Understanding Group Health Insurance
When a health insurance plan covers a group of people, such as company employees or members of an organisation, it is called group health insurance. Most employers provide group health insurance coverage as part of employee benefits. It covers employees and their immediate family members, such as spouse, dependent children, and parents. Some plans may allow coverage for in-laws. The premium is less expensive than individual health insurance because the risk is spread across many people.
Group health plans can be purchased only by a company or groups of people.
Benefits of Group Health Insurance for Small Businesses
Group health insurance for small businesses comes with a host of benefits for both employers and employees. Some of the key benefits are:
- Financial Protection
One of the biggest benefits of a group health insurance plan is financial security against rising medical expenses at affordable premiums. As the risk is shared across employees, insurers charge lower premiums. While some employers pay the premium entirely, which means employees don’t have to pay anything, others have a cost-sharing basis method.
- Employee Well-being
Investing in the health of employees will help improve overall employee well-being. Employees will have access to quality healthcare without worrying about the costs and focus on their work.
- Employee Retention
By offering health insurance coverage, you can instil a sense of loyalty and work satisfaction among the employees, which can be a significant factor in retaining the workforce.
- Compliance
In some cases, it can be mandatory for employers to offer health insurance coverage to employees. Non-compliance can lead to penalties.
- Tax Benefits
Businesses can reduce their tax liability by availing of a tax deduction on the premium paid towards group health insurance. The premium is declared under business expenses to claim deductions.
Group Health Insurance Requirements for Small Businesses
According to the Insurance Regulatory and Development Authority of India (IRDAI), all registered commercial and industrial establishments must compulsorily provide group health insurance to their employees. The eligibility criteria for small businesses to have group health insurance are:
- The company must have a minimum of 20 employees. However, this can vary based on the insurer and specific terms and conditions of the policy
- Small businesses or groups, which have less than five employees, can buy micro-insurance plans.
- The policy will cover employees’ immediate family members like spouse, dependent children and parents.
- Most insurers require a minimum of 70% employees to enrol in the plan.
- Coverage is typically for full-time employees.
- There may be a waiting period before new employees become eligible.
How to Choose the Best Group Health Insurance Policy for Your Business?
Several factors have to be considered to ensure you buy the best group health insurance plan for your employees. These are:
- Evaluate Your Employee Needs
The first step is to make an assessment of the specific health needs of your employees and their families. Factors such as age and health status, medical history and potential risks will help you choose the right coverage amount.
- Research and Compare Plans
Research multiple plans for small businesses from different insurance providers and compare them based on coverage, cost, benefits, etc. This will ensure you buy the plan that aligns with employees’ needs and your budget.
- Network Hospitals
Look for an insurance provider with a wide network of reputed hospitals so that employees have the flexibility to choose the hospital, which is convenient for them.
- Look for Additional Benefits
Look for policies with additional benefits such as wellness programmes, free annual health check-ups, mental health support, etc. These features can enhance the value of group health plans.
- Terms and Conditions
Before buying any plan, check the waiting periods, exclusions, deductibles, and other terms and conditions to ensure you buy the right health cover.
Conclusion
Group health insurance plans play a significant role in employee retention and job satisfaction. They are affordable and come with a host of benefits. However, it is important to note that an employee is covered by the group health insurance plan only until they join the organisation. When they leave, coverage ceases. Hence, it is always advisable to have a backup, i.e., individual health insurance, for continuity in coverage.