Designing Your Group Health Insurance Benefit

A group health insurance (GHI) is a health insurance plan that covers a group of people (and their family members) who work in the same organization. As we discussed here, GHI is 10X better than an individual health insurance. But one of the biggest challenge in setting up GHI is the complexity of the policy. Unlike an individual insurance, GHI allows you to customize ~25 terms (aka benefits) in your policy. That means you need to understand each of these terms and figure out what is best for your team.

If you are setting up GHI at your organization for the very first time, this may seam like a herculean task. And you would eventually end up making the wrong choice, which will negatively impact the experience of your employees.

In this post, we share with you the four most important decisions that you need to take, while leaving the rest to the algorithms of Plum.

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1. Members covered

GHI allows you to cover not just the employees but their family members as well. The three most common variants of GHI are:

  1. E-plan: Covers employees only
  2. ESC-plan: Covers employees, spouse, and upto 4 dependent children
  3. ESCP-plan: Covers employees, spouse, upto 4 dependent children, and 2 parents

As discussed here, if you choose to take ESC or ESCP-plan, you will have to cover spouses of all married employees, all dependent children, and parents of all employees.

At Plum, we have analyzed data of hundreds of organizations. The choice of members covered has the highest impact on the premium that the organization has to pay.

If you choose to move from E-plan to ESC-plan, you can expect to pay anywhere between 20% to 100% additional premium (depending on what % of your employees are married).

If you choose to move from E-plan to ESCP-plan, the premiums become 3X to 4X of the E-plan. That’s because you have now added 2X more lives to the plan (2 parents for every employee), and these parents are in the higher age band (50yrs-70yrs) where the premium-per-life is two to three times of those in lower age band (18yrs-35yrs).

The choice between E-plan, ESC-plan and ESCP-plan is mostly influenced by how much budget your organization has for health insurance benefits. That said, few organizations choose to not look at the budget constrains, and rather invest into their employee benefits plans.

2. Sum insured

The second most impactful decision is the sum insured (SI), the maximum value for a particular year that the insurance company can pay if you are hospitalized. Organizations can choose a SI of as low as ₹50K or as high as ₹10L (or even more).

Here is a rough breakdown of how your premium may increase as you increase you SI. Assuming premium for ₹50K SI is ₹100, premium of ₹10L SI would be ₹513.

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As you would notice, it is not a linear relation between SI and Premium. You can increase you SI by 6X from ₹50K to ₹3L by just paying 2X premium.

At Plum, we recommend you to think about two dimensions when deciding the SI: (a) what kind of hospitals your employees visit, and (b) the family coverage you are providing. E.g., if your employees tend to visit tier-A hospitals (e.g., Manipal, Cloudnine, Apollo), and you are taking an E-plan/ESC-plan, we recommend a SI of between ₹3L to ₹5L. If you are taking an ESCP-plan, we recommend a minimum SI of ₹5L. If your employees tend to visit the smaller hospitals, you can take a lower SI of ₹1L.

3. Maternity benefits

The third most impactful decision is to choose whether you want to add maternity as an add-on benefit to your GHI benefit. Coverage for maternity means that you can claim your expenses related to pregnancy, including hospitalization, pre-hospitalization and post-hospitalization. The benefit starts from day 1 without any waiting period, and covers any prenatal and postnatal expenses.

Maternity benefit comes with a sub-limit (which is independent of your SI). You can opt for a maternity benefit starting from ₹25,000 to ₹1,00,000.

Adding a maternity benefits can increase your premium anywhere between 15% to 30%, depending on the size of your team and the quantum of maternity benefit.

While we recommend that every organizations does provide maternity as a benefit, so as to ensure that your employees (both female and male) can have peace of mind at the most important stage of their life, organizations who have very young and unmarried employees can postpone this coverage for a while.

4. Pre-existing diseases coverage

The fourth most important decision is to opt for pre-existing disease (PED) coverage. PED means any condition, ailment or injury or illness or related condition(s) for which insured had developed signs or symptoms, and/or were diagnosed and/or received medical advice/treatment, within 48 months prior to the first policy with the company.

Opting for PED coverage can increase your premium by 15% to 25%, depending on the size of your team.

If you have decided to take an ESCP-plan, we strongly recommend to opt for PED coverage as parents are most susceptible to having pre-existing conditions. If you decided to take an E-plan or ESC-plan, you can choose to opt out of PED coverage to save some cost.

GHI has 20+ more possible customizations. E.g., room rent limit, disease wise sub-limit, ambulance cover, floater vs non-floater, corporate floater, waiting periods (four types), baby day 1 cover, and many more.

At Plum, we take away these complexities. All you need to do is decide your family coverage, SI, maternity add-on and PED cover, and leave the rest to us. We ensure that we choose the customizations that provides the best experience to your employees while keeping the cost low.

If you are an organization that hasn’t set up a health cover yet for your employees, give Plum a shot.

To get started, just visit www.plumhq.com and get started with your employee health cover. Trust us, it takes less than two minutes to share your details. The rest is on us!