How Much Does Group Health Insurance Cost Employer Per Person?

Group Health Insurance in India

According to WHO, approximately 55 million Indians are pushed into poverty annually due to out-of-pocket healthcare expenses. 17% of Indian households face catastrophic healthcare costs, often struggling to recover. Moreover, about 40% of Indians are not covered under government schemes and lack the financial stability to invest in retail health insurance. It is evident that health insurance is no longer a luxury but a necessity. Corporations across the country recognize the need for health insurance across various socio-economic strata.

A recent report titled 'The State of Employee Benefits 2024' revealed that group health insurance significantly contributes to India's health insurance landscape. Here are some statistics to support this:

• 1 crore Indians availed retail health insurance plans in the past 3 years.
• In comparison, 10 crore Indians were added to group health insurance during the same tenure.

Companies are pushing an employee-centric work environment and focusing on employee retention. Understanding the cost of group health insurance per employee is crucial for designing competitive job offers. This article explains how companies calculate these costs to provide efficient medical support.

Key Takeaways

• About 40% of Indians are not covered under government schemes.
• 1 crore Indians availed retail health insurance plans in the past 3 years, while 10 crore were added to group health insurance during the same tenure.
• Factors like adequate coverage and company size contribute to the cost of group health insurance.

IRDAI Mandate: Group Health Insurance is Non-Negotiable

COVID-19 prompted the Government of India to mandate employers provide group health insurance to their employees. IRDAI further provided guidelines ensuring every employee is protected against medical emergencies and covered for expenses such as OPD care, diagnostics, and more.

This move benefits employers by helping them retain employees and offering tax rebates under Section 17 of the Income Tax Act.

Factors Affecting Group Health Insurance Cost Per Employee

The following factors are important in calculating group health insurance costs and directly affect the cost per employee:

• Adequate Coverage: Most small to mid-size organizations in India offer a minimum sum insured of INR 1 to 3 lakhs, which is often considered insufficient. However, recent statistics show a 66% increase in the median sum insured.
• Employee Strength and Company Size: According to 'The State of Employee Benefits 2024', some top companies in India spend just 2% of their salary budgets on employee healthcare and benefits.
• Cost Sharing Under Group Health Plans: Limitations such as co-payments, deductibles, and sub-limits under a group health insurance plan contribute to the costs borne by the employer.
• Family Coverage Option: The kind of coverage employers wish to provide to their employees varies. Some group health plans cover ESCP (Employee, Spouse, Child, Parent) policies, while others may offer ESC (Employee, Spouse, Child) or ESC+P (Employee, Spouse, Child + Voluntary Parent) policies.
• Add-on Coverage Options: Providing coverage against critical illnesses, accidental injuries, hospitalizations, and other such add-ons can increase or decrease the overall costs for group health insurance plans per employee.

Average Cost of Employer-Provided Group Health Insurance Per Employee in India

Multiple factors govern the cost of group health insurance plans per employee, such as:

• Sum insured amount
• Coverage benefits
• OPD care
• Add-ons
• Coverage for pre-existing diseases
• Family cover size, and more

The average group health insurance cost ranges between INR 10,000 to 25,000. While younger employees may avail of cheaper group health plans, older employees with pre-existing ailments might incur higher premiums.

Conclusion

Group health insurance is essential for the overall well-being of employees, and organizations are increasingly prioritizing it. Employee retention significantly increases when employers take care of their employees and their families. Since purchasing a group health plan affects corporate budgets, accurately calculating the group health insurance cost per employee is crucial.

To inquire about group health insurance for your organization, call PolicyX insurance experts today for personalized suggestions.