Know Why Corporate Health Insurance Isn’t Enough for Your Family Health Needs?

January 21, 2022 Mutual Fund

Apart from the salary, several perks and benefits offered by corporates to their employees are financially or non-financially beneficial to both employees and employers. One of such basic perks offered by almost all the organisations is a Group Health Insurance Policy. Some companies offer Health Insurance Coverage to only their employees, whereas many extend it to their families. But is the health insurance coverage offered by the employer enough for you and your family, considering the rising cost of medical expenses? Read this article to know the answer…

What is a Corporate or Group Health Insurance Policy?

A Corporate Health Insurance Policy, also known as a Group Health Insurance Policy, is a health insurance plan that offers coverage to a large number of people, typically a group of employees or members of an organisation. Generally, the policy is offered by a corporate as a perk because the premium is paid by the corporate to provide additional medical coverage to its employees.

What are the common features of a Corporate Health Insurance Policy?

• The Corporate Health Insurance Plan generally covers either only self (employee) or self, spouse, children, dependent parents.

• The employer usually pays the entire premium.

• Like any other health insurance plan, you get cashless hospitalisation benefits at network hospitals of the insurer.

• It provides coverage to fees of medical practitioners and specialists, pre and post-hospitalisation expenses, domiciliary and daycare expenses.

• Some ancillary charges like ambulance charges are covered under these plans.

• Some plans provide free yearly health check-ups to employees.

• Most Corporate Health Insurance Plans cover pre-existing diseases and maternity expenses.

Why do Corporates offer Health Insurance Coverage to their employees?

Offering health insurance coverage to employees, in turn, offers several benefits to the corporates, such as;

1. Tax Benefits:

   Employers get tax-benefit for providing health insurance coverage to their employees.

2. Employee Retention:

   Employee retention has become challenging in today's technologically advanced and fast-paced world. However, as per studies, workplaces that offer several perks and benefits to the employees tend to have high employee retention rates.

3. Lower Premium:

   Since it is provided to a large number of people, the company has to pay a comparatively lower premium than what it would cost to an Individual Health Insurance Policy. Moreover, companies get quotes from different insurers. Hence, due to the high competition, the insurers offer several discounts.

What are the benefits of a Corporate Health Insurance Policy to the employees?

1. Larger Coverage:

   Corporate Health Insurance Policies generally have larger coverage than regular policies like Individual Health Insurance Plans, Family Floater Health Insurance Plan, etc. That means it covers more number of diseases and offers more benefits. It typically includes daily hospital cash benefits, critical illness cover, COVID Insurance, etc., which you would otherwise have to buy separately.

2. Pre-existing Diseases:

   The Group Health Insurance Policy covers pre-existing diseases right from day 1 of joining of the employee. There is no waiting period for pre-existing diseases In Group Health Insurance Policies, unlike Regular Health Insurance Policies. Regular health insurance policies usually have a waiting period of 2 to 4 years for pre-existing diseases, Depending on the policy terms and conditions.

3. Maternity Coverage:

   The biggest advantage to young employees is that most Corporate Health Insurance Plans offer larger maternity coverage. Most of these plans provide coverage for normal delivery, c-section delivery, newborn cover, pregnancy complications, etc. Whereas, with a Regular Health Insurance plan, you have to either separately buy maternity coverage or wait until the waiting period is over, Which can range from 2 to four years depending on the insurer.

Does a Corporate Health Insurance Policy offer sufficient coverage?

There is no doubt that having Corporate Health Insurance benefits both employees and employers. However, that does not mean it is sufficient for a robust health insurance cover to secure you and your family in case of unfortunate eventualities. Here’s why the Group Health Insurance Coverage might not be sufficient for you, and it is a wise choice to have a separate health insurance policy:

1. Low Sum Insured:

   Corporate Health Insurance Plans have a comparatively lower sum insured than Individual or Family Floater Health Insurance Plans. Generally, the Group Health Insurance Plans offer a sum insured from Rs 1.5 lakhs to the maximum of Rs 5 lakhs, depending upon your employer and position, which will certainly not be enough in case of hospitalisation for a serious illness or major accident.

