Group Insurance October 3, 2020

COVID-19 has affected many industries. It has changed business norms, working styles, made work-from-home mainstream. Many employers have been forced to give more importance to employee productivity, comfort and health after the nationwide lockdowns were imposed. There has been an increased focus on health insurance coverage for Indian citizens as a way to handle hospital expenses due to any unforeseen situation. A major step in providing health insurance coverage to Indian citizens is the mandatory employer-sponsored group health insurance coverage as mandated by the Ministry of Home Affairs guidelines.

Health Insurance

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According to IRDAI, “All industrial and commercial establishments, workplaces, offices etc. shall put in place arrangements for the implementation of Standard Operating Procedure (SOP) before starting their functioning. SOP for social distancing for offices, workplace, factories and establishments, medical insurance for the workers to be made mandatory, as per the circular.” This is As per Order No. 40-3/2020-DM-I (A) dated 15th April 2020 issued as part of the Consolidated Revised Guidelines for resuming workplace operations by Ministry of Home Affairs, 

Earlier also, a large number of employers especially corporates and multinationals were offering group health insurance coverage to their employees. Now, the focus has also shifted to employees working in smaller firms and beyond the top metro cities. Employers have been asked to offer health insurance coverage to their employees even after the COVID-19 pandemic has passed. 

To help in the efficient distribution of group health insurance, IRDAI has also advised the insurance companies to offer these comprehensive health insurance plans at affordable premiums and in simple policy wordings. 

Globally, employer-sponsored health insurance accounts for a large share of total health insurance policies. It is one of the best ways to ensure that the benefits of health insurance are distributed over a large section of the population.

There are other benefits to the employers also when they offer group health insurance coverage to their employees – 

  1. Group Health Insurance coverage boosts employee productivity and morale. It is a good retention tool and employees feel more loyal towards their employers who take care of their health needs.
  2. Group Health Insurance works out to be cheaper than retail health insurance. On average, the per-person cost of a group health insurance plan works out to be at least 50% cheaper than the cost of retail health insurance bought directly by the employee
  3. Group health insurance can also cover parents, spouse and children of the employees – thus giving them a complete peace of mind.
  4. Another benefit of group health insurance is that it can cover all existing diseases and illnesses also from Day-1. This is a benefit that is normally not available in health insurance plans.
  5. Group Health Insurance policies can be customized to offer additional benefits to one’s employees – thus increasing loyalty towards the employer.

Overall, the MHA guidelines clearly state that employers who have resumed operation in the Unlockdown phase should mandatorily cover their employees with some form of health insurance coverage. Employees who were covered under ESI ( Employees’ State Insurance scheme) can be excluded from the purview of group health insurance coverage.

Although no minimum sum insured has been prescribed under the guidelines, it is advised to opt for a sufficient sum insured to ensure that the health insurance genuinely helps the employees at the time of claims are not just an eye-wash. 

As a general guideline, it is advised to offer at least 3 Lacs of coverage to each employee if your organization is based in a metro/tier-1 city wherein treatments costs are high. 

In case you want to cover employees’ families also, a 5Lacs of coverage should be sufficient enough to take care of major health expenses.

We believe that these guidelines are a step in the right direction in ensuring critical healthcare financing for working Indian citizens. Employers should not look at buying health insurance solely as an expense but a critical investment in their employees’ health.

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