Why Do Employers Give Corporate Buffer in Group Health Insurance?
For employers, a corporate buffer makes sense for several reasons:
- Cost-Effective Employee Care
Corporate buffers let employers ensure their employees get the care they need without having to rewrite their entire insurance plan or hike premiums dramatically. This cost-effective solution is perfect for small to medium businesses seeking affordable and complete coverage.
- Increasing Employee Satisfaction and Retention
Employees feel valued and will remain loyal if the employer has their back in case of a medical emergency. A corporate buffer shows employees the company is prepared to go the extra mile to protect their health.
- Attracting Top Talent
Benefit packages are a key driver of top talent today's job market is fiercely competitive. Including a corporate buffer in the group health insurance policy draws employers to new hires who value healthcare protection.
How Does Corporate Buffer Work?
When an employee incurs hospitalisation or medical expenses beyond the sum insured under their group health insurance plan, the corporate buffer pays for the excess. The short breakdown:
- a) Predefined Buffer Limit: The employer determines a fixed buffer amount as additional coverage for all employees.
- b) Usage: Employees using their sum insured can access the corporate buffer to cover the rest of the costs.
- b) Claims Process: The employee typically files a claim for the excess expense over their sum insured, and the insurer pays the hospital directly or reimburses the employee as agreed upon.
- d) Buffer Pool: Others establish a shared employee buffer pool. This means instead of each employee having a buffer, a collective amount is set aside for use in case of medical emergencies. This shared pool ensures that all employees have additional coverage even if they do not each have a buffer. Others set aside a buffer for each employee.
Benefits of Corporate Buffer to Employers
a) Cost-Effective Coverage: Corporate buffers provide additional coverage without upgrading the whole group health insurance policy. This buffer is used only in emergencies and thus costs less overall than if the sum insured were increased for every employee.
Like group health insurance premiums, contributions to corporate buffers are deductible under Section 80D of the Income Tax Act. This means the amount contributed to the buffer is usually deductible from the company's tax liability. This provides employers with tax relief while keeping their workforce healthy, showing financial prudence and planning.
b) Flexibility: Corporate buffers may be adapted to organisational size and financial resources. Employers figure out how much buffer they provide and how it is utilised.
c) Increased Employee Loyalty: This added coverage can increase morale and retention rates by showing employees that the company's priority is their health and wellness.
Advantages of Corporate Buffer to Employees
a) Financial Security in Emergencies: Medical emergencies cause costs far more significant than those covered by a group health insurance policy. The company buffer ensures workers receive needed treatment without incurring out-of-pocket costs.
b) Increased Healthcare Access: The corporate buffer allows employees to obtain better health services when costs go over their regular policy limit.
c) Extended Family Benefits: Sometimes that corporate buffer extends to family members protected under the employee's policy to protect those loved ones in case of a medical emergency.
Why Corporate Buffer is a Smart Addition to SME Group Health Insurance Plans
For SMEs, offering a corporate buffer may be one way to bolster their group health insurance policy. More resources are often required by SMEs to provide comprehensive health benefits. SMEs can add protection without premiums to much higher levels by adding a corporate buffer. This can help SMEs retain top talent, increase employee satisfaction and show an interest in employee wellbeing while controlling costs.
Conclusion
A corporate buffer in group health insurance allows businesses to provide health care to their employees without going broke. It provides a financial cushion and pays for medical expenses not covered by an employee's insurance. This helps employers and employees feel calm. Employers - especially SMEs - can benefit from the flexibility, cost efficiency and tax savings by providing a corporate buffer.