Minimum Number of Employees Required for Group Health Insurance in India

The minimum number of employees required to buy a group health insurance policy in India is a structural rule applied by insurers to ensure adequate risk pooling. Here's the current 2026 picture and what smaller teams can do.

The Standard: 7 Employees

Across most IRDAI-licensed insurers — including the major players like ICICI Lombard, HDFC ERGO, Bajaj Allianz, Star Health, Niva Bupa, and Aditya Birla Health Insurance — the minimum group size is 7 employees. This is also the minimum at Plum.

The 7-employee floor exists because group health insurance pricing depends on risk pooling. Below this number, the actuarial model becomes unstable: a single high-claim member can spike the loss ratio, making it difficult for the insurer to price the plan profitably.

What "7 Employees" Actually Means

• Full-time employees count. Permanent full-time staff with a formal employer-employee relationship.
• Founders and directors count if they are on the company payroll and have a documented employment relationship.
• Probationary employees count. Most insurers include staff under probation as long as they are on payroll.
• Contract employees may or may not count depending on the insurer; check the policy terms.
• Interns and trainees generally do not count unless they are on a payroll arrangement.
• Domestic helps and gig workers do not count for standard group plans.

Why the 7-Employee Threshold Exists

• Risk pooling stability. Smaller groups have higher variance in claims. With 7+ lives, insurers can apply standard actuarial models.
• Administrative efficiency. Setting up a group policy involves fixed costs (KYC, plan design, TPA setup). Below 7 employees, the per-employee cost becomes high.
• Regulatory clarity. IRDAI does not mandate a specific minimum, but standardising at 7 simplifies compliance and pricing for insurers.
• Hazardous occupations are an exception. Under the Code on Social Security, 2020 (effective November 21, 2025), ESIC coverage is now mandatory for any single worker engaged in hazardous work, with no minimum group threshold.

What Small Teams Below 7 Employees Can Do

• Wait until you reach 7 employees. If you're at 5 or 6, group cover becomes available within a few months of hiring.
• Buy individual health insurance for each team member. The premium will be 30 to 50% higher per person than group cover, and pre-existing diseases will carry up to 36 months of waiting period under IRDAI 2024 rules.
• Use a reimbursement-based health benefit. Some companies provide a monthly health allowance instead of insurance.
• Pool with other small employers. A few brokers and platforms aggregate small employers into a single group policy.
• Voluntary ESIC enrolment. Under the Code on Social Security, 2020, establishments with fewer than 10 employees can voluntarily opt into ESIC if both employer and employees agree, providing basic health cover.

What Happens When You Cross the 7-Employee Mark

Most insurers can issue a group policy within 3 to 7 working days once the team reaches 7 employees and required documentation is submitted. Premium per employee typically falls 30 to 50% below the cost of equivalent individual cover, and pre-existing conditions become covered from Day 1.

Group Size Tiers and What Changes

• 7 to 25 employees: Standard group rates apply. Plan design is largely standardised.
• 25 to 100 employees: Some insurers offer experience-rated discounts and customisation.
• 100 to 500 employees: Pricing is more experience-rated; broader benefit customisation becomes available.
• 500+ employees: Fully experience-rated pricing; bespoke plan design and negotiated TPA service levels.

Frequently Asked Questions

Can a 5-person company get group health insurance in India?

Generally no. The standard insurer minimum is 7 employees. A 5-person company would typically use individual health insurance until it reaches the 7-employee threshold.

Does the 7-employee minimum apply across all insurers?

It is the standard across most IRDAI-licensed insurers and major platforms including Plum. A few specialised micro-group products exist but with limited features.

Do founders and directors count toward the minimum?

Yes, if they are on the company payroll with a documented employment relationship.