Group health insurance is a type of health insurance that is taken for the group, in which the insurance company compensates the insured group member in case of hospitalization due to an accident, illness or disease during the policy period in return for an amount known as a group health insurance premium.
Group Health Insurance & Employee Benefit Plans
The group health insurance premium is usually paid by the employer and depends on many factors such as the size of the group, age of the group members, sum insured required, and other factors.
The size of the group decides the premium to be paid under the group health insurance policy. The greater the size of the group, the higher would be the group health insurance premium. The other factor which decides the group health insurance premium is the type of policy i.e. family floater or nonfloater. As the number of members increases in the family as well as the policy the size of the group increases, thereby increasing the premium to be paid under the policy. The other factor which decides the premium under the group health insurance policy is the age of the group members. The higher the age, the higher would be the premium under the group health insurance policy. Most employers restrict the group health insurance coverage to the employees only and in some cases might extend it to the immediate family of the employees. Only in rare cases, parents or parents in law would be included under the policy. If parents or parents-in-law are included in the policy it increases the average age of the group and thereby impacts the premium to be paid under the group health insurance policy.
In addition to this, the sum insured or the coverage opted for by the employer also decides the premium be paid under the policy. The higher the coverage, the higher would be the group health insurance premium. A higher sum insured means greater risk to the insurance company and therefore high premium would be charged by the insurance company. If the coverage is required on an individual basis then the premium to be paid would be very much higher. Coverage on an individual basis is when each member in the group health insurance policy has a separate sum insured which can only be utilized by them. In the case of non floater policies where a family of 4 members are involved, the sum insured would be separate for each of them and the sum insured cannot be transferred from one person to another person.
Group health insurance is a part of employee benefit plans offered by organizations. There are certain other employee benefit plans such as Provident fund, personal accident insurance, life insurance, etc. which are considered necessary by most of the employees at the workplace. Employee benefit plans are those plans which are offered by the employer in addition to the basic salary. Insurance is considered the major employee benefit plan. It is important to have a good group health insurance policy in force to cover your employees in the workplace.