Medical Insurance for Employees in India

Important Points to Remember Before Purchasing Medical Insurance for Employees in India

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Group Health Insurance is one of the major benefits provided by the employer to the employees. Any organization with at least 7 employees is eligible for group health insurance. In view of the rising costs of medical treatments, especially in private hospitals, getting health insurance coverage for the employees is a good investment.

Many insurers are offering medical insurance for employees in India. Thus, employee health insurance plans differ in coverage scope, sum insured, add-ons, and more. 

There are some basic points that employers should consider before purchasing medical insurance for employees in India. They have been listed here.

Features of Medical Insurance for Employees in India

Sum Insured

The sum insured is the maximum amount that each employee covered under the group health insurance policy can claim in a year. The insured amount should be enough to cover the employees’ medical expenses while preventing the need to spend a huge amount from their own pockets.

The minimum suitable insured amount for medical insurance for employees in India is Rs.5 lakhs. In view of the inflation rate in the healthcare sector, this figure is considered to be adequate by experts. However, if the employer can afford it, the sum insured can be increased beyond Rs. 5 lakhs as well.

Family Health Insurance

Medical insurance for employees in India allows the addition of spouses, children, parents, and other dependents of the employees to the policy. It is the employer’s discretion to whether or not to extend the benefits of the group health insurance to the family members of the employees. 

To increase job satisfaction among the employees and improve employee retention, many employers choose to include the family members of the employees in the group health insurance. Employees with aged parents are particularly benefited.

Premium Amount

Premiums of group health insurance plans are lower than individual health insurance plans because the risk to the insurer is less due to division among a large number of people. Nevertheless, the employer must consider the affordability and sustainability of the premium before purchasing medical insurance for employees in India.

The employer needs to weigh in the sum insured, coverage benefits, and other groups, health insurance policy features in terms of its premium. The employer should be sure that the premium amount is affordable in view of the benefits and sustainable in the long run because it is a long-term plan.

The employer can also consider co-payment if the employees can afford it. This means the employees pay a certain percentage of the premium, with the employer paying the balance.

Premium paid for group health insurance can be included in business expenses and claimed for tax deductions under Section 80D of the Income Tax Act. The deduction limit is Rs. 1.5 lakhs every financial year.

Coverage Scope

Medical insurance for employees in India covers in-hospitalization expenses such as room rent, doctor’s fees, medicine costs, nursing expenses, OT charges, and more. However, it is better to opt for a group health insurance policy that covers both pre and post-hospitalization expenses.

Most employee health insurance policies cover pre-hospitalization expenses, which are incurred within 45-90 days before hospitalization. Pre-hospitalization expenses include the costs incurred before the insured person gets hospitalized. Visits to the doctor, diagnostic tests, and costs of medicines prescribed before the insured person is admitted to the hospital are covered.

Post-hospitalization expenses include all the medical expenses incurred by the insured person after being discharged from the hospital. Expenses related to diagnostic tests, medical check-ups, and medicines are covered. Expenses on therapies are not included under post-hospitalization expenses. Insurers usually cover post-hospitalization expenses for up to 60 days from discharge.

Maternity Benefits

The employer can consider maternity benefits while going through various plans for medical insurance for employees in India if the staff has a good number of young and married people.

Maternity benefits in group health insurance include coverage of both normal and C-section deliveries without a waiting period of 9 months. Expenses related to newborn care are also usually included. Many plans also cover expenses for infertility treatments.

Network Hospitals

The network of hospitals of the insurer should be scrutinized before purchasing medical insurance for employees in India. Network hospitals have a tie-up with the insurance company to provide cashless treatment to the latter’s customers. The cashless treatment eliminates the need on the part of the insured person to arrange for funds to clear the hospital bill because the insurer pays the amount directly to the hospital.

The network hospitals should be present where the employees live and work and in multiple cities all over the country.

Free Medical Check-Up

Opting for a group health insurance plan offering free medical check-ups is beneficial. This is because free medical check-ups help in the early detection of pathological conditions without any extra cost to the employees. A specific number of tests are also covered under free medical check-ups.

Lifetime Renewal

Lifetime renewability is an essential feature to look for when buying medical insurance for employees in India. Lifetime renewal means the policyholder has the right to renew the policy each year without age or other kinds of restrictions. It also eliminates the need to make fresh medical declarations each year and allows renewal irrespective of the claims made in the previous year.

Claim Process

The efficiency of the claim process of any group health insurance provider can be determined from its claim settlement ratio. The claim settlement ratio is the number of claims settled by the insurer over the number of claims received. Thus, checking the claim settlement ratios of various insurers when looking for medical insurance for employees in India is recommended.

A claim settlement ratio of 90 and above is considered to be good. Cashless claim processing on the production of the health card issued by the insurer and digital document processing in case of reimbursements are provided by the best insurers.


Group health insurance policies are beneficial for both the employee and the employers. They help both parties save money in the long run. If you are looking for a group health cover that is inexpensive and yet, provides a lot of benefits, then you must check out Vital at


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