Employer-sponsored health coverage is commonly referred to as a Corporate Health Insurance Plan or Group Mediclaim Insurance. Employers procure this group health insurance policy to ensure the well-being of their workforce. Below, we outline the advantages and disadvantages of this type of insurance for employers and employees.
1. Tax Benefits:
Group Insurance for Employees is an employer-sponsored plan in which the company or organisation covers the premium expenses on behalf of its employees. Consequently, employers can avail of tax benefits as per the Income Tax Act (1961).
2. Zero Waiting Periods:
While policies with waiting periods require individuals to wait for a predetermined number of days before filing a claim for pre-existing conditions, a Corporate Health Insurance Plan for Employees eliminates this waiting period. Pre-existing diseases are covered right from Day 1 of joining the organisation.
3. Cashless Hospital Arrangements:
Leading insurance providers offering this coverage establish partnerships with hospitals to facilitate a seamless claim settlement process. Through these affiliations, hospital bills are settled effortlessly between the insurer and the hospital. This helps employees focus on their recovery and return to work faster, as they don’t have to worry about arranging funds to pay the hospital bill.
4. Taking Care of Moms and Babies:
A significant advantage of Corporate Health Insurance is maternity benefits. The plan covers the cost of having a baby, including delivery (both normal and C-section) and other related medical care. Plus, it also takes care of newborns for the first 90 days. This works in favour of female employees and increases employee loyalty.
5. Covering the Families of Employees:
With Group Health Insurance for employees, you can also ensure their families are covered. Employees can add their spouses and dependent children to the policy, ensuring they are protected in a medical emergency. Some plans also allow employees to add their dependent parents to the policy. This projects the organisation as employee-friendly and helps retain talented resources.
6. Outpatient Treatment Coverage:
This policy allows coverage for treatment in an OPD or day-care facility where an employee does not require hospitalisation. As such treatment can be quite expensive, employees don’t have to bear the financial burden. This earns employers goodwill and builds a favourable reputation.
7. An Effective Motivational Tool:
A well-designed group health insurance plan is a powerful motivational tool for employees. It makes them feel secure knowing their employer prioritises their health and well-being. This heightened sense of value is often reciprocated by an increased sense of worth and loyalty on the part of the employee, leading to a definite increase in productivity and engagement.
8. Preventive Healthcare:
A group healthcare plan also includes preventive health check-ups, which help detect underlying medical conditions on time or reduce the severity of an existing ailment. This helps organisations prevent instances of sickness and absenteeism due to illness and increase overall employee efficiency.
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Here are a few drawbacks of this type of policy
1. Added Cost to the Organisation:
Group Medical Insurance could be expensive as the employers foot the bill for the healthcare policy premium in this setup. This becomes even more vivid if an employer chooses a comprehensive group healthcare plan with add-on features.
2. Complete Dependency on Employers:
Employees remain solely dependent on employers to address any medical contingency.
3. Limited Personal Control:
Since the employer manages the coverage, an employee/policyholder has minimal flexibility to tailor the plan to his/her preferences. One may need to bear additional costs in situations where customisation is permitted. For instance, if an employee wishes to increase coverage, he/she may have to pay the extra premium. This may serve as a deterrent for employees.
4. No Flexibility:
The employer is the one who decides which health insurance company to go with, sets the coverage terms, and picks additional features and benefits for the healthcare plan. In this situation, there’s limited room to address personal needs. Essentially, an employee is a part of a standard cover that applies to all employees in the company. This may not be beneficial for an employee with specific healthcare requirements.
5. Insufficient Coverage:
Corporate Health Plans may offer inadequate coverage, especially in metropolitan cities where hospitalisation and treatment costs are relatively higher than in other regions.
6. Concerns with Claim Settlement:
All of us worry about the duration and extent of claim settlements. This apprehension can be heightened in Group Health Insurance since employers select the health insurance company or the sum insured. The process of settling claims can be troublesome unless one is covered by an insurer that provides a straightforward and hassle-free claim settlement process.
7. Unsuitable for Personal Financial Planning:
Despite the critical role health insurance plays in personal financial management, because of the drawbacks mentioned above, relying only on a corporate healthcare policy can make it unreliable for personal financial planning. The lack of continuous and insufficient coverage makes integrating the policy seamlessly into an annual financial plan difficult.
8. One-Size-Fits-All Plans:
These plans are made for a big group, assuming that one size fits everyone. Everyone leads different lives, and health insurance should be customised to meet the needs of each individual. But this is one aspect where a Group Healthcare Plan falls short.
Although Group Insurance for Employees is one of the best ways to provide medical coverage for the workforce, it has certain drawbacks. Corporate Health Insurance has advantages like offering comprehensive coverage for everyone by sharing the cost and allowing for the inclusion of one’s family. Still, the disadvantages, such as the inability to customise the plan and inadequate coverage, cannot be ignored. Weighing the pros and cons of various Group Health Insurance plans is a decision that can help both the organisation and its employees.