What is Group Health Insurance?

Group health insurance plans offer coverage to a collective of individuals, usually employees of companies or members of organisations. These plans provide insurance at a reduced cost by spreading the insurer's risk across the group.

These are acquired by companies or organisations and then distributed exclusively to their members or employees. Individuals cannot purchase this coverage separately.

Group health insurance plans vary widely in terms of insurers, plan types, costs, and terms. As a result, each plan is unique. In some cases, the plans have different levels and offer basic or advanced coverage with add-ons. Premiums are shared between the organisation and its members depending on the plan chosen. There may also be an option to extend coverage to immediate family members and dependents at an additional cost.

Here are the unique features of a group health insurance:

• A group must meet a minimum member requirement, usually around 20 or 25 individuals, depending on the plan type. This policy lasts for one year and requires annual health insurance renewal for continuous coverage.
• Coverage limits are set to prevent coverage levels that are too high because policies are based on a group, not individuals, and are determined by the nature and composition of the group.
• The premium is affected by factors such as group size, type, average age of members, sum insured, and other coverage options chosen.
• Premium payments can be made by the group, its members, or a combination, but the insurance company collects a lump sum premium from the group.
• Individual claims do not affect the coverage of other members, and cashless claims are possible at affiliated hospitals.

Following are some distinctive advantages of availing a group health insurance:

• Group insurance allows employees to access affordable health insurance.
• The policy promotes a sense of belonging and connection between its participants. This, in turn, acts as a plus point for the organisation.
• Additional coverage options (such as riders and top-ups etc.), if available, give extended policy benefits to the employees’ dependents or family members.
• Businesses that purchase insurance for their employees and pay premiums can write off the cost as a business expense, reducing their taxable income and saving the money on taxes.

Not all medical or hospitalisation costs are covered under group health insurance plans. Check out the exclusions to a group health plan below:

• Cosmetic treatment
• STDs such as HIV/AIDS infection and herpes etc.
• Medical tests and other procedures like x-rays and CT scan etc. (in out-patient cases)
• War injuries
• Pre-existing health conditions^*

 ^*In this regard, please note that the costs of pre-existing illnesses are covered only after the health insurance waiting period is over, which is usually a period of 1-2 years.

The following are some of the expenses that are generally covered by a group health insurance:

• Hospitalisation expenses such as nurses’ fees, doctor’s fees, room rent, ICU room charges, anesthetist’s fees, surgery costs, charges for blood transfusion and medicines etc.
• Day-care procedures
• Organ donor cost
• Ambulance cost
• Domiciliary treatment
• Pre and post-hospitalisation expenses.

To be eligible for group health insurance, an employee must be on the payroll by the employer. Ineligible individuals typically include independent contractors, retirees, and seasonal or temporary employees. Employees on unpaid leave may also fall in the list of ineligible ones, until they return to work.

Group health insurance generally covers the employee's spouse and dependent children up to a certain age. Employers may choose to extend the age limit for dependent children.

Groups eligible for group insurance include:

• Employer-employee groups with employers providing coverage.
• Trade Unions
• Clubs
• Association
• Banks

The government of India also purchases group health insurance policies to cover specific population groups, such as the Chief Minister's Medical Group Medical Insurance Policy and Central/State Government Employees Group Insurance Plans.