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How Many Employees Do You Need to Get Group Health Insurance?

Team AckoOct 25, 2022

You need not be the owner of a multinational company to offer Group Health Insurance to your employees. You can do so even if you are the owner of a small or medium-sized firm. If you are wondering whether you can offer health insurance benefits to your employees or not, then this article will help you figure things out. Read ahead to know minimum employee requirements and related concerns about Group Health Insurance offered by employers to employees.

How Many Employees Needed For Group Health Insurance



What Are the Minimum Requirements for Group Health Insurance for Employees?

As per a 2016 update, the minimum number of employees required for a Group Health Insurance was 20. This requirement could be reached by involving the employee’s family members in the insurance cover. However, in 2021, Group Health Policy can be purchased for employees of a smaller firm also. 

For example, ACKO can offer such a cover for a small organization of around 10 employees as per the terms and conditions. Thus, if you want to know how many employees you need to buy Group Health Insurance, it is best to discuss it with the insurance company along with details concerning the cover and the premium. 

Do not confuse such plans for Micro Insurance or Employees Compensation Policy (Workmen’s Compensation Policy). These are different from Group Health Schemes and as a result, their minimum requirements are different. For example, Group Micro Insurance plans are available for a five-member group as well.

Key Parameters About Employee Health Insurance

Here are some crucial parameters to be considered concerning Employee Health Insurance. 

1) Nature of Employees: Number, Types, Definition

If you are an employer looking to insure your employees, you need to be aware of the nature of employees (full-time, on-contract, etc.) that can be covered under the plan. Usually, the plan can have restrictions concerning part-time employees and third-party payroll employees.

The age of the employees to be insured can also play a factor in determining the coverage and the premium. While choosing an insurer and an insurance policy, make sure to have a transparent discussion on these points. Clear all doubts and then proceed to purchase the plan.

2) What Happens In Case of a Smaller Group After Policy Issuance?

There can arise a situation where the strength of employees might reduce over time. For example, a company might have to layoff employees due to recession or a pandemic. The point to note here is that the basic employee requirements are set during policy issuance. Thereafter, the policy is renewed on an annual basis. Changes in the number of employees and the coverage can be discussed with the insurer at the time of policy renewal. These changes can affect the payable insurance premium as well.

Consider this example. An employer insured his 50 employees under the Group Health Insurance Plan. At the time of policy renewal, the number of employees had reduced to 30 from 50. Here, the policy will be issued to cover those 30 employees and the overall payable premium will reduce as compared to the previous year.

3) What are the Advantages of a Large Group?

When the risk is shared among a large pool of people, the payable premium is reduced considering a single unit (one policyholder). Thus, if your organization consists of employees in the 100s or 1000s, the average payable premium cost can be lower as compared to insuring 50 employees.

Such negotiations about the number of employees, the extent of the coverage, and inclusion of services can be made with the insurer while buying or renewing a Group Health Insurance Plan.

Usage of Group Health Insurance Policy for Employees

Here are some points that will help you understand the usage and workings of Company Health Insurance for Employees.

  • The employer purchases a Group Insurance Policy for the employees by paying their premium.

  • This Group Insurance Scheme is usually valid for a year after which it needs to be renewed.

  • The Group Health Insurance Plan offers health insurance coverage to the stated employees and their families (if allowed and included in the cover).

  • Under this Employee Health Scheme, the coverages and the terms of the policy are the same for everyone in the group. Individual enhancements can be made by paying extra.

  • The inclusions and exclusions of the Group Mediclaim Policy can vary across insurers as this is not a standardized policy.

  • The advantage of such plans that offer insurance for employees is that they do not have stringent rules (as compared to individual plans) concerning pre-policy medical check-ups, waiting periods, and pre-existing conditions. 

  • The arrangement in the employer-employee insurance is such that the cover expires when the employee is not a part of the company.

Also, Read: What Is Group Health Insurance?

Points To Note:

Here are some important things to keep in mind while choosing an insurance cover for your employees.

  • As the primary reason to opt for such a cover is to insure the employees, the focus should be on prioritizing the coverage (sum insured + services) over the premium cost.

  • Select the sum insured of the plan based on the average risk faced by the employees, the city where your business operates (for the standard of living) and your health insurance budget.

  • The insurer from whom you are contemplating buying the plan must have a long list of reputed hospitals mentioned as Network Hospitals.

  • Choosing a tech-based insurer can go a long way in ensuring a seamless insurance experience.

  • Consider those insurers and plans that allow employees to insure their family members as well. To simplify, such a plan can double up as a group insurance policy for a family if they do not have any other type of insurance.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet; and is subject to changes. Please go through the applicable policy wordings for updated ACKO-centric content and before making any insurance-related decisions.

Frequently Asked Questions:

Listed below are some of the common doubts about Employee Health Insurance.

How many employees are required to avail Employee Health Insurance for a small business like a boutique agency?


It’s best to discuss your requirements with the insurer as different insurance providers might operate on a different basis. Some insurers do offer such a policy for a company with 10 employees as well.

How to enhance the cover for an individual employee?


If an individual employee wants to enhance the coverage, the employer needs to do so via the insurer’s app or by contacting the insurer via the website. In such cases, if the enhancement in the cover is approved, the individual employer will have to pay more premium to avail such a cover.

Is it possible to include in-laws under the Family Cover of an Employee Health Insurance Plan?


Usually, the spouse and the parents can be included in the Family Cover of an Employee Health Insurance Plan, in-laws are not considered. Please check the terms and conditions of the plan concerning this.

Will group insurance be too expensive for the owner of a small company?


Employers have the liberty to choose a cover as per their requirements. If they feel the policy is expensive, they can reduce the sum insured, this will in turn reduce the overall payable premium.

What are the major benefits of opting for Employee Health Insurance if I am an employer?


As an employer, offering a Group Health Insurance plan can result in better goodwill for you. It can position your company as a people-focused organisation. Such backing by the company can enhance employee loyalty as well.

Can family members be included in the group policy?


Yes, certain policies allow you to include your family members in the policy.

Does the number of employees or type of employees matter while availing the policy?


Such details can matter to the insurer. Thus, it is best to discuss the same in detail while buying the policy.

Who is considered as an employee under this policy?


Usually, a full-time employee is considered as an employee under this plan. However, it is suggested to refer to the Policy Wordings or speak with the insurance company for more clarity on this front.

What happens if I buy the plan but the number of employees reduces at the time of the renewal?


The payable premium shall be reassessed if there is a reduction in the number of employees at the time of policy renewal.

Can the number of employees in a Group Health Scheme be less than 20?


They can be, provided you meet the terms and conditions put forward by the insurance company. Some insurers might offer such a plan for smaller firms with less number of employees.

Explore More:

Explore more on Group Health Insurance



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