10 Advantages of Group Health Insurance Policies over Individual Plans

If you have a small business or are employed in a company which doesn’t offer a group medical insurance program or health insurance benefits – then read along to explore ways in which you can offer this much-needed benefit to employees of your company.

Mediclaim or Group Health Insurance decisions are often taken by the Human Resources department together with the Finance and the Admin department within the company. I have divided this post into 2 parts -

1. Why is having a group mediclaim policy beneficial to the organization?

2. What are the various benefits offered under a group medical insurance program? 

Advantages of having a group medical program

Any loss of health of an employee directly affects the operating structure of an organization and if the employee is in sales, then affects the financials aswell. Any long-term absence can have a significant effect especially if the organization is a small one (less than 50 members). In such circumstances, having a medical insurance program that can support employees get well sooner really helps. The mediclaim policy also acts as a catalyst for employees to approach a hospital or their doctor at an early stage of the illness or disease rather than later.

The company medical insurance benefit is also useful as it offers expense coverage in case of accidents also. This becomes very important if there is a large portion of employees in the company that work outdoors in sales and distribution roles.

From the organization’s perspective, medical insurance benefits are a very good perquisite to offer to employees. This is tax deductible and considered as a business expense under Section 36(1)(ib) of the Income Tax Act, 1961. Additionally insurers often offer good discounts with regards to these group insurance policies as the operating expense for insurers in running these program is not as high as retail policies.

Benefits offered by insurance companies under a group medical insurance program

A group medical insurance program allows a significantly high degree of customization as compared to a retail plan that we buy online or through agents. Some benefits that a group health insurance policy offers which a retail plan (mostly) never offers include –

1. Pre-existing disease benefits from day 1 – This is perhaps the most important benefit that a group medical insurance program carries and organizations do seek this, especially if the organization is mature i.e. has staff members in all age groups. This one benefit will cover staff members who suffer from diseases like diabetes, high blood pressure, thyroid and other medical complications.

2. No medical test – Often insurance companies omit any medical tests for any member who joins in the group. This means 60 year old individuals can be a part of this group plan without medicals, while almost every 60-year applicant for an individual policy would required to give a medical test irrespective of his/her current health. The group medical insurance program allows its members to enroll with no-medical tests.

3. Parent coverage – Often individuals are dismayed when insurance companies express their inability to cover your parents. This happens largely in an individual plan but group medical programs allow coverage to parents also. Most insurance companies allow parental coverage till an age of 80 years.

4. No waiting period – Most individual policies have a hospitalization (sickness) waiting period of 30 days to 90 days. A group medical insurance program can easily provide this waiver.

5. OPD (out-patient) benefits – Out-patient refers to illnesses or injuries that can be treated without being hospitalized (not even day-care). Some examples can be cough, stomach aches, fever, stitches due to a fall while playing etc. These often require a visit to the nearby doctor at a clinic and the general practitioner can offer necessary medication. A group policy can offer an out-patient benefit if the organization so desires. This benefit is given is sub-limits.

6. Dental coverage – Insurance companies have the flexibility of offering these in various degrees of customization. For some, it includes simple and complicated procedures like extraction, filing, dentures, root canals and implants. While some other would include this and also teeth cleaning, fluoride application, bleaching, scaling and other cosmetic features including teeth whitening.

7. Cost of spectacles or contact lenses – You might have probably seen this in the exclusions page of your individual health policies. Insurance companies often add these to increase the marketability of the group insurance product. This is obviously, a big plus for the employee.

8. Maternity cover – While some insurance policies do offer cover upon pregnancy, however they carry waiting periods starting from 2 years to 6 years. A group medical insurance program allows pregnancy covers to start from day 1.

9. Baby coverage from day 1 including all internal congenital diseases – This benefit should be availed if the maternity cover is being availed. The first 90 days of a baby’s birth are most crucial as internal congenital diseases are often detected then. This includes clefts, heart conditions etc. which require surgery in most cases and a quite expensive & emotionally harrowing for parents. Having a baby coverage from birth will provide a safety net for parents to absorb the financial burden of such surgeries. (for more information on such congenital disease, please refer to my post on critical illness)

10. Coverage for cataract, hernia, piles etc. from day 1 – Most insurance companies cover these after a waiting period of 2 years. The group medical insurance policy can offer these from inception of the policy.

Overall, the group medical insurance policy offers fantastic flexibility to the organization to structure a medical program that will be useful for employees and also which will help them shape as a model employer.


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