Group health insurance refers to medical insurance coverage for a group. Such a group mediclaim policy can be availed by employer-employees, banks and their customers, and clubs and their members.
Which factors affect the premium of Group Health Insurance and how?
- A group’s size, average age, and occupation are important determiners of the premium of a group medical insurance plan. Thus, the larger a group, the lower its premium for a group mediclaim policy. Similarly, if the average age of the group is low, premiums will be low.
- Field, factory, airline staff, healthcare workers and offshore workers are considered high risk and will have to pay higher premiums. On the other hand, clerical staff are at lower risk and policies for them will have lower premiums.
- Another significant factor is the claim history of the employer or group administrator. What this means is that higher past claim ratios will lead to higher premiums. Claims ratios of over 100% will definitely result in premium increases.
- Additionally, the features and riders that a group opt for also determine premiums. Thus, the more add-ons a group selects, the higher the premiums it will have to pay for group medical insurance.
- Choosing a co-pay option will reduce premiums on group health insurance.
See: What benefits are available under employee group health insurance?
Case study: Premiums of Group Mediclaim depending on Size and the average age of the group
College friends Kirti Bisht and Vivek Madhukar joined different firms. While Kirti joined a large FMCG firm with almost 12,000 employees pan-India, Vivek joined a start-up.
Vivek’s company employs only 12 people, and it is mulling a group health policy for its employees and their dependents. Vivek remembers that Kirti and her employer contributed equally (Rs. 2,650) to a group health plan that gives Kirti a health cover of Rs. 500,000. Accordingly, he expects to pay a similar amount as the premium and opts for Rs. 500,000 covers. However, his premium is Rs. 3,580.
The insurer’s explanation: The firm has very few employees and even the addition of family members of employees takes the number only to 20, the minimum covered under the policy. In fact, the premium would be higher still if the firm tried to match the features and riders that Kirti’s employer offered.
The good news for Vivek though is that the average age of the employees in his company is only 29 compared to the average age of 37 in Kirti’s company. This, combined with a cleaner claim history for Vivek’s company, might lower premiums in the future.
See: What are additional benefits available under Group Health Insurance?
Case study: Premium of Group Health Insurance depending on the type of occupation and add-ons
Giriraj Sundaram is the general manager, of Human Resources, at Vatsam Precision Equipment (VPE) Pvt. Ltd. He has to motivate employees through various benefit schemes. For instance, one scheme the management has approved is corporate health insurance. Accordingly, Giriraj is now considering the premium payable under the policy and examines the following information:
| Total number of employees at VPE | 120 |
| Clerical and sales staff | 30 |
| Engineering staff | 65 |
| Quality management and machine upkeep staff | 10 |
| Management staff | 5 |
| Permanent drivers and peons | 10 |
The insurer quotes a premium based on a weighted average of occupational risks. Thus, it assigns the highest per-life rates to the drivers and the lowest to the clerical staff. These rates are then weighted to get an overall rate for the company.
The firm’s initial premium is Rs. 3 lakh. VPE also added a corporate buffer of Rs 1 lakh. If an employee incurs medical expenses of more than their sum assured, the excess costs can be paid from this buffer. The buffer added an additional cost of Rs 70,000 taking the total premium to Rs 3.7 lakh.
To learn in detail about all factors and determiners of the premium of a Group Health Insurance, be sure to visit SecureNow where you could compare insurance quotes online before making any selection of group insurance or individual insurance policy.
About The Author
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.
