Answered: Questions By Small Business Owners About Health Insurance

Choosing health insurance plans can get complicated and a lot can go wrong, which is why you must make an informed choice.

By BusinessToday.In  
Monday, March 26, 2018

If you are a small business owner, you would know that your employees are the most important asset of your enterprise. Which is why, it becomes imperative for you to offer them comprehensive health insurance plans. This can go a long way in attracting and retaining employees and improving productivity by ensuring everyone is in the best of health and do not have any worries about medical expenses.

The cherry on top?

You also get to save money with tax credits and deductions and you can put this money back into your business to expand it even further. So, it is a win-win situation.

But choosing health insurance plans can get complicated and a lot can go wrong, which is why you must make an informed choice. You may have a lot of questions about group plans, how they work and how they are better in comparison to individual health insurance.

Here are some of those questions answered:

1. How many employees do I need to get group health insurance?India's insurance regulator, IRDA, has specified in a draft dated January 19, 2016, that the minimum number of employees in a company should be at least 20 for the purpose of a group health insurance policy. However, there are provisions to issue micro insurance policies to groups that are as small as 5-member strong. An important clause in the draft, however, also specifies that if a company has less than 20 members, group health insurance policies can still be issued if you add the family members of the employees. Also, different insurers might have different limits on the minimum size of the group to be insured.

2. How do group health insurance plans work?Group health plans generally offer health coverage to the employees and their families (spouse, dependants, and parents) at any firm. Under this plan, the terms and conditions as well as provisions and exclusions are the same for everyone covered by it. These provisions and exclusions, however, may differ from insurer to insurer. Under group health insurance plans, the employee is also not required to be medically checked prior to issuance of policy, there is no waiting period and he/she can also get coverage against pre-existing conditions. In some cases, employees can also avail of maternity benefits.

3. Group health insurance vs. individual health insurance- which works better?

The four primary differences between group and individual health insurances are:

a. Cost - Predictably enough, group health insurance plans cost less and can be availed by the employee at a nominal or no cost. While individual health insurance demands that premium be paid separately, for group plans, it is a part of the employees' CTC package and is deducted from the salary.

b. Convenience and customization - Everybody who is an employee of a company is eligible for a group health insurance plan. This is in stark contrast to individual insurance which can be denied to a person based on his/her medical or financial history. On the flip side, with individual insurance packages, one has the freedom to set the terms of the policy and customize it according one's needs, a provision one does not have in group insurance plans.

c. No claim bonus - With a group plan, even if one does not make a claim throughout the tenure of the policy, there is no benefit to be availed. However, under individual insurance policy, one gets No Claim Bonus that appears in the form of a discounted renewal premium or incremental cover at no additional cost.

d. Renewal Date - Unlike an individual insurance plan that has separate renewal dates for everyone, group insurance policies have only a single renewal date.

4. How to choose group health insurance?

It is hard to decide which group plan will work the best for your organization. These tips might help:

a. Though it's the natural course of action, do not opt for the cheapest plan. Rather, look at coverage options. Remember, lower the price, lower the coverage.

b. Ensure that you have sufficient coverage to help your employees deal with all possible eventualities; a minimum of 5 lakhs is recommended.

c. Check the network of hospitals/clinics that the policy of your insurer can be availed at. It is always beneficial to opt for an insurer that has tied up with reputed hospitals.

d. Read the fine print and see that you do not miss any clause that might adversely affect your employee in their time of need.

e. Do your research, go through all options in detail and take an informed decision. After all, this is the health of your employees that we are talking about.

Remember, the health of your employees ensures the health, wellness and progress of your company.   

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