The importance of a health insurance plan is not unknown. As a start-up owner, one of the biggest questions you might be tackling is whether or not you should offer health insurance cover to your employees. A group health insurance plan, is a health insurance coverage offered to people working in the same organization. This cover is often extended as a benefit to the employees where the premium for the same is borne by the organization itself. Additionally, this health insurance cover can be extended to cover the health insurance needs of employees’ family members (subject to the terms and conditions of the group health insurance plan).
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Advantages of a group health insurance plan to be considered by start-up owners:
In India, with the availability of numerous group health insurance providers, it is now easy to purchase health insurance cover for your employees at economical pricing. However, apart from economical pricing, certain other factors that need to be considered by start-ups are as under:
- Master Insurance Policy: Irrespective of the size of your organization or the nature of your industry, a group health insurance plan can be availed of by most start-ups. Even though the number of people in your organization may be around 10 or 50 people, the group health insurance coverage can still be purchased to cover your entire team.
- Sense of Security: Hiring employees for a start-up is a challenging task for every entrepreneur. However, start-ups by offering benefits like a group health insurance cover can help in building trust and a sense of security in the minds of their employees. Additionally, it can prove to be a favorable HR tool for employee retention.
- Economical: Being a start-up, it is important to find the right and economical tools to attract and retain good employees. A group health insurance plan offers comprehensive coverage irrespective of the different age groups in the organization.
- Sense of Belonging: Offering a health insurance plan to employees not only offers a sense of security in the minds of employees along with a sense of belonging. Thus, investing in a group health insurance plan and offering the same to your employees will boost employee productivity and provide peace of mind as it provides financial security in times of medical contingencies.
How to select the correct group health insurance plan for your start-up?
After understanding the importance of extending a group health insurance plan to the employees it is important to understand how to select the correct health insurance plan for your start-up. The following are a few of the most important factors that every start-up entrepreneur must consider while selecting a group health insurance plan for the organization.
- Select correct Sum Insured: The rising cost of medical treatments makes it imperative for all start-up owners to know ‘How much is enough?’. Selecting a correct sum insured will ensure that most of the medical conditions and emergencies are covered under the base plan. Additionally, the entrepreneur can also offer the facility to avail of the additional sum insured on an individual basis at a cheaper premium amount that can be purchased by the employee.
- Room Rent: The room Rent Limit is one of the biggest factors contributing to the cost of a group health insurance plan. It is imperative to set them a certain percentage of the sum insured as a room rent limit. Therefore, discuss with your group health insurance provider regarding the optimal limit for Room Rent to ensure a balance is achieved between employees’ need and employer’s cost.
- Premium Sharing: It is not always necessary for the company to bear the premium cost completely. There are no pre-decided norms for this aspect, it needs to be decided based on the stage of the organization in terms of progress after inception, the nature, and demographics of the workforce, the compensation strategy of the organization, etc.
- Year on Year Escalation of Premium: Insurance premiums can quickly escalate in the case of start-ups as even a few claims would have a significant effect on the premium in terms of percentage cost. It would be appropriate to keep control measures such as co-payment, procedural limit, etc. at the beginning, which can be eased out progressively once the policy matures and the policy behavior is well understood.
- Advantageous than existing personal insurance: One of the biggest challenges that you might face as a start-up entrepreneur is that your employees might have an existing health insurance plan and might have strong reservations regarding getting enrolled in a partially sponsored group health insurance plan. It would be appropriate to understand the benefits group policies offer that individual policies do not. Some of such benefits include coverage of pre-existing diseases, and better support from the company as well as the insurance broker.
Restrictions put-forward in case of group health insurance plan:
Now that we have understood the advantages and factors to consider before choosing the correct health insurance coverage. One must not forget to understand and gain knowledge about the restrictions (if any) put forth by IRDA (the insurance governing body in India) in respect of opting for a group health insurance plan by a start-up.
One of the restrictions that every start-up entrepreneur must know is that he/she cannot start an organization, i.e., a start-up for the sole purpose of availing of health insurance cover at an affordable premium. The organization for which the group health insurance plan is to be availed has to be a homogeneous group of people working together for a business or economic activity other than insurance.