Group Health Insurance

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The country’s insurance regulator, IRDA in an exposure draft issued on January 19, 2016, specified that the minimum number of persons in the group should be 20 for the purpose of a group health insurance policy. However, micro-insurance policies can be issued to a group with as small as 5 members.

The criteria given in the first para apply at the time of issue of the policy, however, if the group/company consists of less than 20 members, group health insurance can still be issued by including the family members of the employees. Thus, even if your organization has just about 20 employees, you can still offer them group health coverage.

Also, different insurers may have their own limits on the minimum size of the group to issue the policy.

Group Health Insurance for less than 20 members :

There can be a scenario in which your company has less than 20 members (or minimum required).

  • One can be that most of the employees are either contractual or part-time workers, who cannot be considered as members of the group insurance.
  • Another scenario can be due to the maximum entry age limit. Most insurers limit the entry age for the group health policy to 65 years (as per regulations). Therefore, if a company consists of employees beyond this age, it may end up having less than 20 members for the policy.

Benefits of Group Health Insurance for Larger Groups :

One of the primary reasons for buying group policy is the discount on costs. In comparison to individual policies, a group policy will offer better benefits at lower costs. The premium per member on a group policy can be up to 30% lower than on an individual policy. Also, there are certain benefits available to group health members:

  • Faster claims/query resolution
  • Maternity benefit
  • Family coverage

The larger the group, the better value adds and discounts can be offered by the insurer. Also, members can be added and removed without altering the policy wording any number of times in a year.

What If Group Becomes Smaller After the Issuance of the Policy?

The limit of a minimum number of insurable employees will apply at the time of issue of the policy. Once the policy is issued it is due for renewal each year (or after some year in the case of multiyear policy). At the time of renewal, the limit can be relaxed and will lead to a reduced premium amount.

Use of Group Health Policy

Sanjeev Jain is heading the Human Resource department in E-Pex Enterprise a fast-growing organization. This year alone the firm hired about 12 new people and now boasts a staff of 52 employees. His latest concern is of maintaining the energy level and motivation of the old and new staff, and at the same time ensuring the retention ratio as much as possible.

As new employees join, the organization’s spend on training programs is growing fast. Sanjeev recognizes that EPex needs skilled staff and the best way to get them is through training. The problem, however, starts after the training as skilled workers are much in demand throughout the industry. Thus, as the HR head of E-Pex, he must come up with initiatives to hit the three objectives including retention.

Sanjeev observes that health is a major concern for everyone. Upon exploring the group health plans, he discovers that this has the potential to benefit the employees, their families and the employer.

Employees and their families will benefit from the reduced cost of hospitalization, while the company enjoys tax benefits on the premium payments. Additionally, employee welfare is in the organization’s interest as it improves the relationship, motivates the worker and also relieves the organization from the burden of moral responsibility of paying for employees’ healthcare while he/she is hospitalized.

Additionally, the insurer informs him that the premium can be discounted in case the policy enjoys a claim-free year, which can reduce the costs even further. Furthermore, the insurer will appoint a relationship manager to EPex, who will look after the administration of the policy.

Sanjeev feels that the relationship manager (RM) will have a lot of work to do since EPex is growing and they plan to hire about twenty more workers in the next few months alone. Though, the insurer has assured that adding and deleting employees from the policy is a very simple process, which the RM will look after apart from answering any queries on the policy from employees.