How Does Group Health Insurance Work in India? End-to-End Process in 2026

Group health insurance in India follows a defined lifecycle from purchase through claim settlement to renewal. Understanding each stage helps employers set expectations and employees navigate claims when they need to. The 2024 IRDAI Master Circular on Health Insurance and the 2024 IRDAI Insurance Products Regulations have reshaped several timelines and consumer protections.

The Regulatory Frame: IRDAI

The Insurance Regulatory and Development Authority of India (IRDAI) regulates all health insurance products and licenses insurers, third-party administrators (TPAs), and brokers. Group health policies must comply with IRDAI rules on disclosures, claims handling, grievance redressal, portability, and policyholder protection. Two recent regulatory documents matter most:

• The IRDAI Master Circular on Health Insurance (May 2024), which sets new claim settlement timelines and consumer protection rules.
• The IRDAI Insurance Products Regulations, 2024, which standardised waiting periods and removed entry age caps.

Step 1: Policy Purchase

The employer chooses an insurer either directly, through a broker, or through an insurtech platform. The buying process involves:

• Submitting employee census data — number of employees, age distribution, dependants to be covered.
• Choosing a sum insured — typically ₹2 lakh to ₹10 lakh per employee, with options for higher tiers.
• Selecting plan features — maternity benefit, parent cover, room rent type, riders.
• Receiving quotes — premiums are quoted based on group size, age mix, industry, and chosen benefits.
• Issuing the policy — once payment is made, the master policy is issued and is typically valid for one year.

Step 2: Enrolment

Once the policy is live, employees and their dependants are enrolled. This usually happens through a benefits platform or HR portal where employees confirm dependant details, choose top-ups if available, and download e-cards for cashless claims. New joiners are added during the year through mid-term endorsements.

Step 3: Using the Policy

When an employee or covered dependant needs treatment, two paths apply:

• Cashless treatment. The employee approaches a network hospital, the hospital sends a pre-authorisation request to the insurer, and the insurer settles the bill directly. Under the 2024 IRDAI Master Circular, insurers must issue cashless pre-authorisation within one hour of receiving a complete request from the hospital, and discharge approval within three hours.
• Reimbursement. When treatment happens at a non-network hospital or pre-authorisation isn't feasible, the employee pays first and submits documents to the insurer or TPA for reimbursement. IRDAI requires insurers to settle reimbursement claims within 30 days of receiving the last necessary document. If settlement is delayed, the insurer must pay interest at 2% above the bank rate.

Step 4: Claims Administration

Claims are administered by either the insurer's in-house team or a TPA. The TPA handles pre-authorisation, document collection, query resolution, and settlement. Quality of TPA service is one of the biggest variables in employee experience.

Step 5: Renewal

The policy renews each year. The renewal premium reflects the previous year's claims experience — known as the loss ratio. Groups with high claims see premium increases; low-claim groups see flat or marginal increases. Employers often use renewal as a moment to compare insurers and switch if better terms are available. Under IRDAI portability rules, accumulated benefits — including waiting periods served and the moratorium clock — transfer when an employee or group switches insurers.

The Moratorium Period

The IRDAI Insurance Products Regulations, 2024 reduced the moratorium period in health insurance from 96 months (8 years) to 60 months (5 years). After 60 continuous months of coverage, an insurer cannot contest a claim on grounds of non-disclosure or misrepresentation, except in cases of established fraud.

How Plum Manages the Process for Employers

Plum handles the full lifecycle through a single platform — from initial quote to enrolment, claims, and renewal. Pre-existing conditions are covered from Day 1, with a wide network of cashless hospitals across India.

Frequently Asked Questions

How long does it take to set up a group health policy in India?

From quote acceptance to policy issuance, most insurers complete the process within 3 to 7 working days for standard plans.

What is the role of a TPA in group health insurance?

The TPA is the third-party administrator that processes claims, manages cashless authorisations, and handles employee queries on behalf of the insurer.

What are the new IRDAI cashless rules under the 2024 Master Circular?

Insurers must issue cashless pre-authorisation within one hour of a complete request from the hospital, and discharge approval within three hours. Reimbursement claims must be settled within 30 days, with interest at 2% above bank rate for delays.

Does IRDAI mandate the minimum sum insured for group policies?

No. IRDAI regulates conduct and disclosures, but the sum insured is determined by the employer and insurer based on plan design.