How to choose the right group health insurance policy for your employees

By Prabhjot Tiwana
Group health insurance is one of the most affordable health insurance plans available in the market. Group Health Insurance accounts for more than 50% of the non-government sponsored health insurance market. As per an MHA notification, it has now become mandatory for employers to offer health insurance coverage to their employees in case they resume operations post Covid-19 lockdowns.

In light of these, it becomes important for the employers to understand the nuances of group health insurance plans- how the premiums are calculated, terms and conditions associated with their policies and the customizations possible so as to extend best possible benefits to their employees in budget.

Here are a few practical tips that may help you design the correct health insurance policy for your employees :

1) Choose the correct Sum Insured – This is the maximum amount of money per family (or individual) that will be paid by the insurer in case your employees are hospitalized. Please take note of the rising medical inflation costs as well as the kind of hospital your employees will generally go to while deciding the sum insured.

Also, additional sum insured becomes cheaper as you go up. A Rs 4 lakh cover does not cost twice as much as a Rs 2 lakh cover. Calculate the premium for higher sum insured amounts also and the additional amount spent will probably be worth it. Typically, go for at least Rs 3 lakh of coverage if you stay in a metro/tier-1 city and a minimum of Rs 5 lakh if you are planning to insure your employee’s family members also.

2) Room Rent Limit – This looks simple. This is basically the highest rent or category of room you are eligible for. Your limits can be 1% of sum insured or even up to a single private room ( irrespective of cost).

If your employees go to a tier-1 hospital in a tier-1 city, average room tariff is typically Rs 10000 for a single private room. Hence, if you have a Rs 5 lakh cover and room rent limit at 1% of sum insured, your employees will be covered only upto Rs 5000 for the room.

There is another disadvantage with lower room rent limits which most people are unaware of. Most insurers also have a concept of proportionate deduction. In simple words – If your total bill for the hospital stay is Rs 2lakh and you stayed in a room which cost Rs 10000. If your room rent limit is Rs 5000 only, then the insurer will reimburse only 50% ( 5000 divided by 10000 ) of the Rs 2 lakh bill . Hence, your employees will lose roughly Rs 1 lakh on the treatment costs also if they stay in a higher category room. In case the budget allows, it is typically advised to get a health insurance plan which at least covers upto a single private room.

3) Check the List of network hospitals
This is especially relevant if your company is based in a non-metro city. Although the list of hospitals may also get revised during the policy year, it is important to check if your city’s preferred big hospitals are covered while buying the policy.

4) Waive off all waiting periods: Waiting period refers to the time your employees have to wait in order to be eligible to take certain kind of treatments. This is typically of 3 types

• Initial Waiting Period: It is typically 30 days. For the first 30 days of the first insurance policy purchase, you can take claims only for accident related hospitalizations. No disease/illness will be covered within the first 30 days.
• Specific Disease Waiting Period: This is typically 2 years.
• Pre-Existing Disease (PED) Waiting Period – This is typically 3 or 4 years. Pre-existing diseases are the specific diseases like high blood pressure, diabetes, thyroid etc which exist at the time of first policy purchase. Insurers cover the treatments for these conditions only after the PED waiting period.

An advantage with group health insurance plans is that you can choose to pay an extra premium and waive off all applicable waiting periods. As a rule of thumb, it is strongly advised to opt for waiver of waiting periods in group health insurance plans. This is a major advantage over standard retail health insurance plans available in the market.

5) Maternity Coverage
Parenthood is a blessing. It is important to be there for your employees when they are having a baby. In case you have a relatively young team wherein the chances of starting a family for your employees are high, you should opt for maternity coverage while buying the policy. In case most of your employees are unmarried or above the age of 35-40 years, you can choose not to take the add-ons of maternity coverage.

6) Cover your employee’s families– Employees love it if their immediate family members are also covered under the health insurance scheme. Offering comprehensive coverage to cover your employee’s families may cost you about twice the premium. Take a wise decision if you want to bear this cost.

In short, there are lots of ways to customize an insurance policy to suit your employee’s needs. You should discuss with your insurance advisor in detail and get your employees covered at the earliest.

(Prabhjot Tiwana is Director and Insurance Head, WishPolicy.com .)