Group health insurance is an application of health insurance in a group context. It involves health insurance coverage for a group of members under a single policy. Group health insurance is usually taken by employers for their employees to provide them with health insurance coverage. Group health insurance can be customized as per the needs and requirements of the customers.

Group health insurance can be purchased by small businesses as well if they meet the minimum number of insureds. Insurance companies require a minimum of 7 people to offer group health insurance. Small businesses are usually sole proprietorships or partnership firms. These businesses can purchase group health insurance for their employees and their families.

Small businesses can also use the premium sharing formula, where a certain amount of the premium is collected from the employees and the rest is paid by the employer. The premium for a group health insurance plan depends on many factors, such as the number of people covered, the amount of coverage chosen, the additional benefits required, etc. The premium for group health insurance is calculated based on the number of insured persons.

The premium payable under group health insurance remains the same up to a certain number of lives. For example, the group health insurance premium is the same for up to 15 people, and any organization with fewer than 15 people must pay the premium for 15 people. This number varies from one insurance company to another, and the minimum premium is different for different insurance companies.

Therefore, it is advisable to include the maximum number of employees in the group health insurance in order to get the cheapest premium. Insurance companies divide companies into small, medium, and large companies and charge a premium based on the loss ratio. The higher the loss ratio, the higher the premium that companies have to pay. There are small companies that have the lowest loss ratio, while there are certain small companies that have the highest loss ratio. So it cannot be generalized that small companies pay a higher premium compared to large companies.

Table of Contents

Introduction

What is included in the group health insurance?

What is excluded from the group health insurance?

What is the need for group health insurance for small businesses?

Frequently Asked Questions

What is included in the group health insurance?

  1. Inpatient hospitalization: Inpatient hospitalization is a condition in which the insured is admitted to the hospital for more than 24 hours for the purpose of treatment. The inpatient admitted must undergo treatment for at least 24 hours, which may be longer depending on the type of treatment. The maximum coverage under inpatient hospitalization is equal to the sum insured stated in the policy. In most cases where the patient is admitted as an inpatient, a high level of monitoring and close observation is required. Certain surgeries and procedures also require inpatient admission such as heart attacks, influenza, burns, etc., where the patient is to be admitted as an inpatient for more than 24 hours.
  2. Daycare hospitalization: Daycare hospitalization is a condition in which the insured can be treated and discharged from the hospital within 24 hours, thus not requiring inpatient hospitalization. Due to advances in technology, most treatments are performed in less than 24 hours, which falls under daycare. These include chemotherapy, radiation, dialysis, cataract, etc. For example, if we take the dialysis for kidney patients the process would be carried out within a period of a few hours and doesn't normally require in-patient hospitalization unless otherwise there is any serious issue involving the kidney ailment. Each insurance company has a list of daycare procedures that are covered by group health insurance. It is important for every small business owner to be aware of the list of daycare procedures before purchasing group health insurance.
  3. Out-patient hospitalization: This is mostly an add-on cover and includes any treatment that is received by the Insured which does not mandate inpatient or day care hospitalization. Outpatient treatment is essentially a consultation with physicians about the treatment to be provided. OPD claims are usually billed on a reimbursement basis, meaning the insured must first claim the service, pay the bill to the hospital, and then submit the original documents to the insurance company to process the claim. OPD claims include hand fractures, minor accident treatment, etc. where the patient need not enter the hospitalization side of the hospital and can get the treatment done at the outpatient department itself.
  4. Accidental Dental hospitalization: A health insurance policy would not cover any treatments that enhance the beauty of the insured under normal circumstances but would otherwise be covered in certain instances where the need for cosmetic treatment arises due to injuries. Accidental dental treatment covers surgeries or procedures performed at the treating hospital.
  5. Alternative treatments cover: Alternative treatment methods such as Ayurveda, Yoga, Unani, Siddha, and Homeopathy are covered under the group health insurance plan. The maximum coverage for alternative treatments is equal to the sum insured as specified in the policy terms and conditions. Claims for AYUSH treatments are only accepted if the patient is admitted as an inpatient in a recognized hospital and the stay lasts for at least 24 hours.The maximum coverage available for hospitalization under AYUSH coverage varies from one insurance company to another.
  6. Maternity Cover: Maternity coverage includes childbirth and other related expenses incurred by the insured patient. All newborn medical expenses are also covered under the group health plan. Newborn medical expenses are covered for up to a period of 90 days, after which the baby may be added to the group health insurance plan upon payment of an additional premium. Pre- and post-maternity hospitalization expenses are also covered by group health insurance. Hospital expenses include room rent, nursing charges, surgeon's charges, anesthesia consultation, emergency ambulance charges, etc. Maternity cover also covers the expenses incurred by the insured on legal termination of pregnancy on the treating doctor’s advice.
  7. Pre & Post hospitalization expenses: Pre-hospitalization expenses are the medical charges incurred by the insured prior to hospitalization, whereas post-hospitalization expenses are the medical charges incurred by the patient after discharge from the hospital which include follow-up visits etc. The minimum number of days for which pre-hospitalization and post-hospitalization expenses are covered is 30 days and 60 days respectively. In order for the insured to claim pre- and post-hospitalization expenses, the insured must be admitted to the hospital as an inpatient. Pre- and post-hospitalization expenses are the medical expenses incurred by the insured patient for diagnostic tests, follow-up examinations, etc. that are required as part of a hospital stay.
  8. Room rent: Room rent is the rent paid by the insurance company for the room availed by the insured during their in-patient treatment in a hospital. If the insured is admitted to the hospital as an inpatient, the cost of room rent is covered by the insurance company up to the amount of the sum insured.

