What is Group Health Insurance?

Introduction

Imagine a choir. And now, imagine an orchestra conductor.

Well,

• The Choir = A group (of any kind of organisation or corporate)
• The Orchestra Conductor = An administrator/employer!
• The Music = A Group Health Insurance Policy

If you have been in an esteemed corporate organisation, an alumni group, or a reputed higher educational institute, you have been a policyholder to group health insurance plans. It always seems like an unasked, unsought financial and medical perk, doesn’t it?

But the question is - are group health insurance policies yay or nay? What are the ups and downs of the plans? Who pays the premium in a group of individuals and takes all the crucial decisions like coverage, exceptions and restrictions in health conditions, and more such features?

Well, here’s all you need to know about group health insurance plans, the best insurers offering such policies, and their pros and cons.

What is Group Health Insurance?

Group health insurance plans are medical and financial insurance coverage offered by an employer or the head of an administrator or a group to the employees or individuals of the same corporate organisation or group, respectively. Such a financial perk is of great advantage to the intended policyholders. Here are a couple of crucial pointers on group health insurance plans -

1. Coverage is extended to - Individuals of the same organisation or institution and their family members. The number of family members who can be included on behalf of a policyholder depends on the employer, the health insurance provider and the health insurance plan availed.
2. Premium is borne by - In case of the corporate health insurance policies, the premium is shared between the employer and the employee (the % of a share varies; however, employees end up paying a minimal share of the premium and that too if they include their family members. Else, employers pay off the entire premium). In the case of health insurance shared among an alumni group or among students from the same institute, the policyholders are financially responsible towards the premium of the health insurance plan.
3. How are group health insurance premiums calculated - Considering how group health insurance policy is shared among multiple policyholders, the premium calculation becomes a bit more complicated than usual. Hence, in this case, a few factors are considered -

• Type of plan: If policyholders avail of the best health insurance policies with high deductibles, then he/she enjoy lower premiums.
• Size of the group: The larger the group of people that shares a health insurance policy, the lower the premium to be paid towards the plan. This is because, the more the number of policyholders, the better risks are thinned out among them, thereby making them a good business opportunity for health insurers.
• Health history of the group: This factor, much like in the case of Individual Health Insurance Plans, indicates that the more the number of pre-existing ailments among the policyholders, the more risk they pose for health insurance providers. Hence, a higher premium ensues.
• Age of the employees: In the case of senior citizen health insurance policies, there is always a higher premium considering the imminent health complications due to old age. Subsequently, in the case of group health insurance plans too, the higher the age of the employees/group, the higher the premium they are supposed to pay towards their health insurance plan.

Well, group health insurance plans surely do look enticing, doesn’t it? But when has a financial tool been all glory and no doom? Well, group health surely has certain downsides; however, its advantages are plenty in number too. Weigh out the pros and cons and decide how suitable this insurance policy is for your financial and medical requirements.

What are the Pros and Cons of Group Health Insurance?

Pros of Group Health Insurance

Okay, first of all, group health insurance doesn’t give you much of a scope. If your company has a group health insurance policy in place, you, an employee, are bound to be included. Thus, the pros mentioned below won’t really help you determine if you should avail of such policies or not. However, these will be effective for your employers who are in 2 minds about whether they should avail of a corporate health insurance plan or not.

Policyholder’s Point of View

• NO PRE-MEDICAL TESTS ARE REQUIRED

In general, health insurance providers are very specific about getting the medical history of the potential policyholders. This helps them develop a better understanding of the imminent health complications and thereby decide upon a suitable plan. However, in the case of group health insurance plans, insurers look the other way and leave out any and all medical examinations before offering a policy.

• WAITING PERIODS MAY NOT BE APPLICABLE

Some group health insurance plans extend the perk of 0 waiting period in the policies. So, irrespective of whether you are dealing with a pre-existing disease, a critical ailment, or a specific illness, you have a 0 waiting period for their coverage (provided that your group health insurance plan offers this perk).

• MINIMUM MEDICAL RESTRICTIONS/ EXCLUSIONS

Group health plans are pretty comprehensive and thus there are minimum medical exclusions across the board in these policies.

(P.S. However, at times, certain ailments come with disease-wise sub-limits and room rent limits. For example, some group health plans have upper limits on cataract surgery based on the chosen lenses.)

• HASSLE-FREE CLAIM PROCESS

With health insurance policies, dealing with the claim settlement process can be quite burdensome.

Whether you are going in for a cashless or reimbursement claim process, you are often being a ping-pong ball between the hospital insurance desk and a Third Party Administrator (TPA) or your health insurer.

On the other hand, with a group health plan, during claim settlement, you just reach out to your employer or to the group admin or the college authority, and they are left dealing with the entire claim settlement procedure.

• MATERNITY AND NEWBORN BABY COVERAGE

Maternity health insurance plans are a tough find in the insurance market. And even if they are available, they are pricey and come with an extensive waiting period of 3 - 4 years. Thus, with maternity and newborn benefits in the group plans, this gives the policyholders that extra edge as a reason why group health insurance plans are a great financial safety net.

