Group Health Insurance Policy

What Is A Group Health Insurance Policy?

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Rising costs of medical treatment and the increase in lifestyle diseases make health insurance and access to high-quality medical facilities without suffering financial losses, an absolute must. Apart from individual and family insurance plans, the health insurance providers also offer group health insurance.

A group health insurance policy is the health coverage purchased by a company or organization for its employees. The policy covers all the employees working as a group for a company or organization. Group health insurances pay for the medical expenses incurred by the employees or their insured family members in hospitalization due to illness or accident.

We will discuss some of the major features and benefits of group health insurance that you should know about.

What is group health insurance coverage?

A group health insurance policy can be purchased by a recognized group such as companies, organizations, clubs, trade unions, associations, etc. The policy covers the members of the recognized group. Only pre-existing groups are eligible for group health insurance. Groups formed specifically to purchase group health insurance are not recognized by the insurers. Employers usually purchase group health insurance for the benefit of their employees.

Individual policies are not issued to the members of a group covered under group health insurance. The insurer issues a master group health insurance policy, which names all the members covered under the said policy and their respective coverage. The policy is issued in the name of the group. The employer company is the policyholder, while the employees are the beneficiaries of the policy.

Who is eligible for group health insurance?

Group Health Insurance Policy

The group should have a minimum number of members to purchase a group health insurance policy. The minimum required members vary from one plan to another. However, most insurance companies mandate a minimum of 20-25 members to provide group health insurance.

Nowadays, many new-age health covers, like the one from Vital offer group health plans that cover organizations with as low as 3 employees.

Who pays the premiums for the group health insurance?

The premium amount of a group health insurance policy is dependent on many factors such as the sum insured, size of the group, average age of the group, and additional benefits selected by the group.

The employer usually pays the premium. However, there can be other arrangements, such as paying a percentage of the premium amount with the employer paying the rest. Whatever may be the case, the insurer collects a single premium amount from the group and not from the individual beneficiaries of the policy.

What is covered in group health insurance?

The sum insured under the group health insurance policy applies to each member individually. For example, suppose a company purchases a group health insurance plan for its employees with a sum insured of Rs. 2 lakhs. In that case, each employee gets coverage of Rs. 2 lakhs under the policy. The company can also choose to extend the coverage to the family members of the employees. Claim by any employee covered under group health insurance does not affect the sum insured of other members.

The coverage limits of group health insurance plans are not very high. This is because the insurance companies do not underwrite the individual health risks of the members covered under group health insurance. The sum insured under a group health insurance policy usually ranges between Rs. 100,000 to Rs. 500,000.

Does group insurance have a waiting period?

Waiting Period in Group Health Insurance Policy

The waiting period is the time period during which the policyholder of a health insurance policy is not able to make claims for medical expenses except for accidental injuries. Group health insurance plans have little to no waiting period, and the group health insurance can cover even pre-existing conditions without any waiting period.

What is policy tenure in health insurance?

Group Health Insurance Policy Period

A group health insurance policy provides coverage for 1 year. The policy needs to be renewed each year. The premium amount and the sum insured can change during annual renewal, and underwriting is done again by the insurer to continue the coverage.

For an employee, the coverage lasts only as long as he/she is part of the organization.

How is group health insurance policy beneficial?

There are several reasons for a company to purchase a group health insurance policy for its employees. Some of them have been discussed here.

  • Group health insurance can be considered a welfare measure for the employees. This is because many employees cannot afford to pay the premium of health insurance and are deprived of it. Group health insurance provides them coverage with the premium being paid by the employer.
  • Purchasing group health insurance policy helps in employee retention. Retaining employees is a challenging task in the current times because there are many job openings in all fields. In the Great Resignation Era, providing benefits such as health insurance to the employees and their families can prevent them from moving to other companies.
  • A group health insurance policy does not require medical check-ups of the beneficiaries. Thus, even if one or more employees are suffering from pre-existing conditions, they would get coverage without any problem. Thus, the medical histories of the employees become redundant under group health insurance.
  • The employer gets tax benefits on the premium paid for a group health insurance policy for the employees. Section 80D of the Income Tax Act enables the employer to claim tax deductions.
  • Maternity coverage can also be added to group health insurance plans. Thus, employers can opt for such plans for their young employees. Maternity coverage has multiple benefits, including coverage of both normal and C-section deliveries and newborn baby coverage without the waiting period of 90 days.
  • Group health insurance provides a cashless treatment facility to the employees covered under it, provided the treatment takes place at a network hospital of the insurer.
  • Premiums of group health insurance plans are lower as compared to other health insurance plans. Thus, such plans do not burn a hole in the pockets of employers.

What is generally not covered in group health insurance?

  • A group health insurance policy is valid for the employees as long as they work for the organization that purchased the policy. If an employee leaves the organization, the coverage ends.
  • A group health insurance policy shall not cover non-allopathic treatments, congenital diseases, AIDS, and treatments for alcohol or drug abuse.
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