Group health insurance is a type of health insurance policy in which the employer or the organization pays the premium and the employee utilises the health insurance cover in case of hospitalization due to any unforeseen consequences such as accident, illness or disease.

Group health insurance is a tailor made health insurance policy which can be customized as per the needs and requirements of the customer. Group health insurance policy can also be extended to cover the family members of the employees. The decision to cover the family members of the employees under the group health insurance policy vests with the employer.

Group health insurance covers inpatient hospitalization, outpatient hospitalization, day care treatment, room rent, nursing charges, alternative treatments, maternity related treatment etc. The sum insured under the group health insurance policy can be floater or non floater. Floater sum insured is when the same sum insured floats among the family members i.e. sum insured can be utilised by any of the family members without any capping or limitations. Non floater option is where each family member would get individual sum insured and the sum insured of one member cannot be transferred to another member.

Let us understand the need to invest in a group health insurance policy in 2022:-

1. Employee benefits: Organizations provide certain benefits to their employees such as Provident fund, health insurance, collateral free loans etc., as a part of the employee benefits. The most famous and important employee benefit is the group health insurance in which the health insurance premium would be paid by the employer on behalf of the employee and the employee can avail health care in case of any hospitalization due to accident, illness or disease.

The health insurance can be extended to the family members of the employees in which case the employees might pay full or part premium for the health insurance coverage for the family. The employees can also avail other add-ons under the group health insurance such as the free medical check-ups, employee wellness programs at certain intervals in the tie-up hospitals or diagnostic centres.

2. Pandemic: Organizations or companies in India have been fighting to reach the pre covid productivity after facing many hindrances. One pandemic was enough to show the need for group health insurance for employees as the employees who were hospitalized and did not have enough financial resources looked up to their employers for financial support which was not possible for the organizations in each and every case.

Losing employees due to pandemic would affect the organization’s productivity and therefore they need to have a robust health insurance policy in place. Covid-19 pandemic has shown the need for a group health insurance policy as the healthcare costs associated with Covid-19 were not systematic.

Even the government of India has made it mandatory to avail pandemic specific group health insurance policy for those organizations working during the pandemic period. Insurance regulatory and development authority of India has asked the insurance companies to roll out a pandemic specific health insurance policy which would cover the hospitalization expenses at low cost. Corona kavach and corona rakshak health insurance policies have been introduced into the market by insurance companies which became an instant hit.

The corona specific health insurance policies are offered at an individual as well as group level. Organizations having at least 7 employees are eligible to take the corona specific group health insurance policy to cover the hospitalization costs of their employees. The corona specific policy is an indemnity based policy where the entire sum insured will be paid to the insured in case of hospitalization due to Corona.

3. Boost morale of employees: The group health insurance policy helps to boost the morale of the employees working in an organization. Employees need not look onto their backs and be in continuous stress thinking of their situation in the event of hospitalization. In developed countries, employer health insurance is considered more valuable than the salary by most of the employees. This is due to the fact that the health care costs are on the rise in every country and having a strong health insurance policy is the only alternative to protect your financial condition in case of any mishap.

It is to be noted that Starbucks, a famous MNC chain, spends more on the group health insurance of employees than the raw materials required for the business. The CEO of Starbucks did not even cut the budget for health insurance during the pandemic and this helped boost the morale of the employees working in Starbucks.

Gone are the days wherein the treatment was affordable, most of the state and central sponsored hospitals in our country do not support all kinds of treatments. There needs to be a standard group health insurance policy in place. Most of the employees prefer to have a group health insurance policy which covers their older parents. Employees who can afford retail health insurance policy also prefer to have a group health insurance policy as the coverage is vast and the benefits in group health insurance policy are higher than the retail health insurance policy. For instance, there would be no waiting period in group health insurance policy which benefits people having pre existing conditions whereas they need to wait for at least 1 year in retail health insurance policies.

4. Tax benefits: The organizations availing group health insurance policies can claim tax benefits under the Income tax act. The tax benefits would be encouraging for the employees to opt for group health insurance policy.

If the employees have paid a part of the premium or full premium then it would be possible for the employees to claim the income tax deduction under 80C of the income tax act. Income tax deduction would be available only if the employees have paid the group health insurance premium. The employer or the organization would not be able to claim any deductions or exemptions under the income tax for the premium paid towards group health insurance policy.

5. Easy premium payment options: Now it is possible to pay the group health insurance premium in parts i.e. installments. The insurance regulatory and development authority of India has permitted the insurance companies to collect the group health insurance premiums in easy installments which would be beneficial for the organization availing group insurance.

Easy premium payment options from the insurance companies increase the chance of taking a group health insurance policy. As the organizations would have the option of paying later, they can even avail higher sum insured under the group health insurance policy.

6. Lifestyle or Workplace related diseases: These days it is very common for a young person to get a heart attack and get admitted to the hospital for treatment. This is due to the changes in the lifestyle of the people. Most people have a sedentary lifestyle leading to many lifestyle diseases which should otherwise appear in old age. Workplace illnesses are also common in certain industries such as Spinning mills, Asphalt factories, chemical factories, etc where the workers are exposed to a variety of workplace diseases.

Having a group health insurance policy can help employees working in such conditions. Lifestyle and workplace diseases would develop over a period of time and it would be advisable for organizations to invest in a group health insurance policy to protect their employees from such risks.

Krishna Murthy V

Krishna Murthy is the senior publisher at Trickyfinance. Krishna Murthy was one of the brilliant students during his college days. He completed his education in MBA (Master of Business Administration), and he is currently managing the all workload for sharing the best banking information over the internet. The main purpose of starting Tricky Finance is to provide all the precious information related to businesses and the banks to his readers.