Group Insurance Policy The Definitive Guide

Group Insurance Policy: The Definitive Guide

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Medical costs are soaring, and hefty health expenses often lead people to dip into their savings. Consequently, health insurance has assumed immense importance in this scenario. Apart from individual and family health insurance, many insurers also offer Group Insurance policies. Group Insurance Policy covers a specific number of people under a single policy. It is mainly provided to the employees of a company or organization by the employer and is hence also known as employee health insurance.

The purpose of group health insurance is to cover the medical expenses of the employees in case of hospitalization for over 24 hours for treatment of illnesses or injuries suffered due to an accident. The employer can also choose to include the family members of the employees as well in the Group Insurance Policy.

Who can purchase group insurance policy?

  • Group Insurance Policy can be purchased by any company or organization which has at least 20 members. However, micro insurance plans are also available for entities having a minimum of 5 members. IRDAI states that group health insurance can be provided to groups with less than 20 members, provided the group members are also included in the policy. The minimum number of people required for group health insurance can vary from one insurer to another.
  • Employers usually purchase corporate health insurance policies for their employees. However, non-employer-employee groups are also eligible for group health insurance. Such groups include societies, associations, and clubs with the president, secretary, or the manager empowered by the group members to purchase insurance on their behalf.
  • Employee health insurance cannot be purchased by any group formed specifically to buy group health insurance. The relationship between the group leader purchasing the policy with the group members should not be limited to policy purchase only. The group must be recognized and in existence long before the policy purchase. Insurers have the right to refuse group health insurance to any such group which is created with the sole purpose of getting insurance.
  • An individual traveling to other countries is eligible for individual travel insurance. However, a group of people frequently traveling overseas cannot ask for group health insurance from any insurer.

What all are covered under group insurance policy?

Pre and Post Hospitalization Expenses

Group health insurance policies cover pre and post-hospitalization expenses incurred to treat a disease or injuries suffered due to an accident. More specifically, it covers room rent, nursing charges, cost of diagnostic tests such as blood tests, X-rays, and more, expenses incurred on medicines, anesthesia, oxygen, operation theatre, doctor’s fees, daycare expenses, and more. Some insurers can also cover the costs of pacemakers, chemotherapy, and radiotherapy. Ambulance charges can also come under the ambit of group health insurance.

Maternity Coverage

Maternity Coverage

Maternity coverage can also be provided by a corporate health insurance plan as an add-on. It covers the expenses incurred on delivery and other medical expenses. The maternity policies cover both normal and C-sections. The newborn baby cover is also provided by most group health insurance plans to cover the infant’s medical care costs.

Cover COVID-19 Treatment

In the post-Covid world, group insurance policy plans also cover the costs of hospitalization and other medical expenses related to the treatment of COVID-19 infection. IRDAI has made it compulsory for every business organization to provide COVID-19 group health insurance to its employees. Coverage includes in-hospitalization, pre and post-hospitalization expenses incurred for the treatment of COVID-19 infection. Ambulance charges can also be covered. The sum insured ranges between Rs. 50,000 and Rs. 3 lakhs depending upon the insurer.

Comprehensive Health Cover

Comprehensive Health Cover

The coverage provided by group insurance policy varies from insurer to insurer. For example, Vital offers comprehensive hospitalization expenses for all kinds of illnesses, including COVID-19, chronic disease management, doctor consultations, medicines, medical check-ups, wellness and fitness programs, consultations with nutritionists, and mental health management – all in the same plan.

Cash Benefits

The insurer can also offer advance cash benefits under its group health insurance plans. This service enables the insured to claim 50% of the estimated treatment cost in cash in advance before the treatment ends, and the remaining 50% is reimbursed after the treatment ends.

What all are excluded from group insurance policy?

Specific Medical Expenses

Group insurance policy for employees does not cover the treatment of complications arising from alcohol or drug abuse by any employee. Congenital diseases and AIDS are also excluded from group health insurance.

Inactive Employees Or Those Who Have Quit

Group health insurance plans for individuals are active as long as the employee works for the company that purchased the policy. The policy ceases to be valid for the individual employee as soon as they leave the company.

