Small and Medium Enterprises or SMEs are under immense pressure to retain employees. Losing skilled and trained employees to larger companies is detrimental for SMEs. Hence, there are multiple ways that SMEs need to implement in order to retain existing employees and get new employees on board.
In view of rising healthcare costs that drain the pockets, group health insurance is an important employee benefit that helps SMEs in retaining employees. There are multiple benefits of group health insurance for both the SMEs and the employees working in them.
Meaning of Group Health Insurance
Group Health Insurance covers the medical expenses of a group of people working for an enterprise or organization. The policy is purchased by the employer and the premium is also paid by the employer. The group health insurance policy can also cover the families and dependents of the insured employees as well.
The insured amount is the same for each and every member of the group health insurance policy and claim of medical expenditure by an employee does not affect the sum insured of other employees.
Benefits of Group Health Insurance for Employees
Pre-Existing Diseases without A Waiting Period
One of the main benefits of group health insurance is the coverage of pre-existing diseases without a waiting period. This means pre-existing diseases are covered right from the day the policy becomes active. Pre-existing diseases have waiting periods in the case of individual health insurance plans. Thus, employees suffering from pre-existing diseases also get instant coverage under group health insurance.
Cover Family Members
The benefits of group health insurance are not limited to the employees only. The insurance policy can also include the spouse, children, and dependent parents of the employees as well. Thus, comprehensive coverage is available for the whole family.
Pre and Post-Hospitalization Expenses
Apart from diseases, expenses incurred on treatment of injuries sustained due to an accident are also covered by group health insurance. This includes both pre and post-hospitalization expenses such as room rent, ambulance charges, diagnosis, daycare procedures, and more. Thus, unexpected hospitalization expenses arising due to an accident do not drain the insured employee’s pockets.
Critical Illness Cover
Critical illness cover is also one of the major benefits of group health insurance. Many group health insurance plans provide coverage for treating critical illnesses. This means the insured employees and their dependents under such a plan are automatically covered if diagnosed with a critical illness.
Maternity coverage is offered by most group health insurance plans. The coverage includes expenses for both normal and C-section deliveries. The plan can be with or without a waiting period of 9 months. Many plans also provide coverage for newborn care with or without a waiting period of 90 days.
Coverage for COVID-19 Treatment
Group health insurance plans specifically designed for Covid19 are also offered by many companies. Corona plans provide coverage for hospitalization expenses for treatment of Covid19 infection. The time period of the coverage is usually 9.5 months.
Cashless hospitalization for employees and their dependents is also ranked among the important Benefits of Group Health Insurance. Cashless hospitalization means the insured person has no need to pay the hospital from his/her own pockets. The insurance company settles the bill of the hospital once the claim is accepted. However, in order to avail of the cashless treatment, it is necessary to get admitted to a network hospital of the said insurance company.
Preventive Health Check-Ups
Preventive health check-ups up to Rs. 5000/- in a year is also covered by most group health insurance plans.
Benefits of Group Health Insurance for Employers
Applicable for All Size of SMEs
Whether an SME has 10 employees or more, it can opt for group health insurance. Thus, there is no mandatory requirement for a large number of employees to get group health insurance.
Increase Productivity of The Employees
Saving the employees from unplanned medical expenses is one of the major benefits of group health insurance. This raises the morale of the employees and encourages them to work harder and more efficiently for the company. The result is increased productivity of the employees.
Improve Employee Loyalty
Improving employee loyalty is one of the crucial benefits of group health insurance. Since the medical expenses of the employees and their dependents are taken care of by the company through group health insurance, they are less likely to switch over to other companies.
Tax Benefits of Group Health Insurance
Tax benefits of group health insurance cannot be discounted. An SME can avail tax deduction on the premium paid for the group health insurance policy it is providing to its employees. The premium paid can be reported as employee benefit expense and is eligible for deduction from the taxable income. However, it must be remembered that only the employer can claim tax benefits on group health insurance.
Lower Costs of Premiums
Lower costs of premiums are also one of the major benefits of group health insurance from the perspective of employers. The premiums of group health insurance plans are lower as compared to individual health insurance plans because the risk is divided over a group of people. Since the risk is divided, the insurance companies are able to offer better plans at lower prices.
Exclusions of Group Health Insurance
Apart from knowing about the benefits of group health insurance, it is also necessary to know about the various exclusions. Some have been listed here.
- Group health insurance is applicable as long as the employee works for the employer paying the premium. The policy ceases to work for the employee as soon as he/she leaves the said company
- Expenses incurred for the treatment of complications caused by alcohol or drug abuse are not covered
- Treatment expenses for congenital diseases and AIDS are not covered
- Treatment expenses for injuries caused due to involvement in criminal activities or suicide attempt are not covered
- Expenses incurred on cosmetic treatments are not covered
- Vaccination and immunisation expenses are not covered
How to Purchase Group Health Insurance?
SMEs should opt for reputed health insurance providers to purchase group health insurance. The coverage should be comprehensive and the sum insured should be enough for each and every employee. For example, group health insurance provided by VITAL for SMEs is wide-ranging in its scope of coverage and includes maternity coverage, Covid19 treatment, mental health, telemedicine, pharmacy benefits, and more. The minimum sum insured is Rs. 3 lakhs.