   Let's take the example of Mayank, who works in a leading private bank and gets health insurance coverage for himself and his family of Rs 2,00,000. Mayank has five dependents, his wife, two children, and parents. During the first wave of COVID-19 in India, his entire family got infected, and his wife and parents needed hospitalisation. The total medical expenses for three of them reached almost 8 Lakhs, which is 4 times his company coverage. Fortunately, Mayank had bought separate Senior Citizen Health Insurance Policies for his parents with a sum insured of Rs 5 Lakhs each. He was able to pay for his wife's hospitalisation through his company insurance. However, Mayank realised the importance of having separate policies with enough insurance cover because, in the absence of his parent's policies, he would have had to borrow money. He has now purchased a Family Floater Health Insurance Policy that covers himself, his wife, and his children.

2. Employment Status:

   The coverage of a Corporate Health Insurance Policy is available to you as long as you are employed with the organisation. The employee's average years at the company is 4 to 5 years. So, if you change your employer, get terminated, or have to leave the company for any reason, you are no longer covered under the company's health insurance. Whereas an Individual Health Insurance Policy will cover you despite your employment status, provided you pay the premiums on time.

3. Post-Retirement Status:

   As stated above, you get health insurance coverage from your company only until you are employed. That said, you will need to buy a health insurance policy after your retirement. However, buying health insurance can be a daunting task after a certain age. Before granting a policy, there will possibly be medical tests and some pre-existing diseases that can make an insurer deny offering you the policy. Besides, although you get insurance coverage, it will not cover pre-existing diseases, which is the crucial reason behind the hospitalisation of senior citizens.

4. Corporate Policies May Change:

   The government does not mandate corporates to provide health insurance to the employees, and it is entirely under employers' control. Hence, the company can make changes in the terms and conditions of the policy offered or decide to stop providing the insurance cover without any legal consequences.

5. Insured Members:

   Your Group Health Insurance Policy may or may not cover your dependents because some companies provide coverage only to the employee. Hence, it is crucial to know the exact details in advance. With a Family Floater Health Insurance Policy, you can cover all your dependents under one roof or choose different policies as per their health conditions. For example, having a specific Senior Citizen Health Insurance Policy for elderly parents is a good option as it offers several added benefits to them.

6. Co-pay Clauses:

   Most Group Health Insurance Plans come with a co-pay clause. Co-pay is a fixed portion of a claim amount that a policyholder has to pay out of their pocket. It can be either a fixed amount or a percentage of the claim. The insurance company decides the co-pay amount, which is different for different medical services. Suppose you have to visit a specialist for a specific illness, and the co-pay mentioned in your policy for a consultation with a specialist is Rs 1,000. In this case, you will have to pay Rs 1,000 for the consultation with the specialist irrespective of whether or not your deductible is met.

7. Room-rent Limit:

   The room-rent limit on most Group Health Insurance Plans is usually very low, and the insured has to pay about 40% to 60% of the room rent by himself, which can be very high depending on how many days you are hospitalised.

To Conclude:

It is undoubtedly a perk to have Corporate Health Insurance Coverage, but having an Individual Health Plan is a necessity. In rarest cases, if the company is offering you a larger sum insured and you do not have any dependents, you might consider delaying the purchase of a personal policy. However, remember that the company will provide you coverage only until your employment, and they have the right to terminate this facility at any time. Besides, as our needs change with changes in our life-stages, it is recommended to review your health insurance cover every three years to ensure you have sufficient coverage. When you have two or more policies, you get an option to choose the policy at the time of a medical emergency. Click here to know how to make a claim with multiple health insurance policies.

This article first appeared on PersonalFN here