A group health insurance indemnifies the health care needs of a group of individuals. These individuals are part of a recognized group such as associations, trade unions, business groups, employer-employee etc. Generally an employer or an association chooses such plans for their employees or members.
Classification of Group Insurance Policies
There are different types of group insurance policies available in India ranging from health insurance to travel insurance but the group insurance policies are classified as non-contributory and contributory.
Under a non-contributory group insurance policy, the employees or members do not pay any premium to avail the benefits of the policy. Employer or the association bears the cost of the entire premium.
Under contributory group insurance policy, the employees or the members of the association have to bear the cost of the premium. It can be either partial or the entire cost of the premium. For instance -the employer may be providing the benefit of the base plan. For other add-on services selected by the employee, the employee is required to pay the charges. However, it may vary in different groups.
Who is covered under a group insurance plan
An individual who is working as a full time employee in a company or an organization is liable for group insurance coverage, provided the company or the organization should be offering health insurance plans to its employees.
Non contributory Group Insurance Plan
Non contributory Insurance — a plan of insurance for which the employer pays the entire premium and the employee does not contribute to premium payment.
What is the percentage of contribution of an employer under a Non contributory group insurance plan?
Under non-contributory group insurance, 100 percent contribution is made by the employer.
Company A and Company B, both of them decide to buy group health insurance plans for their employees. Company A bought a plan where the employer bears the cost of the premium for the basic plan. But it gave the option to its employees that if they want any other medical benefit, they can bear the cost for the additional premium. Whereas Company B has decided to buy a plan which provides basic health coverage to its employees, and the employees do not have to pay the cost of any premium. It is additionally not providing its employees with the option of choosing an additional facility. They are provided with a basic plan and will have to stick to it.,kjjk,bn
Thus Company A bought contributory group insurance plans, while Company B plans on buying non-contributory group insurance plans.
Advantages of Non contributory group insurance plans:
- Since, 100 percent contribution is made by the employer, nothing is deducted from the employee’s paycheck.
- Employees get to enjoy the coverage without paying a penny.
- Under a non-contributory group insurance plan, all employees get to enjoy the same coverage at no additional cost.
- From the perspective of a business owner, the cost of time, paperwork and maintenance in non-contributory group insurance plans is much lower than those plans that involve regular tracking of various employees’ contributions.
Disadvantages of Non contributory group insurance plans:
- One of the prime and most important drawbacks of non contributory group insurance plans is that it provides limited coverage to its employees.
- Without the involvement of employees, the premium amount would be very less, which would result in limited medical benefits.
- Smaller premium describes less comprehensive coverage provided to the employee.
- Incase of inclusion of disability payments, the employee will have to pay an extra amount of income tax on those payments.
- Premium paid by the employers may be taxed to the employee and it is being paid on their behalf.
To conclude, there are different types of group insurance plans available in the market. However, it is better to opt for a health insurance plan that provides maximum coverage to the employee and their families. When an organization enrolls itself in a group insurance policy, it agrees on the premium based on its monetary capabilities. Thus, low premiums results in low coverage.
With a non-contributory group insurance plan, an employee may be extended with basic or limited medical benefits. Hence, an organization should not limit its group policy to non-contributory plans and should extend the contributory plans to employees as well. The ones who can afford to pay for add-on benefits should be given the liberty of extra medical benefits.
A note for the employers
Employers in search of a reliable group healthcare plan connect to PlanCover. PlanCover is a well-known insurance-broker company that offers the leading policies from IRDAI-approved companies in India. You can connect to their team even if the employee strength is low. Find the best group healthcare policy that suits the needs of a CA professional with dedicated support from PlanCover.