to be followed and requisite documents must be submitted at the time of making claims:

    • A preauthorization form, duly completed, would be required at the time of being admitted to a hospital for a cashless claim. The claim acknowledgement number and the claim form with important details such as the employee code would have to be submitted.
    • If an employee health insurance card is issued by the insurance provider, the same would have to be presented at the time of seeking hospital admission
    • Intimation of such admission is required to be given to the health insurance company or to the TPA (Third Party Administrator) in the manner and within the specified time as required by the terms of the insurance policy. For planned hospitalization, advance notice is usually required; for emergency admissions, notice has to be given within a specified timeframe (usually within 24 hours).
    • ID proof and possibly proof of employment would be other required documents for group health insurance claims.
    • While for cashless claims the hospital would directly send documents to the TPA or insurance company, in the event of receiving treatment at non-network hospitals, the employee would need to keep track of and submit all original documents. These would be: duly completed claim form, doctor's report, medical bills, investigation reports like lab tests, X-rays and reports for establishing existence of the injury. Discharge summary with the final bill and detailed breakup would also be required.
    • For accidental death claims, documents such as the police report, death certificate, postmortem report and other relevant documents would have to be submitted where necessary and applicable.

    The policyholder company /employees can ensure a smooth purchase and claims procedure by ensuring that all required documents are accurate and complete in all respects and that they are submitted as and when required.

    Advantages of Employee Group Health Insurance

    Group health insurance is a health insurance product that companies and employers typically purchase for protecting employees of their organization. Group health insurance is a convenient and mutually advantageous product that benefits employers as well as employees. Here are some advantages of group health insurance and a look at some of its limitations.

    General advantages of group health insurance

    • Usually there is no requirement for medical checkups prior to issuance of the policy. This streamlines processes and saves time; being beneficial for the employer as well as the employees.
    • Depending upon who pays the premiums – in some cases employees may be required to contribute to premium payments – certain tax benefits are available to the employer as well as the employee.
    • For employers as well as employees there is an obvious advantage of good overall health and boosting employee morale. Health insurance benefits translate to a healthier workforce. When the health care needs of employees are taken care of, they suffer less stress, resulting in improved productivity; even fewer workdays lost, which is mutually beneficial.

    Advantages for companies and employers

    • One of the main benefits of offering health insurance to employees is that this acts as an attractive perquisite for current as well as potential employees. Employers can attract talented individuals to their company by offering health coverage. A good health plan along with the salary also helps to retain the company’s existing talent pool and helps in motivation. When an employee is secure in the knowledge that their employer would manage health expenses if any, they are more willing to take up a job and to stay with the company for longer.
    • Group policies can be very cost effective vis-à-vis individual policies. Rather than buying individual policies for employees, it is undoubtedly more cost effective for employers to buy group policies. Premiums are lower – up to 30% lower than individual policies according to one study – and hence can be very economical. Policies can therefore, be tailored to the budget of the company.
    • For group policies, there is one master policy issued for covering multiple individuals. One composite amount is to be paid in this respect. The policy is easier to manage because there is only one single insurance premium payment to keep track of. Employers may also be able to avail no-claims bonus and assured renewal benefits.
    • Group policies are flexible and customizable. The employer or company can choose the type or coverage, the number of individuals to be covered as well as the features of a policy as per their requirements. The features, inclusions and exclusions can be altered keeping in mind the size of the organization, the number of employees there are, their classification, age, gender as well as the nature of work they engage in.

    Advantages of group health insurance for employees

    • For individuals who do not have health insurance, a company who offers health insurance is some obvious benefits. Even for those who already have health insurance, additional insurance offered by the company can be welcome. Group health insurance coverage from the company helps to add an extra layer of protection to existing individual insurance policies.
    • Group health insurance policies could be customized to also include the family members of employees. In some cases, companies permit their employees to opt for coverage of dependent family members by contributing in part to premium payments. In some cases, the company may undertake the extra premium payments and in other cases, the employee may be required to make part payment of the premium.
    • Since it is possible to customize group policies to cover maternity benefits, daycare procedures, ambulance services and so on, employees benefit from such comprehensive coverage. Specific coverage /protection may be offered for the sort of work and the nature of risk that the employee undertakes.

    Limitations of group health insurance

    Group health insurance is company or employer specific and not employee specific. Hence its benefits cease when a person leaves their job. The health insurance coverage under a group policy will not carry over to the new place of employment unless the new employer also offers health insurance. The employee may have to buy his or her own health insurance if the new employer does not offer it.

    In spite of the few limitations however, group insurance remains an attractive and mutually beneficial option for organizations and their employees.

    Who should buy group health Insurance

    Group health insurance is term frequently used to denote employee insurance. However, the scope of group health insurance goes beyond merely the health insurance that is provided to employees by their employer or company. We look at who needs group health insurance and who can buy it for whom.

    Who needs group health insurance?

    An entity or a corporation that employs people would typically need to buy health insurance for the following reasons:

    • To protect and secure the health if their employees in order to maintain a healthy workplace environment.
    • Companies that offer health insurance to employees can ensure that employees pay proper attention to their personal health resulting in higher productivity and lower incidence of lost workdays because of poor health.
    • Companies that invest in group health insurance for their employees are able to attract talented individuals to take up employment, since health insurance is an attractive perk that enhances the offered remuneration package.
    • Group health insurance facilities also send out the message that the employer or company cares about their employees. This enhances the company image and also increases workplace motivation. It can encourage valuable talent to stay within the company; thereby reducing attrition rates.
    • Employees who do not own individual health insurance policies would be looking for job opportunities that offer health insurance as one of the perks of employment. Such individuals would be better off seeking employment where health insurance is offered.
    • Any company that wants to be able to offer their employees coverage for a wide range of illnesses and accidents, hospitalizations, surgical costs, ICU facilities, prosthetic or other post illness aids needs group health insurance. Companies can also opt for optional add-ons such as critical illness cover and customize the group policy with various other riders.
    • Group health insurance is a must for companies that engage in certain hazardous processes or whose employees are required to undertake a certain amount of risk in the course of their work.

    Who can buy group health insurance?

    Since group insurance has specific benefits such as rates that are more competitive than other forms of insurance, the IRDA has made it clear that group insurance can only be sold to groups.

    The IRDA has issued Group Insurance Guidelines to clarify who may and may not avail of group insurance policies.

    Specifically, individuals who have a certain number of employees on their payroll would buy health insurance. Incorporated companies, proprietorships as well as partnership firms can also buy group health insurance to protect the health of their employees.

    Group health insurance can be purchased by / for a group of employees or by a corporate entity. Nonprofit organizations, institutions, associations or clubs can also purchase it for their employees or members. Sometimes banks and financial institutions offer insurance to all those who open a certain type of account with them or buy a certain grade of credit card from them. Here as well, the bank or institution as an added incentive to encourage people to buy their financial products or use their services would purchase a group policy.

    It is not open to individuals to buy group health insurance; however, individuals can always seek the benefits of group health insurance in other ways!

  • Q:What is a group health insurance policy?

    Q:How is group health insurance different from other types of health insurance?

    Q:What is employee health insurance?

    Q:What does group health insurance cover?

    Q:Can you avail cashless facilities under group health insurance?

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