How Can An Employer Reduce The Premium Rates For Group Health Insurance?
Health insurances or Mediclaim plans require a premium charge every year. It is the overall renewal charge for the insurance. If the policyholder fails to pay the money in due time, the policy gets canceled. Many are aware, unlike the personal healthcare insurance programs, group Mediclaim policies have a lower premium rate. But in both cases, there are ways to reduce the premium charges to manage the budget limitations. However, the topic in discussion for this article is group healthcare policy. So, if you are an employer, reading this piece of writing is a must!
Essential for the employers
Employers in India have to offer a healthcare plan to their employees. It has become mandatory, since the circular released by IRDAI in April 2020. Post-lockdown due to covid-19, every employer and business owner has to provide the basic Mediclaim benefits to the employees (and the dependent family members). The employer has to purchase the insurance and pay for the annual renewal charges without any delay to continue the plan benefits. As the responsibility is entirely on the employer, they should consider the pricing carefully. Without proper evaluation, they cannot determine, if the price they are paying is at par with the offerings.
Things to note for managing the expenditure
As an employer, you have to limit your expenditure to ensure that the group healthcare plan does not become a financial burden. You can figure out effective ways to manage the expense and the needs of the employers. Especially for small-scale businesses and startups, having a balanced budget is essential. Following are some of the best ways to reduce the premium charges without compromising on the offerings. This way, your employees will get stable financial support during medical emergencies and, you will also be able to manage the needs without spending too much.
- Go for a regular plan with basic insurance features.
A corporate healthcare plan need not be tailor-made. As per the circular by IRDAI, there were no specified amount or plan features mentioned. It means the employer can select a policy they want that covers the basic requirements of the employees working in their office. So, the best way to reduce financial liability is to find a regular healthcare plan. The Mediclaim should provide coverage through cashless and reimbursement, all-over the leading hospitals in the country.
- What is the right amount? – Most employers in India, having a small to mid-size enterprise, provide insurance within a range of Rs.1lac to Rs.3lac. You can go for a higher insurance sum if you can afford it. But, considering the usual standards, you can settle with the average insurance amount. For example, if you purchase a policy worth Rs.1lac coverage, the premium would not be more than two thousand(unless the employee belongs to the upper age band). The exact amount cannot be defined, as the different insurance companies have different premium rates. But you can always tally the amounts to check the right price to negotiate.
- Do not provide a comprehensive insurance plan.
As you may know, group healthcare plans can be of two types. One is where the employer only includes the employee as the policyholder. The other category is the comprehensive insurance program. Here, the dependent family members of the employee also get included in the list. The decision lies upon the employer to include or exclude the family members into the policy.
A good way to cut the premium charge is by not offering a comprehensive plan. But you have to decide carefully. If your competitor organizations in the market offer comprehensive plans, you should also follow the suit. But if they offer the regular group healthcare programs, you can pick as per your wish.
However, if you have to provide a comprehensive healthcare program but want to reduce the premium rates, exclude the senior citizen members. Only include the spouse and children of the employee into the policyholder list. Premium charges for policy renewal for senior citizens (dependent parents of the employee) are more than the rest. So, this way, you can manage both the requirements and yet make it lighter on the budget.
- Hire young employees in the organization.
Anyone can notice a common feature across all healthcare plans, which is the impact policyholder’s age on the premium rate. If the policyholder is aged more than thirty-five or in some cases, more than forty-five, the overall insurance premium will increase. Why? People belonging to the higher age band are prone to acquire more ailments and thus may claim insurance coverage. The insurance companies use it wisely to calculate the renewal cost.
As an employer, you can reduce the premium expense by hiring the employees wisely. You must have noticed that many employers post recruitment notes mentioning the upper age band of the candidates. One good reason to do this is for managing the expenses incurred due to group healthcare policies. If your team has an average age between twenty-five to thirty-five, you can enjoy a reduced insurance premium charge.
- Go for flexible payment options.
There are ample healthcare plans for employees. All the leading insurance companies offer group healthcare plans to ease the needs of the employers. With the diverse healthcare plans in the market, there are also flexible payment options. You can choose a monthly or yearly payout for the insurance renewal. Some insurance companies also offer discounts on early premium payment which you can avail of by paying early.
Otherwise, you can check whether your employees are willing to share a portion of their salary to enjoy this Mediclaim. However, the shared payment is only suitable for the employees if they are enjoying add-on plan features. For add-on features in a plan, the employer can pay the basic renewal charges while the employees can meet the extra expense. It is better to consult with the employees before taking such a decision.
- Check for a no-claim bonus.
Most of the leading insurance companies in India offer a no-claim bonus in group healthcare plans. While purchasing the group healthcare policies, it is better for the employers to pick such a group Mediclaim that offers this feature. But how does it reduce the expense? Think practically. If your workforce comprises young members (mostly between the age band of twenty-five to thirty-five), the chances of them falling ill due to critical ailments are less. So, the chances of claiming the insurance are also less. You can get lucrative discounts on the overall premium charges for a no-claim bonus at the year-end. Use it wisely to reduce the premium charges for group healthcare plans.
- Go for a co-payment mode.
For newly established startups and growing businesses, the premium charges can be heavy during the initial years. For such budget limitations, there is a co-payment option that might be your one-stop solution in managing the premium expenses. Co-payment in group healthcare policies allows the employer (purchaser) to share the premium expense with the insurer. The insurer is the insurance company from where you have bought the salary. There are three ways to use co-payment –
- Co-payment fee
- Co-payment percentage
- Annual deduction
The policies with co-payment features have a low premium charge, which helps in eliminating budget worries. The usual percentage of co-payment approved by the leading insurance companies ranges between 5% to 20%, depending on the policyholder’s age.
- Check what the employees need.
What is the sole purpose of providing group healthcare insurance to your employees? It is to ensure financial security in times of medical emergencies. Most employees these days own personal healthcare insurance, even if their company offers a group healthcare policy. Thus, you can always ask your team if they need insurance support from your end. If the majority of the employees already have ongoing healthcare insurance, you can settle for a basic Mediclaim plan with low premium charges. If needed, the employees can use your insurance. But, their first choice would be the personal Mediclaim policy with extensive plan coverage to avail of better insurance support. Hence, consulting with your employees may help you find an effective way to reduce the insurance premium.
- Utilize the tax exemption.
The tax release may not be a direct way to reduce the premium amount, but it indirectly helps in eliminating the cost overload. You can earn tax deductions in your annual income tax amount by showing relevant proof of premium payment to continue the group healthcare plans for the employees. So, it is indeed an effective way to reduce the insurance premium charge.
- Port the plan if needed.
If you think the group healthcare policy is more, you can always switch the plans. Find an insurance company that offers similar coverage features at a lower premium rate. IRDAI allows group health insurance port without losing out the earned insurance seniority or credits. Hence, switching the policy into a better and economical healthcare plan eases your financial load.
- Seek expert guidance to find the best plan.
The right way to find out the best group healthcare insurance without paying an expensive premium charge is to go for an insurance broker. The brokers help you figure out the best plan features within the tightest budget and thus reduce the overall expense.
Consider PlanCover for suiting the budget.
Any small to mid-sized organization can approach PlanCover, the leading insurance broker in India, to get the best deal on group healthcare plans. With PlanCover, you can find group policies within the budget from the IRDAI-approved insurance companies in India. Connect to the proficient team and find better ways to reduce the insurance premium without losing out on the plan features.