Why Startups Should Buy Group Health Insurance?

Editorial Staff
June 11, 2024
13 min read

Share
2915

Table of Contents

Group Health Insurance

The group health insurance industry in India is a significant and growing part of the insurance industry. The product offers coverage to a large number of individuals under a single policy. Group health insurance policies are typically offered by employers to their employees, but they can also be purchased by other types of organisations, such as cultural associations, banks or societies.

Group health insurance policies in India provide coverage for medical expenses, including hospitalisation, pre- and post-hospitalisation expenses, OPD in some cases and other medical expenses like maternity etc. These policies can be customised to meet the specific needs of the group, including the sum insured, policy duration, and coverage options.

The industry has been growing at a rapid pace in India, with a 31% jump post-Covid, as per the ‘Independent Market Assessment of Health Benefits Administrators in Indian Health Insurance Industry’ according to a report by Frost & Sullivan.

The Indian health insurance industry itself is expected to grow at a CAGR of 15.3% between FY20 and FY25, driven by increasing awareness, rising medical inflation, and government initiatives.

What is Group Health Insurance?

Group health insurance is a type of health insurance plan that covers a group of people, typically individuals belonging to the same organisation or employer. Employers often offer group health insurance as part of their employee benefits package to provide affordable healthcare coverage to their employees.

Opting for Group health insurance for companies, including startups and SMEs, is often more cost-effective than individual health insurance plans, as the risk is spread across a group, leading to lower premiums. Such plans usually cover preventative care, inpatient and outpatient medical procedures, prescription medicines, diagnostic tests, and more.

Unlike individual health insurance, where the risk is concentrated on an individual, group health insurance for SMEs and startups offers coverage to a collective group, often including the family members of the employees of a company. Group health insurance plans are selected and purchased by companies or organisations and then offered to employees, providing benefits such as lower premiums, extensive coverage, and generally no exclusions or long waiting periods for pre-existing conditions.

Why Do Startups Need to Prioritise Group Health Insurance for Employees?

Startups face unique challenges in the business world, especially when it comes to allocating resources and managing costs. However, prioritising group health insurance for employees is essential for several reasons. Let’s take a look at some of these:

1. Reducing operating costs

Group health insurance can help startups reduce operating costs in the long run. Most potential employees are willing to take a job that pays relatively less if health insurance benefits are included. Excellent healthcare benefits help companies retain employees and keep them happy, reducing hiring costs.

2. Increased productivity

A healthy team is always more productive. Employees with health insurance and healthcare benefits are more likely to seek timely medical care, reducing sick days and ensuring consistent progress towards the business’ goals. Knowing that their company offers them adequate health insurance can empower employees and in turn, boost their productivity.

3. Compliance with regulations

Offering group health insurance can help startups attract and retain talent, reducing hiring costs and ensuring compliance with potential future regulations. In fact, group health insurance, in most cases, could be a must to meet statutory requirements.

4. Brand image

By demonstrating their commitment to employee well-being, startups can enhance their reputation as responsible and caring employers, attracting positive attention and goodwill from customers, investors, and other stakeholders.

Also, Read: Group Term Life Insurance for Employees

Importance of Group Health Insurance for Startups

Group health insurance holds significant importance for startups for several reasons. Let’s elaborate on some of these reasons:

1. Competitive advantage

Offering a robust healthcare benefits package sets your startup apart from competitors that may not provide similar benefits. It can be a key differentiator in attracting top talent and winning contracts or forging partnerships.

2. Employee well-being

Providing access to health insurance ensures that your employees can take care of their healthcare needs without financial stress. Healthy employees are likely to remain more productive, and possibly stay with your company for the long-term.

3. Risk mitigation

Unexpected medical emergencies or illnesses can pose a significant financial burden on employees. By providing health insurance, startups can help mitigate this risk for their employees, ensuring they are better prepared to handle unforeseen medical expenses.

4. Improved morale

Knowing that they have access to healthcare coverage can alleviate stress for employees, allowing them to focus more on their work. This can lead to increased morale, and overall productivity.

5. Easy claim and settlement

Group health insurance policies typically offer efficient processing for claim settlement, making it a convenient option for both employers and employees.

