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What is a Group Health Plan?

18 May 2022, 1:46 PM

A Group Health Insurance provides cover to a group of individuals who are a part of a particular recognised group. In Group Health Insurance Plans, a single policy known as Master policy is issued and the group members are covered under this health insurance policy. By a Group Health Insurance Policy, coverage would also be provided to the family members of the group such as the spouse, dependent parents, and children.

Features of Group Health Insurance Plan

Some of the major features of Group Health Insurance Plans are mentioned below.

  1. The Group Health Insurance plans would provide coverage to those groups which already exist. If any group which is created only to avail of this coverage then it would not be feasible.
  2. The Group Health Insurance Plan is issued for one year. If there is a need to avail the cover even after one year, then it must be renewed every year.
  3. There has to be a minimum number of members in a group to be covered by a Group Health Insurance Plan. Usually, most of the Group Health Insurance Plans would need a minimum membership of 20-25 individuals.
  4. The claim made by any one member of the Group covered under this health insurance plan does not affect the coverage of other members.
  5. In this health insurance policy, the coverage is provided up to a specific limit. Insurance providers do not allow very high levels of coverage as they are not underwriting the health risk of each member present in the group and covered under the plan.
  6. Cashless health insurance claims are feasible if the insured group members would avail the treatment at a hospital which lies in the network of the insurance provider.
  7. Premium in a Group Medical Insurance is affected by different factors such as type of the group, size of the group, the average age of the members who are covered, the sum assured, etc.

Which Groups are Eligible to Purchase the Group Health Insurance Plan?

Some of the groups which are eligible to purchase Group Health Insurance Policy are

  1. Any Employee-Employer group in which the coverage for employees is purchased by the employer.
  2. Clubs where insurance is being purchased for the members of the club.
  3. Trade unions where the coverage is purchased by the union for its members.
  4. Banks in which insurance is purchased by the bank for its customers.
  5. Association where members are insured by the Association through a Group Health Insurance Plan.

How does a Group Health Insurance Plan work?

The simple process by which Group Health Insurance Plan works can be summarised as below.

  1. A group would be approaching an insurance provider with the proposal of purchasing a Group Health Insurance Plan from it.
  2. The insurance provider would underwrite the medical risk involved in the group and would accept the proposal.
  3. The sum insured would be agreed upon and the premium to be paid would be finalised.
  4. If the premium to be paid is fine and the group agrees to it then it would purchase the policy by paying the premium.
  5. The Group Health Insurance Policy would continue for one year once it is issued.
  6. If any member of the insured group would have any claims, he would inform that to the insurance provider.
  7. The claim would be verified by the insurance provider and then settled.
  8. For the claimant member, the sum insured is the amount remaining after the health insurance claim settlement and the cover would continue till the remaining sum insured.
  9. Coverage for other members would remain intact and continue until the policy tenure ends.
  10. At the end of the policy tenure, the group can propose for a renewal.
  11. During renewal, there would be underwriting of policy again based on last years’ experience of the claim.

Common Inclusions and Exclusions in the Group Health Insurance Plan

The common expenses which are included in Group Health Insurance Plans are

  1. Room rent
  2. ICU Room rent
  3. Ambulance cost
  4. Organ donor costs
  5. Daycare treatment procedures
  6. Pré-hospitalisation and post-hospitalisation expenses
  7. Expenses incurred in Domiciliary treatment

The major exclusions of the Group Health Insurance Plans are

  1. Cosmetic treatments
  2. Mental disorders
  3. Congenital illnesses
  4. HIV/AIDS

Individual Health Insurance versus Group Health Insurance Plan

Some of the major points of difference between Individual Health Insurance and Group Health Insurance are mentioned below.

DifferenceIndividual health insuranceGroup health insurance
Who are coveredThe proposer, spouse, children, and dependent parentsMembers in a group are covered.  
The Sum InsuredSum insured can be of any level based on the individual’s requirementA limit is there up to which sum insured can be availed in a Group health insurance plan
The PremiumThe premium here is higher than the Group Health Insurance PlansPremiums, in this case, is quite low
Coverage benefitThere are several coverage features in individual health insuranceCoverage benefits are limited
Tenure of coverageLifelong renewableThese health insurance plans would permit coverage until the insured member is the group’s member
Pre-policy medical check-upsThis might be necessary depending on the age of the insured personPre-policy medical checkups are not necessary

Benefits of Group Health Insurance Plan

Some of the major benefits offered by the Group Health Insurance Plans can be listed below.

  1. Default Health Insurance – This insurance cover is provided to all the members present in a group. So, it is highly beneficial for  those who wished to purchase health insurance policy but could not due to the cost of the premium. The premium would be paid by the employer or the organisation which has purchased the Group health insurance policy.
  2. A pre-medical Checkup is not Needed – In the case of Group Health Insurance Plans; there is no need to submit the medical checkup reports to be enrolled in the plan.
  3. Low Premium – The premium in Group Health Insurance Plans is quite low as compared to the Individual health insurance plans. As a result, Group Health Insurance Plans are cost-effective in nature.
  4. Easy Claim Processing – The claim settlement process is quite easy in Group Health Insurance Plans. The legacy of the organisation/union whichever has purchased the policy is taken into consideration and the claims are settled quite faster.
  5. Maternity Cover – Group Health Insurance Plans would offer maternity health insurance benefits to an individual from the first day irrespective of the period of enrolment into the policy.
  6. No Waiting Period – There is no waiting period in Group Health Insurance Plans to avail the benefits of the plan, unlike the individual health insurance plans.

Disadvantages

Some of the common disadvantages of the Group Health Insurance Plans are:-

  1. Limited Coverage – Group Health Insurance Plans would provide very limited coverage to the members.
  2. Policy Discontinuity – Once the member is no longer associated with the organisation/club/trade union which has purchased the health insurance policy, the policy and its benefits would end.
  3. No Customisation – There is a lack of any scope for customisation of the Group Health insurance Plan according to the requirements of the members in the group.

Conclusion

So, Group Health Insurance Plans are the best method to avail insurance coverage at a nominal premium. However, it is advisable to understand the various aspects of the Group Health Insurance Plan before purchasing. Detailed research and comparison are necessary before purchasing the Group Health Insurance Plans. 

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