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Checklist for Employers Before Buying Group Health Insurance


Summary

Buying Group Health Insurance

Group health insurance is the most preferred form of health insurance policy among employers as a single policy would cover all their employees. The group health insurance policy can also be extended to cover the family members of the employees. The sum insured under the group health insurance can be offered on a floater basis or nonfloater basis when the family is covered.

This means that the different members of a family can have different sums insured depending on the option exercised by the employee. The final decision to include the family members in the group health insurance would be taken by the employers as they provide the health insurance coverage to employees as a part of employee benefits.

If the employees want to include their family members in the group health insurance policy the employers may ask the employees to bear the extra premium so that the employer pays for the employees coverage and the family members coverage would be paid by the employee.

A few Employers may even allow the employees to include their parents in the group health insurance policy. It would be a boon for the aged parents to be included in the group health insurance policy as they can avail the coverage from day 1 without any waiting period.

Many employers don’t include parents in the group health insurance policy as the overall premium payable would increase drastically due to the high claim settlement ratio that would arise in the future. Parents above 60 years have a high chance of utilizing the group health insurance coverage and thereby increasing the claim settlement ratio.

Parents and parents-in-law can also be included in the group health insurance policy on payment of additional premium. The employer can decide on the incision of parents in the group health insurance policy as it may affect the premium at the time of renewal as well.

Let us understand the Group Health Insurance checklist to be followed before buying the employee health insurance policy:-

  • Claim Settlement Ratio: The main thing employers should consider before taking a group health insurance policy is the claim settlement ratio of the insurance company.

    The claim settlement ratio is the ratio of the number of claims settled to the number of claims received by the insurance company. The claim settlement ratio is available on the website of the insurance company and is also known from the declarations made to the IRDA.

    The other thing to consider is the market talk of the insurance company when it comes to the claim settlement ratio, there might be many insurance companies which have a high claim settlement ratio but have negative word of mouth.

    This negative word of mouth may be due to the deficiency in Services at the time of claim settlement which might happen primarily due to 2 reasons:-
  • Settling the claims in partial. This means the claims made would be settled partially and the claim would be closed to maintain the claim settlement ratio. Whenever the ratio is to be taken out the pending claims will be closed with partial payments resulting in the balance of claim settlement ratio. This is the dangerous game played by a few health insurance companies in India of which customers should be aware.
  • Delaying the settlement of claims. A few claims may be delayed and carried forward to the next quarter or next year which can cause customer dissatisfaction. This usually happens from both ends i.e. due to non submission of documents on the part of the customer and holding the claim due to technical or other reasons on the part of the insurance company.
  • Coverage: The other item in the checklist is the coverage under the group health insurance policy. The coverage provided under the group health insurance policy should be checked before taking the policy. Employers should understand what is being covered and what is not. It is important to look at the coverage and not only the premium at the time of taking the group health insurance policy. There might be instances where the quotation is less in premium but the coverage would be less such as there might be co-payment under the policy which reduces the premium to a great extent.
  • Exclusions: The other thing in the checklist is the exclusions under the group health insurance policy. There are compulsory exclusions which are mandated by the Insurance Regulatory & Development Authority of India. These exclusions are common for every insurance company but there might be separate Exclusions set by the insurance companies. These exclusions should be considered carefully before opting the group health insurance policy. For instance, there might be an exclusion staying that there would be a co-payment in case of treatment happening in other than network hospitals. These kind of exclusions are insurance company specific and varies from one insurance company to another.
  • Cashless network or hospitals: The other thing in the checklist before taking the group health insurance policy is the list of network hospitals. Network hospitals are the hospitals that are tied up with the insurance company to offer cashless claim settlement facilities. The list of network hospitals can be obtained from the website of the insurance company. It is important to note that the cashless network list would be changing from time to time as there would be hospitals which are being added and deleted from time to time. The more the number of cashless network hospitals, the more it would benefit the members of the group health insurance policy.

    The network hospitals would be distributed all over India and it is important to ensure that there are adequate network hospitals in your area of operation.
  • Insurance intermediary: The other important thing in the checklist is the insurance intermediary. Insurance intermediaries act on behalf of the insurance company to sell the insurance policies. It is important to select the correct insurance intermediary before taking the group health insurance policy. Among the insurance, intermediaries are insurance brokers, individual agents, banks and online portals. It is important to understand that insurance brokers have an edge over other insurance intermediaries in case of group health insurance policies. This can be understood as the insurance brokers deal with many insurance companies and know the products in and out. They can even provide risk management solutions to the customers in addition to insurance selling.
  • Compare and choose: The last and most important item in the checklist before taking the group health insurance policy is to compare the group health insurance quotes from different insurance companies and then select the best quote. Insurance brokers can help you in getting the quotes from different insurance companies as they deal with multiple insurance companies at a time. The more the number of quotes, more the chance of selecting the best insurance policy. Insurance brokers can understand the requirements of the customers and accordingly provide the group health insurance quotes from different insurance companies. Compare and choose should be done at the quote selection stage itself. Once the premium is paid to the insurance company for group health insurance policy it would be difficult to change the insurer as it involves cancellation and rebooking of the group health insurance policy.

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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 mostly 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 Marketing Management.