Also, Read: Top 8 Features of Group Health Insurance

Benefits of Investing in Group Health Insurance for Startups

Here are some benefits for startups should they consider investing in a robust group health insurance plan

benefits of group health insurace for startups

1. Attracting and retaining top talent

Group health insurance can help startups attract and retain top talent by providing employees with comprehensive health coverage, which can be a significant differentiator in a competitive job market.

2. Providing financial security for employees

Group health insurance for startups provide essential financial security for employees and their families by offering coverage against unforeseen and emergency medical expenses during hospitalisations. This type of insurance plays a vital role in ensuring the well-being of employees by providing them with financial protection in times of medical need.

3. Enhancing company culture and morale

By offering group health insurance, startups can enhance their company culture and morale by demonstrating their commitment to the well-being of their employees. This helps companies in the longer run by improvement in productivity and to stay competitive.

4. Tax advantages for startups

Many group health insurance policies offer tax advantages for startups in India. Employers can enjoy tax deductions for group health insurance premiums paid for their employees.

The expense for group health insurance is treated as ‘Profit in lieu of salary’ and can be claimed as a business expense in the profit and loss account. However, it’s advisable to check with the insurance provider about the nuances of this benefit.

Employers can claim tax benefits if they pay the full premium. However, if the premium is shared with employees, the tax deduction can only be claimed for the portion paid by the employer and not for the employees’ contributions.

5. Compensation benefits

Group health insurance is an essential aspect of employee compensation benefits for startups. It provides affordable insurance plans with wide coverage, efficient management with 24/7 support, and cashless insurance claims to increase healthcare accessibility.

6. Affordable premium plans

Group medical insurances tend to have economical rates based on the features you choose in the plan. Startups can choose a plan based on their requirements and affordability.

Related Read: Group Health Insurance Benefits

Challenges of Group Health Insurance for Startups

The challenges of group health insurance for startups include:

1. Cost considerations for startups

Startups, especially those in their early stages, may face financial constraints that make it challenging to afford comprehensive group health insurance plans for their employees. Startups often have limited resources and may struggle to allocate funds towards employee benefits like group health insurance, especially when prioritising other operational needs.

2. Choosing the right coverage and plan options

Understanding and selecting the right group health insurance plan from a myriad of options can be daunting for startups, especially those without dedicated HR or benefits administration teams. Startups may have unique employee demographics and healthcare needs, requiring customised insurance plans that may not be readily available or affordable.

3. Compliance and regulatory considerations

Ensuring compliance with regulations and legal requirements related to group health insurance can be complex and time-consuming for startups, adding to the administrative burden.

This is because it is essential for companies to work closely with legal and insurance professionals to ensure compliance with regulations and maintain regular reviews and updates to align with evolving regulatory norms. This means additional time and resources for compliance, which could remain a challenge for start-ups.

4. Dealing with fluctuating team sizes and turnover

High employee turnover rates can also pose challenges for group health insurance, as frequent changes in the workforce can impact the stability and cost-effectiveness of insurance plans. Employee turnover can increase costs for the employer, as they may have to pay higher premiums for new employees.

In short, regular assessments and careful planning are necessary to ensure that allocated funds align with evolving healthcare needs and regulatory requirements.

Quick Read: 10 Questions to Ask Before Choosing a Group Health Insurance Plan

What Startups Should Consider While Choosing Group Health Insurance Plans?

Startups should consider several factors when choosing group health insurance plans, including cost, number of employees, claims settlement ratio of the insurer etc. Let’s look!

group health insurance considerations for startups

1. Budget constraints

Startups should consider their budget and the cost of premiums when choosing a group health insurance plan. They should also consider the extent of deductibles, co-payments, and other out-of-pocket expenses.

By comparing quotes from multiple insurers and carefully evaluating coverage options and costs, startups can select a group health insurance plan that offers the best value for their budget and provides adequate coverage for their employees.

2. Number of employees to be covered

Ultimately, whether startups in India should cover all employees under group health insurance depends on a careful assessment of legal requirements, financial considerations, employee expectations, organisational culture, and strategic goals. So, the number of employees to be covered may vary depending on the above.

