Why do small businesses need group health insurance?

Small and Medium Businesses (SMBs) have long been one of the pillars of the Indian economy but their work came to a near standstill in the Covid induced lockdowns. As our economy gradually emerges from this downturn, SMBs have to find ways to meet the challenges of our new reality. One of the ways would be to invest in Group Health Insurance for employees.

This might be counter-intuitive because the lockdown has caused a cash-crunch for these businesses. However, the reality is that employees are a lot more cognizant of the high medical expenses that can show up unannounced. And the cash-in-hand component of someone working in the SME sector can rarely provide adequate cover for medical emergencies. As a result, even those businesses that have survived the pandemic will find it hard to retain employees who seek greener pastures to get a sense of security. The only way out is to invest in insurance.

Investing in group health insurance goes a long way in making sure that employees feel safe and looked after within an organisation. Employees and their family members appreciate the health and financial safety provided through insurance coverage, now, more than ever. This motivates them to perform better and creates a sense of loyalty for the company. But employee retention is not the only benefit companies enjoy through this. These advantages are as follows:

  • A cost-effective option due to lower premiums: The advantage of group health insurance is that it’s bought in bulk, making it cheaper than an individual insurance purchase. This is easier and cost-effective for a company than constantly reimbursing individual medical costs.
  • Tax Benefits: Group health insurance is 100% tax-deductible as stated by the Income Tax Department. This means you get complete tax deduction benefits when you pay for your employee’s healthcare since the entire amount that you pay as the premium gets accounted for as a business expense.
  • Availability of easy premium payment options: Depending on the policy of the company, an employer has the freedom to select the premium payment frequency. This can vary from monthly to quarterly to yearly as per the employer’s convenience.

Saving time for HRs

SMBs don’t have large admin teams that can manage bureaucratic overheads. Companies can turn to tech-first insurance brokers who offer services such as a G-Suite or Microsoft Teams integration, or an HRMS integration – that can reduce the overheads on the HRs.

Group health insurance is a cost and time-effective option when compared to individual insurance purchases, even so, founders and HR heads often find themselves confused between choosing to provide a group cover or letting employees choose individual plans and reimbursing for it. To make that choice easier here are some options companies have while looking for a coverage:

  • Group Mediclaim Policy (Group Medical Coverage): This plan is offered to a group of people where the benefits offered are similar to all the members of the group. The policy takes care of the hospitalization expenses and other allied expenses as opted by the employer or the organization for their employees.
  • Group Personal Accidental Insurance: This policy refers to a group health insurance plan that provides financial coverage to employees against – injuries, accidental death, disability. Accidental death is also covered under this policy.
  • Group Term Life Insurance: This is a term insurance policy that provides financial assistance to a company’s employees and family members. Usually, a company takes this to cover the financial loss of its employees and family members in case of death/accidental injury etc.
  • Corona Kavach: In the current scenario, health insurance companies are required to launch this policy to cover the costs of Covid treatment. It provides coverage for COVID-19 treatment for up to 9.5 months against a one-time payment of the sum insured. In the current circumstances, purchasing Covid coverage for employees is a great way to make them feel safe and cared for.
  • Top-ups: These are the updates in the insurance policy which are added as per the demand of specific clients. These are usually adjusted by an extra premium amount. With the help of top-ups, employees can safeguard additional members of their families who aren’t covered through the company’s insurance.

A comprehensive group health insurance is the best way for a company to protect its employees. Especially with the ongoing pandemic, it is important to ensure that your team has all the support required in case of any healthcare emergency.

(The writer is Co-Founder and CEO Nova Benefits)

(The one-stop destination for MSME, ET RISE provides news, views and analysis around GST, Exports, Funding, Policy and small business management.)

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