Are you wondering whether the group health insurance plans your employer offers are cheaper than the individual health insurance plans you may buy? Then, this post is for you.
It is easy to say that group health insurance policies are cheaper than individual ones for the reasons discussed below. However, it might be more reasonable to rephrase the question and consider which option might be more cost-effective. Thus rephrased, you might find that when it comes to meeting your needs and those of your family, a blend of individual and group health plans offers a truly cost-effective solution.
Group health insurance — attractive pricing
The following factors make corporate health insurance a relatively low-cost option.
Risk pooling
With employee group health insurance policies, insurers pool risks across a large number of employees. The group of employees may have a mix of high- and low-risk profiles. However, the insurance provider prices the policy on general factors such as group size, average age of employees, nature of jobs, the industry in which the company operates, etc. In this way, the risk is spread across all the members of the group, lowering the overall cost of insurance on an individual basis.
Employers pay for insurance
Usually, employers pay group mediclaim premiums. In this case, the individual bears no cost for the health insurance. For employers, this is something of a win-win: they can attract and retain good employees and avail of tax benefits. Group health insurance premiums count as a cost and this reduces tax.
In some instances, employees may contribute towards the premium. But since this cost is divided across the group, the individual share of this cost burden will be low.
Wide cover at a low cost
When organisations offer employee insurance schemes, they often extend cover to the employee’s families. Thus, in addition to health cover for employees, the insurance takes care of the medical expenses of their spouses, children, and elderly parents too. A family floater plan can provide similar cover but is usually more expensive than an individual health insurance plan. Thus, with a group health insurance policy, employees get more extensive cover at a lower cost.
Additional Read: How to Negotiate Best Price for Group Health Insurance for Employees?
To conclude, the lower cost of a group health insurance premium, the absence of waiting periods, the wide coverage offered for self and family and other such benefits make a group health insurance plan very cost-effective. However, it is safer to hedge one’s bets with an individual health plan in addition to a group plan. The main reason for this is that individual plans are renewable lifelong and always remain with you. In this way, you can try and circumvent restrictions in either plan.
