Beyond the Basics: Uncovering the Hidden Advantages of Group Health Insurance


Beyond the Basics: Uncovering the Hidden Advantages of Group Health Insurance

Group health insurance covers the hospitalization expenses of the insured members in case of illness, disease or an accident up to the sum insured limit mentioned under the plan. In addition to basic hospitalization, the policy also covers daycare expenses, expenses incurred on alternative treatments, organ donor expenses, outpatient expenses etc. These benefits are advertised by the insurance companies and explained by the insurance intermediaries while selling the plan. Still, in addition to these, there are many hidden advantages in group health insurance plans, such as waiver of pre-policy medical checkups, corporate buffer, coverage of expenses incurred on bariatric treatment etc. Recently, the insurance regulatory and development authority in India has been making it obligatory for insurance companies to protect against mental illness and HIV/AIDS as well as extend insurance coverage to those suffering from disabilities and so on.

Let us Understand the Hidden Advantages of Group Health Insurance in India:

Easier Modifications:

Modifications are common in a group health insurance policy where one needs to update the members in the policy. For example, an organization must continually update the member list with new employee additions and delete employees leaving the organization. Insurance broking companies such as Ethika Insurance have designed separate software linked to the organization to facilitate transactions smoothly. Employers can directly make the software changes at their end, which would reflect immediately in their policy copy in the form of endorsements. With this software, the insured customer would not need to send the data manually to the insurance intermediary or the insurance company every time an employee joins or resigns from the company. All the insured customers need to do is maintain a sufficient balance in their CD account, similar to the bank account. In this account, the insured customer should have sufficient balance so that the new additions would be processed from the day of addition, and the refund of the premium would be credited to this account in case of deletion of members from the group health insurance policy. In case of any modifications in the group health insurance policy, ensure customers can have them done immediately without much hassle. This must go with the insurance broker with the Group health insurance software.

Ill People Can Also be Covered:

The other hidden advantage of group health insurance policy is that even ill people can be covered under the policy without any restrictions. In general, insurance companies would not prefer to cover people with certain health conditions, such as Critical illness, Diabetes, Hypertension etc., because these people would be making a claim soon. Insurance companies try to avoid such profiles to reduce their premium outgo in the form of claims. Insurance companies are bound to provide written confirmation to the applicants if their proposal is rejected, clearly stating the reason for rejection. This practice of rejecting the health insurance proposal is limited to only individual or retail health insurance plans and does not apply to group health insurance plans. In group health insurance plans, even those people with critical conditions can be covered without needing a pre-policy medical checkup or facing rejection of their proposal. This is because the group health insurance proposal form does not ask about the health conditions of all the members enrolled under the policy, making it easy for persons with pre-existing conditions to avail of the coverage.

Suppose you have a parent or spouse whose health insurance proposal is rejected by the insurance company. In that case, they can be added under your group health insurance plan sponsored by your employer. If you own an organization, you could take the group health insurance plan to cover all of your family members who have faced rejection by insurance companies when applying for retail or individual health insurance.

No Pre-policy Medical Checkup:

Another benefit of group health insurance is that it doesn’t need an initial medical exam before purchasing it. Since the number of members under the policy would be higher, conducting pre-policy checkups for all the insured members would be practically impossible and economically not feasible. This advantage under the group health insurance policy would benefit people with pre-existing conditions such as diabetes, cancer, hypertension etc. Even people undergoing treatment for a condition can enroll under a group health insurance plan and continue their treatment. Unlike individual or retail health insurance, which has a compulsory pre-policy checkup for certain cases, group health insurance plans do not require any pre-policy medical checkups.

Unlimited Coverage with Top-up:

The other hidden advantage of group health insurance is that unlimited coverage can be availed under the policy by taking a top-up policy in addition to the base cover. For example, suppose you have a group health insurance coverage of Rs.5 Lakhs per member/ family. In that case, you can avail of extra coverage up to Rs.1 Crore by paying 1/4rth of the base premium with a group super top-up health insurance plan. The deductible under the super top-up health insurance plan can be equal to that of the base group health insurance sum insured. The limited coverage under the group health insurance policy can be extended to unlimited coverage with a super top-up health insurance plan. It would be expensive to avail higher sums insured under the group health insurance plan, so as an alternative, one can go for a super top-up health insurance plan.

Corporate Buffer:

Corporate buffer is the other hidden advantage of the group health insurance plan. A corporate buffer is an extra sum insured available under the group health insurance plan, which any member can utilize. The decision to allocate the corporate buffer rests with the employer, a corporate buffer is usually allocated to the employees if their base cover is exhausted and they do not have any external health insurance policy to cover the ongoing treatment-related expenses. When taking the policy, the corporate buffer in group mediclaim policy for employees is to be decided by the insured customer, i.e. employer. A corporate buffer is advantageous if an employee’s base sum insured gets exhausted and needs an additional sum. But it is important to remember that the corporate buffer sum insured is costly as it is not assigned to any particular person, and the chances of utilizing it are higher when compared to the base group health insurance sum insured. For example, the company owner with pre-existing conditions or undergoing treatment may take a corporate buffer along with the group health insurance plans and then utilize the corporate buffer entirely for treatment once the base sum insured is exhausted. So, the corporate buffer sum insured acts as the floating sum insured and is subjected to the same terms and conditions under the group health insurance policy.

