Group health insurance — expiry and renewal
A group health insurance policy gives employers the opportunity to provide its employees cover for medical expenses. For employees too, a group plan offers some advantages over individual mediclaim policies.
So, when does a group medical insurance policy expire? How can it be renewed? This post attempts to offer some clarity on these and other similar questions.
Expiry and renewal of group health plans
A group health insurance policy is usually valid for one year. At the end of this tenure, the insured must renew the policy to ensure that coverage continues. For instance, if an organisation buys a group health insurance plan on 1 January 2020, the coverage will run till midnight, 31 December 2020. If the organisation renews the policy before this date, coverage will continue for another year, i.e., till 31 December 2021. If not, the policy would expire from 1 January 2021. Once the policy expires, the insured members lose all the benefits of their employee insurance scheme.
Additional Read: What Is Covered Under Group Health Insurance?
The age of members and policy renewal
Customers can renew individual health insurance each year, and the insurer has to renew these insurances life-long. Age pre-determines premiums in individual insurances so they cannot be reset each year. The same is not true for group health insurance plans though. The insurers offer the policy for one year because the composition of a group can change frequently as employees join or depart. Typically, the insurer will set an upper age limit and not insure persons above that. It is possible to insure the elderly as well, but that requires an additional premium and, in some cases, health declarations by the insured person.
Claims and expiry
Since the group health insurance plan covers multiple members, the policy does not expire when a member’s claim is paid in full. For example, suppose a group purchases an employee insurance policy for 100 members with a sum insured of Rs 50,000. Let’s say, one member has a medical emergency and makes a claim of Rs 50,000. The group health insurance policy will pay the member’s claim of Rs 50,000 and the coverage for that member will stop for the remaining duration of the policy. However, other members can make claims if their sum insured has not been exhausted. Thereafter, when the company renews the policy in the next year, the member who used up their coverage will again be able to avail fresh coverage.
A feature in some group plans is that of a corporate buffer. Here, the company has a sum assured that it can use towards expenses incurred by employees who have breached their sum assured level. To continue with the example above, if the company had a corporate buffer, it could have paid for claims over the Rs 50,000 limit.
The renewal premium may change depending on the following:
Number of members: During the coverage year, new members might join a group and some members might exit from the group. So, the insurer would calculate the renewal premium based on the updated number of members.
Sum insured: If a group seeks to increase or decrease its sum insured at the time of policy, the premium will also change accordingly.
Add-ons: If a group chooses additional options for better coverage, the renewal premium would increase. On the contrary, if it opts out of existing add-ons, the renewal premium would decrease.
Claim experience: If many claims were made in the past year, the insurer will usually increase the premium. However, if claims were low, it will allow a discount in the renewal premium.
In some special cases, an insurer will agree to pre-determined renewal rates. However, these are more of an exception than the rule. Some insurers look at small groups differently. They will treat each renewal as a fresh case and not look at the claims history.
To sum up, the tenure of a group health insurance policy is typically a year. A group mediclaim policy expires only if it is not renewed on time. The group policy does often have an age limit. One member’s claims do not affect the cover for the remaining members. Claims might result in higher premiums on renewal, while lack of claims could yield discounted premiums. Age and number of members, changes in sum assured, and add-ons also affect renewal premiums.