3. Coverage options and benefits offered

Startups must look for plans with broad coverage that includes both inpatient and outpatient services. The coverage options must include coverage for hospitalisation, surgeries, doctor consultations, diagnostic tests, medications, and treatments for various illnesses and injuries.

4. Network of healthcare providers

Startups should consider the network of healthcare providers covered by the insurance provider. They should ensure that the plan covers a wide range of network hospitals, clinics, and medical professionals.

5. Flexibility and customisation of plans

Starts ups must choose a provider that offers health insurance plan that offers flexibility and customisation options, allowing employees to select coverage levels and benefits that best suit their individual needs and preferences.

6. Claim settlement ratio

The claims settlement ratio is indeed an important factor for startups to evaluate when finalising a group health insurance plans. Startups must evaluate it in conjunction with other factors to make well-informed decisions about group health insurance plans. By prioritising insurers with a high claims settlement ratio, startups can ensure reliable coverage and a positive claims experience for their employees.

7. Ease of settlement

Startups should consider the claims process of the group health insurance plan. They should ensure that the process is efficient and user-friendly, with a quick turnaround time for claims approval and payment.

8. Customer service

Quality of customer service provided by the group health insurance plan is also something startups must keep in mind. One can look for insurance service providers that offer 24/7 support, with a dedicated customer service team to address any questions or concerns.

9. Reputation

Startups must look at the popularity of the group health insurance plan and the reputation of the insurance company offering it. The insurance service provider should have a good track record of customer satisfaction and claims payment.

Suggested Read: Cashless Health Insurance

How Much Does Group Health Insurance for Startups Cost?

The cost of group health insurance for startups can vary widely depending on several factors. Let’s see some of these:

Employee age and health profile: Insurance premiums are influenced by the age and health profile of the employees. Generally, older employees and those with pre-existing health conditions may result in higher premiums due to a higher likelihood of medical claims.

Coverage options: The scope of coverage and the types of benefits included in the insurance plan will impact the cost. Plans offering comprehensive coverage, including medical, dental, maternity, and additional benefits like mental health coverage or wellness programs, will have relatively higher premiums compared to basic plans with limited coverage options.

Location: Insurance costs can vary based on the geographic location of the startup and its employees. Health insurance premiums may be higher in areas with higher healthcare costs or limited provider networks.

Plan design and deductibles: The specific design of the insurance plan, including deductibles, co-payments, and out-of-pocket payments (if any), will influence the premium. Plans with lower deductibles and co-pays typically have higher premiums, while plans with higher deductibles may have lower premiums but require employees to pay more out-of-pocket for medical expenses.

Insurance provider: The insurance company providing the group health insurance plan will impact the cost. Different insurers may offer varying rates based on their underwriting criteria, claims experience, and administrative fees.

Employee contributions: Some startups may require employees to contribute towards the cost of health insurance premiums. Employee contributions can help offset the overall cost of the insurance plan for the startup.

Industry and risk profile: The industry in which the startup operates, and its risk profile may also affect insurance premiums. Certain industries, such as construction or manufacturing, may have higher risks associated with employee health, leading to higher insurance premiums.

Overall, it’s challenging to provide a specific cost estimate for group health insurance for startups without considering these factors. Startups should work with insurance brokers or insurtechs to obtain quotes tailored to their unique circumstances and needs.

Also, Read: Types of Health Insurance

Why Choose Onsurity’s Group Health Insurance for Startups?

Onsurity’s Group Health Insurance for startups offers several benefits that make it a compelling choice. The company’s monthly subscription plans start from just Rs 145 per employee, covering teams with as few as 3 members, and providing comprehensive healthcare, insurance, and wellness benefits. Here are the benefits of choosing Onsurity.

1. Affordable coverage

Onsurity offers affordable group health insurance plans tailored for startups, helping them provide valuable health benefits to their employees without breaking the bank. The plans are designed to be cost-effective, making them suitable for startups with limited budgets.

2. Flexible options

Onsurity understands that startups have diverse needs and preferences when it comes to employee healthcare. The company offers flexible options that allow startups to customise coverage based on their specific requirements, including the number of employees to be covered, coverage levels, and optional add-ons.

