Group mediclaim policy allows employers to provide insurance coverage to their employees. Relatively low premiums and tax deductions make it attractive to employers. On the other hand, features like extensive coverage, the inclusion of dependents in the policy, and cashless hospitalisation appeal to employees. But what type of employees can be included in a corporate health insurance plan and how often can this list be changed?
Types of employees covered in group insurance
Group health policies generally only cover full-time workers and employees. This is done to avoid the risk of adverse selection. Employee insurance schemes do not cover contractual workers, third-party consultants, and the board of directors.
Employers can cover contractual workers and employees under other provisions, like worker’s compensation insurance. Even in the case of such insurance, they are eligible for compensation only for injuries sustained within the employer’s premises.
Similarly, group health policies meant for employees do not cover a board of directors. This is because from an insurer’s perspective the board is self-employed. However, directors working on a remuneration basis might be eligible for employee health coverage.
Changing the list of insured members in group insurance
Let’s say you’ve identified which of your employees are eligible for a group mediclaim policy. How can you change this list to account for employees joining and leaving the firm?
Frequency
Usually, an insurer does not place a limit on how many times you can amend an employee list. So, you can add or remove employees’ names and details from the policy any number of times throughout the year.
Process
You can simply request the relationship manager assigned to your group to update the list as convenient. Usually, the turnaround period for such a request is about a week.
The insurer would prefer to receive requests at regular intervals (weekly or monthly) instead of daily requests. However, recruitment processes in some firms may lead to just that frequency.
A very useful approach to streamline insured members is to maintain a cash deposit (CD) balance with the insurer. This amount is generally between 5% and 10% of the insurance premium and is kept with the insurer as a deposit. If you maintain a CD balance, then you can inform the insurer about the addition of employees up to a month after the employees join. The insurer adjusts the premium for the month from the CD balance. The major advantage here is that if the employee has a claim before you have informed the insurer it will still be paid. At the end of the insurance tenure, the insurer will refund any unutilised CD balance to the company.
Case study: Frequent recruitment
TBS Ltd. is an MNC operating in the customer service domain. Currently, it employs approximately 10,000 employees across the country and is rapidly expanding. Meera Ramineni, the company’s CEO, expects the employee strength to double in five years.
This means the firm will be recruiting close to 2,000 people a year for the next five years. However, this will only cover new positions. To cover their attrition rate of 10% a year, TBS will have to recruit close to 3,000 new workers each year. This works out to more than 10 hires every working day.
HR head, Shrisangeeta Krishnan, reveals that the firm usually hires in batches of 20–30 and then trains them together. This is a continuous process, as the firm cannot afford a staff shortage. So, it keeps another batch of 20–30 ready to join in case anyone leaves during training. The HR executives thus have to update and remove names of employees every day from group health insurance and pension policies as well as term life policies.
TBS’ group medical insurer allows daily updates of employee names and member codes. This makes life easier for the company’s staff. But it does make coordination between TBS and the insurer nightmarish. That’s why TBS’ broker has been encouraging the company to maintain a CD balance of Rs 2 lakh. Then, the company needs to communicate the change in employees only monthly rather than daily.
Additional Read: What are the advantages of Group Health Insurance?
Written By-
Mayank Sharma
MBA Finance
He is a professional who brings extensive knowledge and expertise to the field of group health insurance. He has dedicated 7years to helping individuals and businesses navigate the complexities of insurance. Having worked closely with numerous clients and insurance providers, he deeply understands the nuances of group health insurance policies. With a reputation for providing insightful and informative content, he leverages his industry experience to educate readers about the importance of group health insurance and its benefits. Through their articles, Mayank Sharma aims to empower individuals and businesses to make informed decisions about their healthcare coverage, ultimately promoting healthier and more secure communities.
