Group health insurance plans usually offered by the employer are usually cheaper than an individual health insurance plan. Though each of these plans comes with its 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 –
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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 carries on the basis of general factors such as the size of the group or company, the average age of the employees, the nature of jobs, and the industry in which the company operates, etc. Hence, the risk spreads across all the members of the group bringing down the overall cost of insurance. When calculated on an individual basis. Medical insurance for employees in India is provided by most companies that have employees in large numbers.
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Contribution by employers:
The employer usually pays the Group mediclaim insurance premium or sometimes with a partial contribution required by employees. The cost of group health insurance plans is 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 for availing healthcare coverage.
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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 business owners. With reduced costs due to tax deduction benefits.
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Benefits to employees:
Through group health insurance benefits offered by the employer, employees can avail of coverage for their family – spouse, dependent children, and dependent parents. As these coverages are available on a large scale for a group of people (employees and their families) the premium is relatively low in comparison to individual coverage available.
Additional Read: How to Negotiate Best Price for Group Health Insurance for Employees?
Health insurance premiums, be it for a group or for an individual, calculates easily with the premium calculators available online.
Though group medical insurance plans offer healthcare coverage and benefits, it has limitations. The basic coverage needed avails at a much cheaper rate when compared with the comprehensive individual health insurance plan. Along with the benefit of reduced cost, group health insurance plans also offer other perks like maternity coverage, pre-existing illness cover, and coverage for elderly family members and many.
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.
