Although corporate and group health insurance plans have existed for decades, they were primarily discretional insurance options available to employers in India. While some companies chose to be proactive and safeguard the well-being of their employees, for the most part, employers skipped this optional coverage plan since it lacked the push of a mandate.
Until quite recently, this remained the status quo. The pandemic acted as the catalyst that changed the government’s stance on employee health covers. In other words, while opting for an individual health insurance plan remains your prerogative, an employee health coverage plan is no longer optional for organisations.
Understanding Employee Health Coverage
An employee health insurance policy (also known as a group insurance plan) is essentially a set of health benefits the firm’s employees enjoy against their employer’s premiums to the policy provider on their behalf. Doing this accrues benefits to both the employee and the employers, as the former enjoys an assured fiscal reserve to cover hospitalisation costs. At the same time, the latter gets to avail of lucrative tax benefits on the same.
Apart from providing employees with a comprehensive coverage umbrella that shields them from unexpected hospitalisation expenses, these plans also cover the consultation fees of specialists. Additionally, they come with add-on dependent covers that can extend this protection to include all the members of the employee’s family – though against a rise in the premium amount.
Kinds of Employee Health Insurance Plans
Primarily, there are two types of employee health insurance plans in India.
- ESI or Employee State Insurance is a medical insurance coverextended to workers in the organised sector. The Employee State Insurance Act (1948) mandates those with a monthly salary of Rs. 21,000 or lower to avail of this plan. However, both the employer and the employee make contributions to the plan
- Alternatively, employees with a monthly salary of more than Rs. 21,000 are entitled to Group Medical Coverage (GMC). Under this plan, a minimum of 7 employees can be covered by a single group policy. The pandemic-initiated lockdown in 2020 made such GMCs mandatory in India.
Is Employee Health Coverage mandatory in India?
When tracing the history of an employee health insurance cover in India, it is essential to note that before 2020, employers were not mandated to extend such policy covers for their employees. However, the change happened with the outbreak of the pandemic. The COVID-19 pandemic magnified the uncertainty of our daily lives. Given the rising infection rate, a nationwide lockdown and work-from-home protocols were mandated by the government to curb the spread of the virus. These circumstances acted as a catalyst in transforming the status of an employee health insurance plan from optional to mandatory.
In an official circular released by the Insurance Regulatory and Development Authority of India (IRDAI) on 15th April 2020, all companies were instructed to offer employee health insurance coverage to their employees. This circular was part of the Standard Operating Procedure (SOP) that outlined the new norms to apply to workplaces once on-site work resumed. Under this mandate, insurance companies were directed by the government to formulate lucratively priced and easy-worded comprehensive employee health insurance policies that companies could purchase to safeguard the health of their workforce. This mandate was brought into effect to ensure adequate financial security against the cost of hospitalisation due to both COVID-19 and non-COVID-19 related conditions.
Does a mandatory Employee Health Insurance Policy benefit both parties?
The simple answer to this question is – yes. While the pandemic has provided the push needed to make such health protection covers mandatory, the benefits of such plans have propelled their popularity even before their recent status transition. A comprehensive health insurance plan for employees acts as a significant morale boosterand also improves the company’s employee retention score. When employees know that their medical expenses are covered, productivity levels significantly boost. From a fiscal vantage point, such group or employee health insurance policies give the employer a sizeable tax rebate. Group health insurance plans are also beneficial because they offer better coverage and benefits at lower premiums(covering more people).
While employees enjoy top-notch coverage benefits, their employer pays the premiums for the plan, making this kind of health insurance the most preferred one. Plans with dependent and OPD coverage extends this coverageeven further. Employees are also exempted from the hassles of insurance claim settlement, as it is handled between the employer and the policy provider. Thus, the benefits of such employee health covers extend to both the employee and the employer.
Choose the right insurance provider
While the government of India has made employee health insurance mandatory, selecting the right insurance provider can make a significant difference for an organisation – both in terms of costs and benefits. At Bajaj Finance Limited, employers can choose from the most optimised list of group insurance plans. Bajaj Finance Limited offers employers the most comprehensive group health insurance solutions, with policies from trusted insurers like Bajaj Allianz, Aditya Birla Group, Manipal Cigna, and others. Apart from cashless and high claim settlement ratios, these plans come with an extensive network of hospitals to make the process of availing of their benefits seamless.
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