Group health insurance plans usually offered by the employer are usually cheaper than an individual health insurance plan. Though each of these plans come with their own benefits and exclusions, group mediclaim insurance plans are more cost-effective than health insurance plans for an individual, for various reasons.
The following are the reasons why group health insurance plans are priced cheaper than individual health plans –
- Risk pooling: Group health insurance policies are offered on the basis of risk pooling across a large number of employees to be insured. As the group of employees can have both a high and low-risk profile for the insurance company, the pricing is done on the basis of general factors such as the size of the group or company, the average age of the employees, nature of jobs and the industry in which the company operates etc. Hence, the risk is spread across all the members of the group which brings down the overall cost of insurance when calculated on an individual basis. Medical insurance for employees in India is provided by most of the companies who have employees in large numbers.
- Contribution by employers: Group mediclaim insurance premium is usually paid for by the employer or sometimes with a part contribution required by employees. The cost of group health plans is either incurred by the employer or shared by both employer and employees. Cost-sharing or contribution by the employer towards this insurance makes it a cost-effective option of availing healthcare coverage.
- Tax benefits to employers: Premiums paid on healthcare coverage availed for employees can get tax incentives for the employer. Specifically, health insurance bought for employees by small businesses can benefit the business owners with reduced cost due to tax deduction benefits.
- Benefits to employees: Through group health insurance benefits offered by the employer, employees can avail of coverage for their family – spouse, dependent children and for dependent parents. As these coverages are available on a large scale for a group of people (employees and their family) the premium is relatively low in comparison to individual coverage available.
Health insurance premiums, be it for a group or for an individual can be calculated easily with the premium calculators available online.
Though healthcare coverage and benefits offered by group mediclaim insurance plans are limited, the basic coverage needed can be availed at a much cheaper rate when compared with the comprehensive individual health insurance plan. Along with the benefit of reduced cost, group medical insurance plans also offer other perks like maternity coverage, pre-existing illness cover and coverage for elderly family members and many.