Ayurveda and Homeopathy Treatments

Ayurveda and Homeopathy treatments are not covered under group health insurance for employees. Only Allopathic treatment is covered under group health insurance, and the expenses for any other form of treatment cannot be claimed. 

Dental Treatments and Cosmetic Surgeries

Corporate Health Insurance plans do not cover dental treatments and cosmetic surgeries. Treatment of injuries caused by suicide attempts is also not covered by group health insurance. 

Pre-existing diseases and group health insurance

Group insurance policy for employees covers many diseases and injuries such as osteoporosis, cataract, hernia, gout, ligament damage, major fractures, spinal disorders, heart ailments, and more. 

Most Employee Health Insurance plans cover Pre-Existing Diseases. Such diseases include diabetes, asthma, hypertension, stroke, cancer, and many more, which are chronic and affect health adversely in the long term. A disease is categorized as pre-existing by the insurer if it was detected at least 48 months from the date of purchase of the policy. There may or may not be a waiting period for pre-existing diseases depending upon the insurer. Even if there is a waiting period for pre-existing diseases, it can be waived off instead of paying an extra premium.

Group Insurance Policy

The insurers do not carry out medical tests in case of group health insurance. However, group health insurance plans for individuals can be customized by individual employees for extra coverage. In such a case, the employee needs to pay the extra premium amount for added coverage, undergo medical tests, and give the insurer information about any pre-existing disease. 

In case the group insurance policy plan does not cover pre-existing diseases, the employer can choose to add a waiver for pre-existing diseases to ensure that the policy is comprehensive. 

Features of group health insurance

Affordable Price

Group insurance policy cost is more affordable than individual health insurance in terms of coverage. This is because group health insurance provides coverage for many people and their families, and the premium viewed in this context is certainly reasonable. The insurer decides the premium amount based on several factors such as the number of people in the group, average age of the employees, number of dependents, geographical location of the company, add-ons, and more. If the employer chooses to include the family members of the employees as well, the premium amount can double. Thus, group health insurance cost depends upon the specific requirements of the employer and also on the total number of lives covered, not just the number of employees.

Waiting Period

Waiting Period

Like individual health insurance, employee health insurance also carries waiting periods. The waiting period is when the beneficiary cannot claim compensation except for accidental injuries. The initial waiting period is active for 30 days from the date of issuance of the policy. Specific pathological conditions such as gall bladder problems, kidney stones, cataracts, and other high-frequency diseases also usually have a waiting period of 1 year. Pre-existing diseases usually have a waiting period of 2-4 years. However, the good thing about group health insurance policy is that all these waiting periods can be waived off by paying an extra premium. Most group health covers, however, come with day one coverage.

Room Rent Capping

Corporate health insurance plans have room rent capping or room eligibility. Room rent plays a major role in hospitalization expenses. This means the policy shall cover the room rent expenses up to a certain limit or if the correct category of room is taken. The room rent cap is usually 1% of the insured amount. The policy can also cover a private room irrespective of the tariff. Some plans, like Vital’s, carry no room rent capping at all. 


The co-payment clause in group health insurance plans for individuals can be of several types. It reduces the premium amount because the employees bear a certain part of the expenses. The common types are as follows.

  • A co-payment fee means the employees need to pay a certain fee for specific drugs, doctor’s visits, treatment modalities, etc. The employee will pay only the fixed co-payment fee while the insurer will pay the rest of the claim amount.
  • Co-payment percentage is the fixed percentage of the claim amount that the employee needs to pay with the balance being paid by the insurer. For example, if the co-payment percentage is 10% and the claim raised is Rs. 40,000, the insured employee will be required to pay Rs. 4000 and the insurer will cover the balance of Rs. 36,000.
  • Co-payment can also be in the form of an annual deductible. The deductible is paid annually by the insured employees for the group health insurance.



The sum insured for each employee by an employee health insurance policy can range between Rs. 1 lakh to as much as Rs. 5 lakhs. The sum insured is applicable for every employee covered under the policy. The claim made by an employee during the coverage period does not affect the insured amount of other employees. Naturally, the sum insured directly affects the premium amount. The amount to be insured under group health insurance depends upon several factors such as extending the benefits to family members or not, several add-ons, need for maternity coverage, etc. 

