Group Health Insurance

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Multiple individual plans or one group health plan?

A group health insurance plan is an effective tool to increase employee motivation. Most employers avail of a single group mediclaim policy that covers all their employees. However, you could also opt for a different approach and have multiple individual insurances for employees. While such a decision could have some benefits, it has many downsides. It is important to understand these to make a balanced choice.

Advantages of multiple individual plans

Substitute cover

Multiple individual health insurance plans ensure diverse benefits for employees. For example, one plan may have a one-year waiting period for cancer cover but another may not. An employee who has not completed a year with an organisation but needs treatment for cancer can rely on the second health plan. In this approach, the individual health plan has to be customised for each employee, which is an elaborate process.

Increased specialised coverage

Multiple individual health plans offer more scope for specialised treatments like dental and vision check-ups and remedies. These are most relevant in individual plans that offer OPD cover as well.

Tax benefits

According to section 80D of the Income Tax Act, premiums for group health insurance plans are eligible for tax deduction. If employees are paying for the insurance and then getting reimbursed, then the employees will be eligible for tax benefits. If the company is paying for the insurance, then it could claim this as an employee expense.

Lifelong cover

Individual insurance is renewable lifelong. This means that employees can benefit even if they leave the company, by paying the premiums themselves. While this benefits employee, it means that insurance is not being used as a retention tool.

Disadvantages of multiple individual plans

The disadvantages of individual plans outweigh the advantages.

Difficult to manage

Multiple individual health plans can be really difficult to manage. The concerned department would have to keep track of different due dates for premium payment and renewal, especially if the plans are from different insurers. Helping an employee with the claims process will also be challenging if different insurers have different processes.

Increased administrative costs

Availing multiple plans will drastically increase administrative costs. The significant increase in premium costs makes this option impractical for small- or medium-sized enterprises.

Health insurance does not act as a retention tool

In individual plans, the employee can opt to pay the premium themselves if they leave the company. So, the retention benefit of an individual plan is less than group plans which cannot be bought individually.

Limited coverage

It can be disappointing if employees find that in spite of individual policies, insurance companies reject their claims. Individual plans always have some restrictions, such as waiting periods that vary between two and four years. Insurers waive off these waiting periods in group plans.

So, in most cases, a well-researched employee group health insurance plan that meets most of the requirements of an organisation’s employees is a better option than multiple individual plans.

Additional Read: How to buy a Group Health Policy?

If you need help figuring out which policy is right for your organisation, let SecureNow help. Contact us at or +91 9696683999.

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