Importance of Employee Health Insurance

Why Is Employee Health Insurance Important?

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The costs of medical treatments are on the rise, and any unforeseen hospitalization can swiftly drain a person’s financial resources. The purpose of health insurance is to protect against high medical expenses. To this end, companies include health insurance as an essential part of the employee benefits package. 

The basic importance of employee health insurance is retaining talented employees and attracting new talent. Employees often cannot afford individual health insurance due to high premiums. Employee health insurance provides default health insurance to them. 

Some other benefits of employee health insurance have been discussed here.

Importance of Employee Health Insurance

No Waiting Period

The importance of employee health insurance is underlined because it has no waiting period. The waiting period is a specific period during which the insured cannot make a claim. Individual health insurance plans have waiting periods for activation of basic coverage. There are long waiting periods spanning 3-4 years for certain diseases and pre-existing conditions. 

In the case of employee health insurance, the insured employees get coverage from the first day itself. Even the employees suffering from chronic conditions such as diabetes or heart disease are exempted from the waiting period and get instant coverage. 

Maternity Benefits

The importance of employee health insurance from the point of view of maternity coverage is particularly more for young employees wanting to marry and start their families. Maternity benefits cover the costs associated with both normal and C-section deliveries. Employee health insurance usually provides immediate maternity cover without the waiting period of 9 months, as is the case with individual health insurance.

Newborn cover can also be a part of the maternity benefits. In individual health insurance, the newborn baby is not covered for 90 days after birth. But in employee health insurance, the newborn is covered immediately after birth.

No Disease Wise Capping

Health insurance plans cap the coverage amount for treatment of specific diseases regardless of the insured amount. For instance, an insured person gets treatment for gall bladder stones and the treatment cost amounts to Rs. 70,000 while his/her health insurance policy caps it at Rs. 40,000. Due to capping, he/she is required to pay the balance of Rs. 30,000 from personal resources. 

The employer must opt for a group health insurance plan which does not have disease capping. Otherwise, the employees would be forced to pay from their own pockets for treatments of many diseases. Thus, no disease capping is yet another major reason illustrating the importance of employee health insurance.

No Room Rent or ICU Charge Limits

Room rent or ICU charge capping in health insurance refers to the maximum per day charge of the hospital room or ICU that the insured person can claim. The room rent/ICU charge limit is usually 1-2% of the insured amount. If the room rent or ICU charge exceeds the limit set by the policy, the insured person needs to pay the extra from his/her pocket. 

The importance of employee health insurance lies in the absence of room rent or ICU charge capping. Thus, an employer needs to purchase a group health insurance policy that covers at least 1 private room or ICU regardless of the charges.

India Wide Cashless Network of Hospitals

Cashless treatment means the insured person is not required to pay anything to the hospital. The health insurance provider settles the bill directly with the hospital. The alternative is reimbursement which means the insured needs to pay the hospital from his/her resources and claim the amount from the insurer later on. A cashless facility is a more convenient option.

The importance of employee health insurance also lies in the cashless treatment facility. However, cashless treatment can be availed only in the insurer’s network hospitals. Thus, an employer must ensure that the insurance company has a countrywide network of partner hospitals to extend cashless treatment facilities to the employees.

Unlimited Free Doctor Consultations 

Many group, health insurance plans include unlimited free consultations with doctors. This facility includes both in-person and virtual consultations. Insurers usually have a panel of doctors to provide free consultations. Many group health insurance providers also provide online booking facilities. 

Annual Health Check-Ups

Annual health check-ups are included in the coverage by the best group health insurance plans. Diagnostic tests are also covered under annual health check-ups. The number of tests included is directly proportional to the sum insured. Annual check-ups are offered for free at the network hospitals of the insurer. However, specific tests not included in the policy are charged.

The importance of employee health insurance vis-a-vis annual health check-ups cannot be discounted. This is because annual health check-ups detect early signs of any disease and stop its progress. The doctor can also detect deficiencies of vitamins, minerals, and nutrients and prescribe relevant medication.

Discounts on Medicines

Many employee health insurance plans offer medicines at discounted rates at network hospitals or pharmacies. This facility is beneficial for the employees because it helps in lowering the overall medical expenses. 

Wellness Programs

Maintaining a high fitness level also underlines the importance of employee health insurance. This is because most health insurance providers offer wellness programs to motivate the policyholders to adopt a healthy lifestyle. As per IRDAI, the wellness programs by health insurance providers must be designed to improve and maintain the policyholders’ health.

The employees covered under such a policy get access to gyms, yoga sessions, sports clubs, etc. Many insurers also provide access to professional nutritionists and mental health professionals.


The importance of employee health insurance is also linked to its flexibility. The employees are free to add extra benefits to the master group health insurance policy by paying more premiums. The add-on benefits can be critical care insurance, accident insurance, and more. The sum insured can also be increased by paying the extra premium amount.


The importance of employee health insurance is for both the employer and the employees. In addition to a motivated workforce, the employer also gets tax benefits on the premium paid for the employee health insurance.

To know more about employee health insurance visit


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