Group health insurance refers to health insurance that can be availed by a company for its employees. Group health insurance plans can have several advantages over personal health insurance plans. Further, providing group health insurance to employees can also benefit a company in a variety of ways.
Nowadays, almost every company is getting on the bandwagon and providing health insurance to their employees. There are very good reasons why this is happening. Companies have realized the benefit of taking care of their employees and know that it will help their bottom line.
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In this article, we’ll discuss five of the best reasons to buy group health insurance for your company:
It Acts as an Employee Benefit
Employees perform better when they feel like their company cares for them. Employees need benefits from their company because such benefits translate to a better quality of life for them. What can seem like a small expenditure for the company can act as a great benefit for the employee.
A lot of employees may not be able to afford a personal healthcare plan. This can leave them highly vulnerable in case a medical emergency occurs. However, if the company offers a group health insurance plan, then the employee can enjoy the benefits as long as they are in employment with the company.
It Helps with Hiring and Retention
A lot of studies have shown that providing employee benefits significantly helps with hiring and retention for companies. It is a known fact that it is much cheaper to retain an employee than to replace an employee. This cost difference is high enough for it to make financial sense for a company to offer group health insurance in an effort to better retain employees.
Further, the hiring process is a two-way street. While companies are considering the candidates, the candidates are also considering the company. It can greatly help a company attract the best talent if they offer group health insurance to employees as part of the employment package.
Employees are not just looking for salaries, they are also looking for a fulfilling experience, and working for a company that cares for their needs can do wonders for employee morale.
It Reduces the Tax Burden
Not everybody knows this, but providing employee health insurance can be used to claim tax benefits under the Income Tax Act of India. The Income Tax Act provides several ways in which a company can reduce its tax burden. The Government of India wants to reward and incentivize companies that take better care of their employees, which is the purpose behind this tax benefit.
There are some instances in which the employee contributes part of the premium while the rest is paid by the company. In such cases, the company can only avail of a tax benefit for the amount of the premium that they have contributed.
Income tax can be one of the biggest expenditures of a company which can greatly affect the EBITDA. Reducing the tax burden can help a company improve its bottom line and providing group health insurance can be a great way to do that.
It is Cost-Effective
A group health insurance plan is more cost-effective than a personal health insurance plan. Insurance companies can afford to charge lower premiums for a group plan because the purchase has been made in bulk. In the same way that wholesale rates are cheaper than retail rates, group insurance plans can be significantly more cost-effective than personal health plans.
Companies can take advantage of this fact and avail a group health insurance plan for all their employees rather than making them get individual plans which would be more expensive.
Companies can also reduce the in-hand portion of the CTC proportionate to the amount that the company is paying for the health insurance premium of the employee.
This can work out better for both the company and the employee. The employee receives more cost-effective insurance while the company can improve its bottom line.
It Provides Superior Medical Care
The terms and conditions of a group health insurance plan can be better for the policyholder than the terms of a personal health plan. Since a group plan operates at a larger scale for the insurance provider, the provider can afford to provide better terms and conditions.
For example, pre-existing diseases can be covered from day one under a group policy. In contrast, under individual policies, pre-existing diseases may only be covered after two to four years of availing of the policy.
There are several group health insurance benefits for companies. In the long run, it can have a significant positive effect on a company’s productivity. It is better for a company to avail of a group plan rather than having employees avail of individual health insurance policies on their own.
If a company does not want to foot the entire bill, they can cover the partial cost as well and let the employees cover the rest.