Is Employer Group Health Insurance sufficient in India?

When it comes to health insurance, most people have only their employer’s group health insurance coverage in India.

It’s like that the salaried Indians are more content with group health cover which is provided by their employers. As a result, they do not feel the need for any standalone individual health policy.

And this is very common. Most employees in the organized sector are covered by the group health insurance plans in India or medical insurance policy for employees in India.

You may say that health insurance is health insurance whether it is given by the employer or bought by self. But apart from some similarities, there are certain differences between group health insurance and individual health insurance.

Where an employer-based group health insurance is one single policy that covers all the people working in an organization, the individual health insurance plan covers (as the name suggests) only the policyholder (and family if family floater health insurance plan is bought).

Employer-based Health Insurance Plans Vs Individual Health Insurance Plans Or Group vs individual insurance – is a debate that confuses a lot of people.

Nevertheless, health insurance is important and as odd as it may sound, health insurance protects your wealth.

And when it comes to the salaried individuals, the more important question is whether an Employer provided Group Medical Insurance is sufficient or not. Group health insurance plans in India are many and vary from employer to employer. But whether the plan on offer is good enough or not is something that should be seriously considered.

Now before we get to why depending solely on employer’s group health insurance coverage isn’t a very good idea, let’s first take a brief look at some of the differences between the group cover and the personal individual health cover:

• Waiting Periods – The individual health insurance begins after the waiting period is over. Waiting periods start from 30 days for the policy to be effective and go up to several months (years) in case of specific diseases/treatments. Group health insurance, on the other hand, has practically no waiting period. Coverage begins from day 1.
• Validity of Insurance – The individual policies are valid for as long as the premium is paid (and policy is renewed) by the policyholder. The employer-sponsored group health insurance is valid until the employer employs the person.
• Medical Checkup – Generally, there is no requirement of undergoing a medical checkup (for self and family members) under the employer’s group health insurance. So if you are looking for health insurance without medical check-up in India, then that’s your answer. But checkup may be needed for individual health insurance plans.
• Insurance Cover Amount – In the individual cover, the policyholder can choose whatever cover he wishes to pay the premium for. But this flexibility isn’t available with employer-sponsored health plans where the employer decides the coverage amount and whether to increase or decrease it as per their discretion.
• Tax Benefits (under Section 80D) – For the individual health plans, the tax benefits accrue to the policyholder under section 80D of the Income Tax Act,1961 (read about latest health insurance tax benefits). But there are no tax benefits for employees who are covered under the Employer’s Health Plans. But if the employee pays a part of group insurance premiums, then that part can be claimed under tax deduction limits of the individual employee. That is all to taxability of health insurance premiums paid by the employer that there is in India.

Atleast some of these points will make the employer-provided group health insurance plans attractive to the employees. And you may feel that it is better to get health insurance through your job.

That is true to an extent. Getting under the coverage of group medical insurance plans in India is no doubt better than not being insured any day.

But as I said earlier too, the question after a while will be whether it is wise to depend solely on the employer for your health insurance needs?

The answer is that it isn’t.

Let’s see why:

1. Sum Insured (coverage) may be Insufficient – The sum insured provided by the employer’s health plan may be insufficient. Suppose the cover provided is just Rs 3 lakh. Is it enough for a family of four? No. So one should check whether the cover provided is sufficient or not for individual needs. Who knows multiple people of one family may require hospitalization in a year. Then what? The employer’s cover will get exhausted quickly and may be insufficient. In group health plans, one cannot change the coverage amount depending upon personal requirements (though some employers may allow for it by paying additional premiums)
2. Negative Policy Changes at Workplace – What would you do if for some reason (like cost-cutting, etc.), the employer decides to do away with health insurance or reduce the coverage substantially? It is not in your hand and employer is the boss. You will be left unprotected and underinsured.
3. Cover during/after Job Switch – You already know that employer-provided insurance cover is valid only till one is employed with the employer. In case of a job switch with a gap in between, the person will be unprotected. Also, there is no guarantee that the next employer will necessarily have a group employer-provided health insurance plan for employees.
4. As an extension of the previous point, if you are covered only by your employer’s health coverage and are planning to quit your job and go out on your own, then better take an individual health cover much before you make the transition.
5. At times, group health cover may have clauses like co-pay and deductibles that the employee would be required to pay in case of making a claim. This is not the case in most individual covers for young-to-middle-aged individuals.
6. Who will insure health after Retirement – If you are nearing retirement and still only have group health cover, then you will be left with no health cover after retirement from the job. This is dangerous as medical expenses after retirement can be huge. So one should make sure to have an independent individual health insurance policy much earlier than retirement. This is to first ensure that all the waiting periods are exhausted much before the retirement begins and also to cover the risk of being denied fresh purchase of health insurance during old age due to future health issues (if any).

All said and done, employer-provided group health insurance plans in India have decent benefits to begin with. But their inherent limitations and lack of flexibility make it necessary for people to not rely solely on them. You have broadly understood how group vs individual insurance differ.

So if you really want to have more independence when it comes to health coverage, then it’s better to have a personal health insurance plan according to your unique needs.

This way, you will also not depend on the employer’s whims and fancies and be protected in future too (if job switch or loss makes you uninsured temporarily).

Now you make ask how much health insurance cover should you buy?

There is no one answer that fits everyone here.

• But looking at rising costs of hospitalization and increasing frequency of lifestyle diseases, taking atleast a cover of Rs 7-10 lakh is advisable. Ofcourse, premium affordability is one factor that will be considered. But this is a good target to begin with.
• In addition to your coverage under the company’s group medical insurance plan in India, go ahead and purchase a standard health insurance policy.
• In the case of hospitalization, first, use your employer’s cover. If bills are more, then make use of the personal health insurance (assuming it is bigger than the company provided one)
• When it seems that the coverage isn’t big enough for future health risks, go for super top-up health insurance. What is that? In brief, the super top-up policies kick in after a threshold. Suppose your base cover is of Rs 5 lakh. And you take super top-up insurance of Rs 15 lakh. Then the bills between Rs 5 lakh and Rs 15 lakh will be settled by your top-up plan as threshold kicks in at Rs 5 lakh. Super top-up health covers are cheaper than base plans as they provide coverage only after a certain limit as explained above.
• Also, it might seem like a waste of money but try to buy personal health insurance as early as possible. That way, your starting premiums will be low and you will not be denied policy purchase later on (which may be the case in later years when health isn’t so good).

Please don’t think that I am against group health insurance plans in India. In fact, it’s an extremely good benefit for young earners who do not know the importance of health insurance. So if you ask me Can I buy health insurance if my employer offers it? The answer is Yes! Go ahead.

But in due course of time, understand the Iimitation of such covers and buy a personal health plan as well.

I hope it’s now clear why you cannot rely only on group health insurance cover provided by your Employer and why the Employer-provided Health Insurance is not enough. Though both seem same, there are indeed subtle fundamental differences in group health insurance vs individual health insurance policy in India.

So don’t tell me that I have group health cover from the employer. I don’t need a personal health insurance plan.

Health insurance is necessary for everyone. I would advise all of you reading this post to purchase a personal (family) health insurance cover apart from what you already have from employer-provided group cover. That way, you will not depend 100% on your employer’s health insurance.