Group health insurance offers several benefits for employers and employees, including affordable healthcare coverage, cashless treatment, coverage for pre-existing diseases, and tax benefits. However, it also has certain limitations, such as limited customisation and the loss of benefits when you change jobs.
Key benefits of group health insurance at a glance
| For Employers | For Employees |
|---|---|
| Helps attract skilled talent | Covers eligible family members under the same policy |
| Improves employee retention | Access to cashless treatment at network hospitals |
| Supports employee well-being and productivity | Covers pre- and post-hospitalisation expenses |
| Offers potential tax benefits | May cover maternity-related expenses |
| Builds trust and strengthens employer brand | No medical check-ups required during enrolment |
| Demonstrates commitment to employee welfare | Coverage for pre-existing diseases, as per policy terms |
What are the top advantages of group health insurance for employers?
The following are some of the key benefits of group health insurance for employers.
1. Helps attract top talent
A comprehensive group health insurance plan can make an organisation more attractive to job seekers. Health benefits are often considered an important part of an employee compensation package and may help employers attract skilled professionals.
2. Improves employee retention
After an employee joins a company, access to group health insurance can improve their overall job satisfaction and encourage long-term association with the organisation. It can foster a sense of care and security among employees, thereby strengthening trust in the employer and supporting employee retention.
3. Helps improve employee well-being and productivity
Medical expenses can affect an employee's well-being and work performance. Group health insurance helps reduce this burden by providing financial protection during medical emergencies. As a result, employees can focus better at work, reduce absenteeism, and improve productivity.
4. Helps save taxes
Several provisions of the Income Tax Act allow employers to claim tax deductions on premiums paid for employees' group health insurance, subject to applicable tax laws. Since these premiums are generally treated as a business expense, they may help reduce the company's taxable income while supporting employee welfare.
Read our guide on how group health insurance reduces employee attrition.
What are the top advantages of group health insurance for employees?
1. Coverage for eligible family members
Many group health insurance plans allow employees to cover their spouse, children, and sometimes parents under the same policy. This can help reduce the financial burden of purchasing separate health insurance policies for family members.
2. Covers the expenses of pre- and post-hospitalisation
Expenses incurred before hospitalisation, such as diagnostic tests and doctors' fees, may be covered under group health insurance, subject to the policy terms. It may also cover certain expenses incurred after discharge, within the days specified in the policy. This can include expenses for follow-up consultations, tests, medications, and other services.
3. Cashless treatment facilities
One key benefit of group health insurance is cashless hospitalisation. If an insured employee or their family members receive treatment at an insurer's network hospital, they need not pay out of pocket. The eligible amount is settled by the insurer directly with the hospital, subject to the sum insured and policy terms.
4. Covers maternity expenses
Group health insurance may also cover maternity-related expenses, depending on the policy terms. This includes expenses of C-section or normal delivery, medications, newborn care, and hospitalisation related to childbirth.
5. No medical check-ups during enrolment
Employees are generally not required to undergo medical examinations when joining a group health insurance plan. This makes it easier to obtain coverage, especially for individuals with existing health conditions.
6. Pre-existing diseases coverage
Group health insurance may cover pre-existing diseases for insured employees. Some plans also offer day-1 coverage for certain conditions, reducing the waiting period before eligible claims can be made.
7. Preventive healthcare and extra benefits
Preventive healthcare measures help prevent illnesses or reduce their intensity. Insurers incentivise preventive healthcare initiatives to help you maintain a healthy lifestyle.
What are the disadvantages of group health insurance for employees?
1. Fear of discontinuation
In a situation where you are laid off by your employer, or you choose to leave the company, you will no longer be covered by the group health policy. In simple terms, you will be covered by the policy until you are part of the group, which, in this case, is until you are an employee of the company.
2. Employer-dependent cover
Your employer chooses the insurer, policy features, and benefits. As a result, the plan may not always match your individual healthcare needs, since it is designed for the entire workforce rather than each employee.
3. Lack of control
The health coverage is controlled by the employer. If you want a higher sum insured, additional benefits, or broader protection, you may have to pay an extra premium or purchase a separate health insurance policy.
4. Inadequate coverage
The sum insured offered under a corporate health insurance plan may not be sufficient, especially in metro cities where medical treatment costs are significantly higher. Employees may need an individual health insurance policy to bridge the gap.
5. No tax benefit
As you are not paying the premium to purchase the health policy, you cannot avail of tax benefits under Section 80D of the Income Tax Act. However, you can avail them if you enhance the cover and pay for the additional coverage.
6. Claim settlement experience may vary
The claim settlement experience depends largely on the insurer. Since the employer selects the group health insurance provider, employees have little control over the insurer or the policy features. If the insurer has a slow or complicated claims process, it can affect the overall experience during a medical emergency. Choosing a policy with an insurer known for a quick claim settlement process can help minimise such challenges.
7. Limited long-term financial planning
Since group health insurance depends on your employment and the employer can change or discontinue the policy, it should not be your only health insurance. Having an individual health insurance policy provides more stable and predictable long-term coverage.
Key takeaways
While group health insurance provides valuable financial protection, it should ideally complement rather than replace an individual health insurance policy. Having your own policy ensures continuous coverage, even if you change jobs, and allows you to choose coverage that suits your healthcare needs.
Frequently asked questions
Group health insurance provides medical coverage for the employees, boosting retention. Moreover, employers can also avail themselves of tax benefits from group health insurance.
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.