Admin’s Point of View

• MINIMAL PREMIUMS

Considering a deeper risk pool with multiple and diverse policyholders, the risks posed are pretty thinly spread. Thus, health insurance providers are more than ready to offer suitable health insurance policies with comparatively minimum premiums (as compared to Individual or Family health insurance plans).

Thus, whether it’s the employer who solely pays off his/her employee’s premiums or for a group where policyholders are individually responsible for their premiums.

• FLEXIBILITY ACROSS COVERAGE OPTIONS

Admins/ Employers are offered a wider range of coverage options to choose from when they are opting for a group health insurance policy. Along with the option to choose an optimum sum insured for each individual, multiple other perks in the plan are also open to choice for the group’s head.

• CONVENIENCE OF AVAILABILITY

Group health insurance policies often fetch relatively low eligibility criteria as compared to Individual plans. In the case of the former, health insurers are far less stringent about the eligibility required for potential policyholders to avail of a health insurance plan.

• STRENGTHENED EMPLOYEE-EMPLOYER/ GROUP RELATIONSHIP

Finances are a sensitive matter, aren’t they? However, taking financial decisions with friends, family, and colleagues is a move that strengthens their relationship with the policy purchaser and the policyholders.

• ENHANCED ORGANISATION CREDIBILITY & RAPPORT (CORPORATE-SPECIFIC)

Corporate Social Responsibility - that’s a major buzzword among companies, isn’t it? An offering of a health insurance plan to the employees with the intent to safeguard their health by offering a free financial backup, that’s quite a credibility gained for the company!

Cons of Group Health Insurance

• UNCERTAINTY OF POLICY TENURE/TERM

Group health insurance policies last only till you stay in employment with the specified employer/group in question. Once you quit the job or the group, you find yourself out of a financial safety net. Of course, you can convert your corporate health insurance policy into an Individual plan. However, the process is long and cumbersome.

And in case you find yourself out of the group plan, and if you don’t have an individual and family health plan to fall back upon, you are left financially vulnerable and exposed during times of medical emergencies.

• THE SUM INSURED IS MINIMAL

In most cases, the group health plan offers a bare minimum amount in terms of the sum insured. This amount might still cover an individual but put his/her family in the mix, and you have a thinned-out coverage that falls short of covering the high-end medical expenses and bills and the hospital invoices.

• POLICYHOLDERS HAVE NO DECISIVE POWERS

Health insurance providers are supposed to give you the freedom to choose a plan that best caters to your customised financial and medical requirements and goals. However, with a group plan that takes into account the overall average requirement of the group, such a customised approach goes missing and your specific medical needs are not exactly catered to.

• HEALTH INSURANCE PLANS/PROVIDERS MIGHT CHANGE

Employers and the admin of a group are at liberty to change the health insurance providers at their discretion. The opinion of the employees or the rest of the group is not really taken into consideration. And this no say over the matter means you can’t choose a health insurance provider based on your expert research or consultation and have to rely solely on the decision-making power of the employer/admin.

• NO RESTORATION BENEFITS ARE AVAILABLE

On top of the fact that the coverage amount is a bare minimum in the case of group health insurance plans, no restoration benefit is provided/offered to the policyholders.  Thus, if the sum insured is consumed over hospitalisation, the employee/group is left financially vulnerable during medical requirements.

• TAX BENEFIT FOR POLICYHOLDER

Tax benefit under Section 80D is a substantial perk for health insurance policyholders. However, with group plans in health insurance, such perks are just out of the window, since this perk is reaped only by the employer.

• PREMIUMS MAY CHANGE BASED ON CLAIMS RAISED

Well, health insurance providers are smart. If they notice that the claim raised in a year goes well over and above their pre-decided expected amount, the premiums for the next year get increased.

While, on the other hand, with Individual health insurance policies, there is a slight boost in the premiums from year to year considering inflation; on the other hand, the boost in premium for group health is far more substantial than that.

• NO NO-CLAIM BONUS IS AVAILABLE

Group health insurance plans also do not come with any No-Claim Bonuses even if the policyholder raises no claims across a year. This is because health insurers usually consider the group health plan as a single policy and not as multiple plans under a single financial tool umbrella. With a large group, one or the other individual definitely raises a claim and hence, there is no chance of no-claim bonuses for the insured group.

Conclusion

Undoubtedly, group health insurance plans are an unasked financial perk that acts in solidarity during a medical emergency. Despite its queue of drawbacks, the group health policies are still a financial boon. However, such plans are only tapped at their full strength if you have an Individual and a family health insurance plan as a backup.

In this way, you can always enjoy the added insurance coverage at your place of employment that comes with no waiting period, minimum premiums, minimal restrictions and exclusions, and more. And yet not be worried about what if your employer or admin dissolves the group or if you have to quit the corporate or the group.

FREQUENTLY ASKED QUESTIONS