3. Comprehensive benefits

The company’s group health insurance plans provide comprehensive coverage, including medical, dental, and mental health benefits. Startups can ensure that their employees have access to a wide range of healthcare services to meet their needs and promote overall well-being.

4. Digital platform

Onsurity’s digital platform makes it easy for startups to manage their group health insurance plans efficiently. The platform provides online access to policy information, claims processing, enrollment management, and employee communication, streamlining administrative tasks and saving HR teams’ bandwidth.

5. Employee wellness programs

The company offers employee wellness programs as part of their group health insurance plans. These programs include access to fitness and wellness resources, preventive health screenings, and educational material to help employees maintain a healthy lifestyle and prevent illnesses.

6. Personalised support

Onsurity provides personalised support to startups throughout the process, from plan selection to implementation and ongoing requirements. Their dedicated customer service team is available to answer questions, resolve issues, and assist startups in maximising the value of their group health insurance plans.

7. Transparent pricing

Onsurity is committed to transparency in pricing, with no hidden fees or surprises. Startups can trust that they are getting straightforward pricing for the chosen healthcare plan, allowing them to budget effectively and plan for future expenses.

Overall, Onsurity’s Group Health Insurance for startups offers a combination of affordability, flexibility, comprehensive benefits, digital convenience, and personalised support that makes it an attractive option for startups looking to provide health insurance coverage to their employees.

By choosing Onsurity, startups can ensure that their employees have access to quality healthcare benefits while simplifying the process of managing their insurance plans.

Also, Read: Waiting Period in Health Insurance

Conclusion

In conclusion, group health insurance is a valuable investment for startups, offering numerous benefits to both the company and its employees. By providing comprehensive health coverage, startups can attract and retain top talent, promote employee well-being, and enhance overall job satisfaction.

Additionally, group health insurance plans can help startups mitigate financial risks associated with unexpected medical expenses and ensure compliance with regulatory requirements.

When selecting a group health insurance plan, startups should consider factors such as coverage options, cost-effectiveness, flexibility, and the reputation of the insurance provider.

Overall, group health insurance plays a vital role in supporting the growth and success of startups by fostering a healthy and productive workforce. By prioritising employee health and well-being, startups can create a positive work environment and position themselves for long-term success in the competitive business landscape.

FAQs:

1. How should startups get group health insurance?

Startsups should undertake adequate research and evaluate the best health insurance service provider. When choosing the right partner, startups should consider initial costs, access to primary care, optional add-ons, paperless claims, and financial implications.

2. What are the minimum employees for group health insurance?

The minimum number of employees required for group health insurance is 7 as prescribed by IRDAI. However, it can range from 7 to 20, depending on the insurance provider and specific policy terms. Onsurity covers companies that have as few as 3 employees.

3. Who can buy group health insurance?

Group health insurance can be purchased by organisations, companies, religious or non-profit organisations, professional associations, chambers of commerce, labour unions etc.

4. What is covered by the group mediclaim policy?

Group mediclaim policy covers hospitalisation expenses, day care treatment, pre-hospitalisation and post-hospitalisation expenses, day care procedures, mental illness treatment, organ donor’s medical expenses, ambulance charges, and maternity benefits (basis the chosen plan).

5. How many employees do you need to qualify for group health insurance?

To qualify for group health insurance, a business typically needs a minimum of 7employees, as per the Insurance Regulatory and Development Authority of India (IRDAI) guidelines.

6. What if the number of employees reduces after the group health insurance policy is issued?

If the number of employees in a company reduces after the group health insurance policy is issued, the policy will continue as it is until the time of renewal. At the time of renewal, the insurer can make room for certain relaxations like insuring a lower number of employees for a marginally higher premium.

7. What are small group plans in health insurance?

Small group health insurance plans are designed for small businesses with 50 or fewer employees, providing them with medical insurance coverage for their employees.

8. Is group medical insurance mandatory in India?

Group health insurance is mandatory for employees in India, as per the guidelines issued by the Indian government as part of the new consolidated guidelines by the ministry of home affairs.

Get Started with Onsurity