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Group Health Insurance
The group health insurance policy is intended to pay for the medical costs of the insured in cases that they require hospitalization because of injuries, illness, or ailment within the period of the policy.
You are covered up to your sum insured mentioned under the policy. Group health insurance is usually taken for a group of people under a single policy, with the organization’s name being the insured. Two types of group health insurance plans are available in the market – employer-employee and non-employer-employee.
Here, the policy members need not necessarily have an employer-employee relationship. NGOs, associations, and societies classify under this category. A group health insurance policy cannot be underwritten for groups formed solely to avail of a policy.
Here, the employer owns the policy, whereas the employees are the beneficiaries. Organizations that establish this relationship clearly can take the employer-employee group health insurance plan. There are 3 types in the employer-employee contribution group health insurance policy, and the classification is made based on premium sharing arrangement between the employer and the employees –
Full Employee Contributed Policy:
In this policy, the employees would contribute the entire premium of the group health insurance policy. The employer does not contribute any premium towards the group policy and acts only as a facilitator. The employees covered by this policy are entitled to decide on the policy’s coverage. The employer acts as a facilitator in getting the group health insurance policy. While the policy is in the employer’s name, the employees can claim income tax exemption for the premium paid towards the group health insurance.
Under this policy, employers and employees contribute to the premium. The share of each party could vary from one company to another. In some cases, employers may contribute a major share of the premium, whereas in other cases, employees may contribute a major share of the premium. Depending on the contributions, employers or employees decide the terms and conditions of the group health insurance policy. Employees can claim income tax exemption under the income tax act for their contribution towards the group health insurance plan premium.
Employer Sponsored Policy:
In employer-sponsored health insurance plans, the employer pays the entire premium, and employees enjoy health insurance coverage. The employer is the one who decides on coverage, rules, and conditions of the policy. The decision to include family members also vests with the employer as the employer pays the premium. In this case, employees cannot claim any income tax exemption as they are not contributing any premium. Still, the employer can claim income tax benefits as the premium is spent on employee benefits.
How Does Group Insurance Boost Company’s Financial Health?
The group health insurance policy can boost the financial health of the organization in many ways, which are discussed below:
The group health insurance policy can reduce attrition in the organization. Employees consider health insurance benefits the organizations offer before deciding on a job change. The attrition rate is especially decreased if the employee’s parents happen to be covered in the policy. The attrition ratio results in vacancies being filled, which come at a certain cost. Organizations also incur costs before the actual productivity of the new hire kicks in. And therefore, by having a good health plan, you can save money.
The other advantage of group health insurance for an organization is that it increases employee loyalty. A good policy makes an employee feel cared for, and the thought of quitting the company rarely crosses his mind. The trait of loyalty is an intrinsic motivator and can, at times, be more powerful than money. Furthermore, we’re an emerging country where Millennials and Gen Z dominate the workforce. This generation is not driven by money. Therefore, astute employers use a good employee health policy to retain quality talent.
Reduces Company’s Expenses in Case of an Unfortunate Event:
According to the Indian Companies Act, organizations are responsible for the well-being of their employees at the workplace and during the course of employment. If any employee is injured in injuries to their body at work or during employment, the employer has to pay the worker financially. It is a burden for the employers to compensate the employee every time there is an unfortunate event, so employers take a group health insurance policy to pass this liability to the insurance companies.
For more information on the effects of group health insurance on the financial health of your business, please book a call with our health insurance experts at Ethika insurance broking.