Group Health Insurance

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Many companies purchase employee group insurance policies for their employees. These insurance policies act as a major motivator and help in attracting a talented workforce.

In most of the employee group insurance policy, there is a deductible clause. As per this clause, the employee will pay a specific monetary limit and then only after that the insurer will settle the remaining amount. It means, at the time of claim, a certain portion of the claim bill would have to be borne by the employee as well.

In employee group insurance policies, deductibles can be divided under the following heads=

  • Compulsory Deductible
  • Voluntary Deductible
  1. Compulsory Deductible= As the name itself suggests, it is a deductible amount which has to be paid by the policyholder compulsorily at the time of the claim. Moreover, it is the amount which is fixed and pre-decided in case of every employee group insurance policy. It is the amount which is selected by the insurance company.
  2. Voluntary Deductible= As the word itself says, it is a deductible amount which is decided by the policyholder and has to be paid at the time of claim. It means, employees can agree to share the burden of the amount at the time of claim, which is known as a voluntary

While compulsory deductible is fixed, it is a voluntary deductible which can vary. As per the repayment capacity, an employer can opt for a high or low voluntary deductible limit.

Read More: How does Group Insurance Cover work?

In case of employee group insurance policies, many employers encourage their employees to go for a high deductible amount in order to keep premium rates under check. The bigger the deductible, the lower would be the premium charged for the same coverage.

Here it is important to note, the deductible can be either a fixed amount, like 5,000,10,000, etc.; or it can be in percentage like 2%, 5%, etc.

Case: 1

Since 1999, MW Technology is a renowned name in the IT sector. Though the company offers various amenities to its employees; it has also bought a group health insurance for its employees. Having an employee base of 500, the company decides to take some steps to keep premium rates of group health insurance policy under check. For that, the company decides to introduce a voluntary deductible clause in its group health insurance policy. It means, at the time of claim, an employee would also bear the claim amount.

In this way, when employees know that they would have to bear the claim amount, they would hesitate in approaching their group health insurance company and in this way, the number of claim would be low. A low number of claims means low premium rates at the time of group health insurance policy renewal.

Here the deductible the company chooses is Rs 10,000, it means, at the time of claim, an employee would have to pay Rs 10,000 from his/her pocket, and the remaining would be borne by the insurer. Also, it means, that the group health insurance company will settle only those claims where the amount is more than Rs 10,000.

Read More: Types of Group Insurance Policies available in India

Case: 2

Last year, J.S Clothing purchased a group personal accident insurance policy for its 200 employees. The group personal accident insurance policy had a clause of the compulsory deductible. It means, at the time of claim, the insurer wouldn’t settle the entire claim as a certain portion would have to be borne by the employee as well. It was a compulsory deductible which was 5%.

Nearly two months back, Rajiv, one of its senior engineers, met with an accident when his car collided with a truck. Here, the group personal accident insurance company came forward and agreed to settle the medical expenses, which were Rs 80,000. However, as the group personal accident insurance had a mandatory deductible clause, a certain portion had to be paid by Rajiv. In this case, Rajiv paid Rs 4,000 and the rest Rs 76,000 were paid by group health insurance company after carefully scrutinising the document.

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