Bariatric Treatment:

Bariatric treatment is a surgery performed by a team of professionals on people who are obese or on people who are suggested to undergo surgical procedures for weight loss to help with metabolic conditions. In general, bariatric surgery removes the excess fat accumulated in the body, which would help reduce obesity and other related illnesses. If obesity is left unattended, one might face diabetes, hypertension, heart disease, sleeping disorders, liver diseases etc. The Insurance development and regulatory authority from India has issued guidelines for bariatric surgery to be covered within the health insurance plan in 2019. Health insurance plans would cover bariatric surgery only if the treating doctor recommends it and if the BMI of the patient is above 40. Bariatric surgery is considered only if it is life-threatening to the insured and has been recommended by the treating doctor in addition to satisfying certain conditions.

The entire cost of bariatric treatment would be covered under the group health insurance plan, subject to the treating doctor’s recommendation. The surgery would be done free of cost in any network hospital where one can avail of cashless hospitalization.

Mental Illness Coverage:

Mental illness is a condition that causes serious disorders in one’s thinking and behaviour. Mental illnesses can be associated with stress, family, work-related, etc. The most common kinds of mental illnesses are dementia, bipolar disorder, obsessive-compulsive disorder, and hyperactivity, as well as others. Before 2022 insurance companies were not covering the hospitalization expenses for mental illnesses irrespective of whether it was pre-existing or developed after taking the health insurance. Insurance companies used to reject the proposals of applicants suffering from mental disorders. Some of the mental illnesses that were not covered before the IRDA guidelines and are covered now include Dementia, Alzheimer’s, depression etc. Mental illnesses should be treated as physical illnesses and covered accordingly in line with the guidelines of the IRDA and the insurance company board. The need for mental illness coverage has cropped up as the Indian population is consistently experiencing the rise of mental illnesses due to the change in work and lifestyle. All the old and new policies would cover mental illnesses, and the hospitalization expenses incurred for the treatment are paid up to the sum insured under the plan.

Critical Illnesses Coverage:

Insurance companies were not covering HIV/AIDS-positive individuals before 2018 under any of their health insurance plans. But with the introduction of “The Human Immunodeficiency Virus (HIV) and Acquired Immune Deficiency Syndrome (AIDS) Prevention and Control Act, 2017, IRDA has made it mandatory for insurance companies to cover persons with HIV/AIDS. The insurance regulatory and development authority of India, in its circular, has made it mandatory for insurance companies to cover persons with HIV/AIDS and to stop discriminating against people with HIV/AIDS. Insurance companies have been skeptical about launching new products for HIV/AIDS-inflicted people as insurers would see a multifold rise in claims due to the low immunity levels in people with HIV/AIDS. But the existing health insurance plans would cover the medical expenses of people with HIV/AIDS and also should accept the proposals of such people without showing any discrimination. The advantage of group health insurance is that there are no pre-policy medical checkups. People with HIV/AIDS need not worry about discrimination as they would be covered automatically under the policy.

Persons with Disabilities (PWD) Coverage:

Health insurance policies were not covering people with disabilities, mental illnesses and HIV/AIDS due to the old regulations in place. But in 2021, IRDA made it mandatory for the insurance companies selling health insurance to develop a health insurance plan designed to cover persons with disabilities, mental illnesses and HIV/AIDS. IRDAI has also prescribed a model by setting out the minimum scope and requirements under the product. Insurance companies can only broaden the scope by offering extra benefits but must maintain the scope of the policy. The insurance companies are to put in place board approved underwriting policy that ensures that every proposal from the scope mentioned above has the chance of acceptance and is allowed for the reasons above mentioned in the scope. The Government of India has already launched health insurance plans for persons with disabilities, such as Nirmalya and Swavalamban health insurance. The group health insurance plans can also cover persons with disabilities up to the required sum insured limit mentioned under the plan.

Daily Hospital Cash Benefit:

The other hidden advantage of group health insurance is that it offers a daily hospital cash benefit to the insured member for a specified period of time. The daily hospital cash benefit would be applicable after a minimum period of ( say 3 days) and would be payable for up to a certain period of time (say 10 days). The insured customer can utilize the hospital cash benefit for out-of-hand expenses that could have been incurred during the hospitalization. The daily hospital cash benefit is paid as a lump sum amount for the number of days applicable during the hospitalization on a reimbursement basis. This is a hidden benefit in group health insurance policy as most people do not care to apply for this reimbursement facility after being discharged from the hospital as they would have already availed cashless claim.

It is also to be noted that if a particular member has made a claim, it will impact the other members at the time of policy renewal, i.e. the other member’s premium would also go up, including the incumbent member’s premium. , the burden would be shifted to all the members under the group health insurance policy. One can understand the concept of insurance clearly with a group health insurance policy. Insurance is a concept where a group of people come together to contribute a premium and share the losses from the premium collected. In group health insurance, if half the members had made a claim and the other half had not made a claim, then the increase in premium at the time of renewal would be distributed equally among all, and the people who did not make a claim would also have to bear the extra burden. This is because the other half who did not make a claim this year might make a claim next year.

For more information on the group health insurance plans, please visit Ethika insurance broking and book a call with our health insurance experts to understand the policy better.

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Susheel Agarwal

Namaste. I'm Abhinay Nedunuru, a Fellow of the Insurance Institute of India with a passion to make insurance simple and crisp. I write on insurance and investment. I have a passion for teaching and training in particular to insurance. I'm currently doing my PhD from IIM in Management.