Cashless Hospitalization

Corporate Health Insurance policies provide cashless treatment facilities. This means the employees don’t need to settle the medical bills themselves because the insurer directly pays the hospital. However, to get the cashless facility, the insured employee must get treatment at a network hospital of the insurer. In the case of a non-network hospital, the employee needs to pay the medical bill themself and claim reimbursement later from the insurer.

How to raise a claim under group insurance policy?

There are several documents required to raise a claim under a group insurance policy for employees. The various documents to be submitted with the insurer are as follows.

  • Correctly filled claim form bearing the signature of the concerned doctor or the hospital
  • Medical reports and final investigation report
  • Doctor’s prescription
  • Final bill with the detailed break-up of all the charges
  • Cash memos and itemized bills
  • Discharge summary carrying the suggested line of treatment
  • Police report in case of accidental injuries

In addition to the above-mentioned documents, the insurer can also ask for any other document for approving the claim.

Why do companies offer health insurance?

Employee Retention

Employee Retention

The competition among companies is high, with each company offering a plethora of perks. As a result, employees have multiple options to switch jobs. The attrition rate tends to be high, thereby adversely affecting performance. Group insurance policy is an important employee benefit that helps in retaining employees, thereby decreasing attrition.

Tax Benefits Under Section 80D

Group health insurance for employees is eligible for tax deductions under Section 80D of the Income Tax Act. This implies that employers can claim tax deductions on the premiums paid for group health insurance policies for their employees. Premium paid for group health insurance comes under business expenses, hence eligible for deductions. In case the insurance is partly funded by the employees, they too can claim deductions on the premiums paid.

Affordable Pricing

Given the scope of the coverage provided by a group insurance policy and risk sharing over multiple persons, the group health insurance cost is reasonable and affordable for the employers. Overall, group health insurance is a low-cost method for employers to provide health insurance coverage to their employees. 

Covers Medical Costs for Employees

Medical Costs of Employees

Medical costs are very high and continue to show an upward trend. In this scenario, group health insurance plans for individuals give the employees and their families a feeling of security against financial hardships caused by expensive medical treatments. Consequently, the employees become more loyal to the company, and their motivation to work better is also enhanced. 

Available to All Types of Organization

Group health insurance plans are available for companies of all sizes. Thus, even owners of small or medium enterprises can opt for group health insurance for their employees. Most insurers offer customized group health insurance plans to suit the requirements of their clients. 

Benefits of group insurance policy for employees

  • Most companies provide a group insurance policy as a default benefit for every employee. Thus, the employees don’t need to opt for health insurance and are covered in employee benefits. The employer bears group health insurance costs, which means the employees don’t need to pay the premium. Even if the employer opts for co-payment, the employees’ amount is much less than the premium of any standard individual health insurance.
  • Group health insurance plans for individuals do not require the employees to take medical screening tests. The insurer issues the master policy of group health insurance covering the employees of a company without seeking medical screening of any employee. In the case of individual health insurance, the insurer is most likely to ask for medical screening before approving the policy.
  • Pre-existing conditions are covered by a group insurance policy, which benefits employees suffering from serious medical conditions. The employer can choose to waive off the waiting period to cover the pre-existing conditions immediately without any delay.
  • Employees can buy a top-up plan in addition to the group health insurance plan provided by the employer to reap additional benefits. The premium paid by the employee for the additional plan is eligible for tax deductions under 80d. Thus, the employee can not only get more benefits but also claim tax deductions.
  • Raising claims is simpler because the employer communicates with the insurer or third-party administrator, and the employees don’t have to do anything except submitting the relevant documents.

Additional facts about group health insurance

An employee cannot cancel a group health insurance policy, and it can be canceled only by the employer. The employee is covered under the policy as long as they work for the organization. 

The employees are not required to renew the group health insurance policy when the policy period ends, and it’s the employer who needs to complete the renewal process. 

The terms and conditions and exclusions under a group insurance policy remain the same for each employee. An employee can get extra benefits by paying an extra premium, but the basic benefits remain the same. A company can extend group health insurance benefits to its retired employees as well. To this end, the company needs to request the insurer in writing. In such a case, the group health insurance cost can be higher because the insurer may charge more premiums for granting coverage to retired employees.


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