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What is excluded from the group health insurance?

  • Pre-existing conditions would not be covered under group health insurance if the customer does not opt for the coverage.
  • Other alternative therapies such as acupressure, naturopathy, magnetic therapy, etc. are not covered by group health insurance unless specifically mentioned in the policy.
  • The cost of diagnostic tests such as blood tests, scans, pathology tests, etc. are not covered by group health insurance unless they are part of the hospitalization required during treatment. For example, infertility treatment requiring diagnostic expenses is not covered by group health insurance, but the diagnostic tests conducted at the time of hospitalization due to an accident or illness or disease would be covered by group health insurance.
  • Self-inflicted injuries such as attempted suicide etc. would not be covered under the group health insurance policy.
  • Expenses incurred due to war or war-like activities are not covered under the group health insurance policy because the policy clearly excludes costs incurred due to war or related activities.
  • Cosmetic treatments are performed to enhance the beauty of a person. Cosmetic procedures such as plastic surgery, dental procedures, eye surgery, or other such procedures are not covered under the Mediclaim group insurance policy unless they are resulting from an accident or disease.
  • Any medical condition arising out of pregnancy leading to hospitalization. Group health Insurance covers maternity and childbirth, but not complications arising from childbirth or pregnancy.

What is the need for group health insurance for small businesses?

  1. Financial stability: The major thing that small businesses should consider is their financial stability. As they do not have many resources at their disposal it would become difficult for them to afford the health care for their employees in normal circumstances. Having a group health insurance plan could save them from financial troubles as they would get high coverage at low premiums.
  2. Employee retention: The biggest benefit of group health insurance for small businesses is that it builds employee trust in the company. Employees would trust the company because it cares about the health of employees and their families. Employees are happy to stay with the same company for a longer period of time if they can obtain group health insurance. Employee retention for small businesses is a challenge because it is difficult to retain talent these days, but group health insurance in addition to other employee benefits helps retain employees.
  3. No waiting period: With group health insurance, there is no waiting period, which means that claims can be made from day one without having to wait for a certain period of time, unlike regular personal or retail health insurance plans. All waiting periods such as pre-existing conditions, waiting periods for certain conditions, initial waiting periods, maternity waiting periods, etc. are waived off in group health insurance plans.
    Since the waiting period would not apply to group health insurance plans, customers can make a claim immediately after signing up for the plan. This advantage of group health insurance benefits people with pre-existing conditions such as diabetes, cancer, high blood pressure, etc. People undergoing treatment for a medical condition can also enroll in group health insurance and continue their treatment. Unlike individual or retail health insurance, which requires a pre-examination in certain cases, group health insurance does not require pre-examinations.
  4. Customizability: Group health insurance can be customized as per the needs and requirements of the customer. Customization can be in terms of coverage as well as the number of people to be included in the plan. There are certain organizations that allow parents to be enrolled in group health insurance plans. Parents can be covered for an additional premium, which is a great benefit to employees. Customization provides the insured customer with an option to choose the health coverage based on their requirements and not stick with one option available to them, like that in individual health insurance plans which come with pre-fixed coverage.
  5. Cashless facility: Cashless facility may be provided by some policies where the insured need not pay for the medical treatment availed by them in any of the network hospitals. Network hospitals are those which are tied up with the insurance companies to offer cashless claim settlement facilities to their health insurance customers. Small businesses have employees who would not be in a position to spend a hefty amount on hospitalization and the cashless facility would be very much helpful for them as they need not spend money up to their sum insured limit.
  6. Tax Benefits: Another advantage of group health insurance for small businesses is that an income tax exemption can be claimed. The premium paid for group health insurance can be claimed as a business expense, and the income tax deduction can be claimed accordingly.

Group Health Insurance FAQs:

  1. How is group health insurance beneficial for small businesses?

Group health insurance would be beneficial for small businesses in many ways such as providing a cashless facility, no waiting period, financial stability, tax benefits, employee retention, etc.

2. Who pays a premium for group health insurance in small businesses?

The premium in group health insurance is usually paid by the employer but in certain cases, the premium can be shared by employer and employees or completely contributed by the employees. The premium sharing agreement varies from one organization to another and there is no hard and fast rule for this. Whoever pays the premium, the policy would be issued in the name of the employer and the employees would be mentioned as the members in the policy.

3. Is it mandatory to take group health insurance for small businesses?

No. It is not mandatory to take a group health insurance policy in India. But companies can provide group health insurance coverage to their employees as a part of employee benefits to motivate and retain their employees. Apart from motivation and retention, there are many other advantages of providing group health insurance coverage to employees.

4. How is the premium decided in group health insurance?

The premium in a group health insurance depends on the number of members, the total sum insured, coverage opted, etc. Since the policy is customizable it would be difficult to predict the premium before calculation.