What is Group Insurance and How Does it Work

What is Group Insurance and How Does it Work

Group Medical Insurance plans are bought by companies for providing cover to their employees. These plans cover a group of people with a single insurance policy. Group Health or Medical Insurance is one of the four types of policies offered by insurance companies. In India, corporations of all sizes provide this facility as it is beneficial for the company (tax benefits) and leads to employee satisfaction.

Cost of Insurance 🔝

As companies take care of the Group Insurance facility, the cost of the cover is nil for employees as they do not pay anything out of their pockets. However, if they wish to procure additional cover for either their spouse/family or children, they can do so by paying an additional premium cost. ➕

The cost of the premium is often a meagre amount that is directly deducted from an employee’s monthly salary. This also helps safeguard their interests as they do not lose a major chunk of income in premium payments, and it is evenly taken care of throughout the financial year.

Validity ⏰

As for a Group Insurance policy, an employee is entitled to enjoy the benefits as long they are employed within an organisation. The policy ceases to exist post-resignation.

Benefits to Employees under Group Medical Insurance:

  • There is no waiting period, and the cover is provided immediately.
  • Prior health check up is required only in certain types of plans.
  • Pre-existing diseases are given in the plan from the first day itself.
  • The range of diseases is quite broad.
  • It can be customised as per need in most cases, providing flexibility.
  • Women have the advantage of maternity cover for the protection of their newborn’s expenses.
  • The premium cost is relatively low when compared to an individual health insurance cover.

Legally, one is entitled to have multiple insurance plans for several types of circumstances. But it is important to understand that having two plans does not mean that people would be reimbursed twice for a medication bill. The crux here is quite simple, the total amount that the plans would repay would never exceed 100% of the cost. Wherever there is more than a single plan, the coordination between its benefits will decide which insurance company will help settle the claim first.

Here we introduce the concept of Primary and Secondary Insurance. 👀

Primary Insurance:

This may owe cost-sharing, but will be the first one to settle the claim.Secondary Insurance:

After the primary insurance settles, part of the share of the remaining bill with the balance amount to be cleared will head to secondary insurance payers. They take care of the balance amount to be settled in time.

What Factors Affect My Group Health Insurance Costs? 3 Components You Should Consider - Baily Insurance

Does One Still Have To Bear Out Of Pocket Expenses Even After Having Two Health Plans? 💡

If an employee is in a PPO (Preferred Provider Organisation) plan, the primary policy may have provider network rules. In such cases, if there happens to be an out-of-network provider who isn’t covered by your plan, then the primary insurance is not liable to cover the costs – and then even the secondary insurance won’t entertain covering the expenses incurred as the preliminary plan’s rules were not followed. 📃

Pros And Cons Of Being Covered By Multiple Health Insurance Policies:

For the companies, it is quite easy to find an insurance company willing to help them with a group insurance policy. The company benefits enormously, as the larger the pool of employees covered under the plan, the lower the premiums and deductibles. It means that a larger group of people are at a lower absolute risk than having a smaller group. The employees feel valued and taken care of, and motivated. On the other hand, the companies benefit from employee retention.

Group Health Insurance Pros:👌

  • Convenient to find.
  • Insurance Brokers provide a good resource.
  • Familiar with employees due to commonality.
  • Protects employees against major as well as minor sickness.
  • Even in hospitalisation cases of a single day, certain policies ensure they cover that cost incurred too.
  • It provides safety (protection by the cover) for employees and their family members as plans have an option to extend the same to employees’ families.
  • There would be cashless treatment if treatment is done at a network hospital with the best kind of facilities.
  • Tax saving is one of the most lucrative aspects as it helps get genuine deductions and no other alternative for tax savings need to be found.
  • Free and regular health check-ups help in constant awareness of one’s health condition and accordingly as per examination precautions and necessary changes can be made. ✔

One of the bottom-line cons of this facility is that the employees do not have any say in group health insurance as right from the network that will be available, they would have to meet, or the premium required to be paid all is taken care of by the employer. It could be an appropriate fit for one employee, but could offer limited or comparatively lesser benefits to other employees being covered by the same plan. These days, average costs have gone up and so have the increase in premiums and deductibles due to growing medical expenses. 💰

Group Health Insurance Cons: 🤔

  • Not individualised as it is taken for a pool of employees.
  • It can be expensive in most cases.
  • Employers’ policies for including family may vary.
  • It is not suitable for small scale industries as companies may not provide reasonable or all required benefits for lesser no. of people.

Hence, it can be observed that the group plans act as employer-employee insurance as they offer a wide range of benefits to both the parties. It is advised that a careful analysis of the needs and requirements be made before opting for a plan.