Group health insurance for employees of small and medium enterprises(SME's) is important because it helps them to attract and retain staff, lowers medical costs through group pricing, tax deduction on premium and provides protection to employees and their family financially in medical bills. Group Health Insurance is also known as Group Medi-claim, which covers all employees and their families under a single policy. This usually includes no waiting period and every pre - existing disease covered from day one.
Below is what group cover actually does for an SME, what it typically includes, how the money works, and where the limits are.
How Does Group Health Insurance Help With Talent Acquisition And Retention?
Group Health Cover is one of the benefits that is noticed by the employees. It helps them to compare job offers and its absence is felt very strongly. SME's cannot match the salaries of large group size organisations for them, group health is a practical way to make the total package worthy and competitive.
Retention effects that matter for a small business:
When an organisation offers health cover it tells candidates that the business is established enough to invest in people. It shows stability.
Reduction in churn. When an employee leaves a company they feel loss of health cover and even more when their families are also covered.
Dependents like spouse, children, and sometimes parents or parents-in-law are covered in group policies.
Replacing a trained employee increases time and money in hiring and re-training. It is always cheaper to keep people than the premium spent to retain them.
What Does A Group Health Insurance Policy Usually Cover?
A Corporate Health Insurance policy or group policy covers hospitalisation and related treatments, medical costs for every enrolled employee. This cover usually includes:
All the in-patient hospitalisation which includes room rent, surgeries, ICU, doctor's fees and medicines.
Expenses before getting admission and after getting discharge for a treatment and for a set number of days is covered. This is Pre and Post hospitalisation.
Treatment that requires only 24-hour stay which is basically day care procedures.
Add-ons like pre-existing diseases, maternity.
Cashless treatment at network hospitals, so the employee does not pay the hospital directly for covered costs.
Employee-paid premiums are not deductible under the group policy
The employer decides the Sum Insured they want for their employees. Sum Insured ranges from Rs 1 lakh to 5 lakh. You can also opt for extra add-ons in coverage like maternity, OPD, room rent with no limits or higher limit. When an employer pays a premium it is settled with the business. And if someone is paying for their own policy, it will come under section 80D of the Income Tax Act.
How Does Group Health Insurance Protect Employees Financially?
A single hospitalisation or treatment can cost a family several months of income. It helps employees to deal with long term debt. Here is how protection is done:
Savings and assets protection: If an employee doesn't have a cover then they may dip into savings, loans at high interest, sell assets or delay treatment. All of this affects their well being and ability to work.
Cashless facility: At a network hospital, the insurer settles the covered bill directly, so the employee is not asked to arrange a large amount to pay during an emergency.
Family cover: In group health plans families are also covered (spouse, child) and parental cover is also included. This depends on the employer what kind of coverage he wants for employees.
Waiting period: Employees are covered from day 1. No waiting period on pre - existing diseases, maternity and other conditions.
Additional benefit: Add-ons like annual health check-ups, tele-consultation, and mental wellness support turn the policy from an emergency backup into everyday care, which strengthens both health and loyalty across your team.
Count And Profile Your Employees
Make a list of employees and also ask them if they want to cover their dependents or parents.
Choose a Sum Insured
Insurer provides sum insured ranging Rs 1lakh - 5lakh.
Get a Quote
A quote is prepared on the basis of age group, health benefits selected by the employer and group size.
Enrol Employees
Most of the group policies avoid individual medical tests of employees.
Issue Cards And Go Live
When you receive e-cards then you can go for a cashless treatment and your cover start from day one.
Key Takeaways
All employees of a company are covered under one group health policy. Without any medical tests and waiting period.
Group health cover helps SME's to compete with larger size firm because they cannot match salaries but they can provide additional benefits to their employees.
Premiums in group policy are usually lower than individual health policies.
Additional benefits like in-patient hospitalization, maternity, OPD, day-care procedures and cashless treatment at network hospitals.
Premiums paid by the business are generally a deductible expense, a 20-employee example at Rs 5,000 each and 25% tax gives a net cost of Rs 75,000.
When an employee leaves an organisation their cover also ends on the exact same date.
Frequently asked questions
There is no legal requirement for every SME to provide health coverage to employees. They offer it voluntarily to stay competitive and support employees.
Many group plans are available for small teams. The exact minimum number of group sizes depends on the insurer and their product. So, always check the eligibility terms whenever you are asking for a quote.
Yes. Dependents are also covered in group health insurance. But this increases your premium and the employer decides whether the cost is shared with the employee.
When an employee leaves an organization their group policy also ends on the same exact date. Many insurers allow porting from group policy to individual policy.
There are many group policies that cover from day one and pre-existing diseases are covered without any waiting period.
About the authors
Neviya Laishram
Written by · Senior Editor – Health, Life and Group Health Insurance Content at ACKOWith a journalism background, she brings 9 years of experience in strategising and editing health, life, and group health insurance content. Having written for magazines and digital publications, she combines research and editorial expertise to create credible, useful content for readers.
Nitesh Kapur
Reviewed by · Senior Director – Underwriting & Claims, Group Health Insurance at ACKOWith over 15 years of experience in health insurance underwriting, he has led group health insurance strategy, risk assessment, and policy design. He has held leadership roles at leading insurers, building risk frameworks, evaluating complex health risks, and strengthening underwriting standards.
