What it is
A group insurance policy is one that a group you belong to takes for its members. According to the insurance regulator IRDAI’s policyholder portal, it offers standardised coverage and very competitive premium rates. The group can be an employer-employee group, which is the case with employer health cover, or a non-employer group such as holders of the same credit card or members of an association.
Only one master policy is issued, to the manager of the group (your employer, in this case), and it is in the name of the group. You are a member under that policy rather than its owner.
Health insurance in general is a contract in which the insurer agrees to provide specified cover at a set premium (the price of the cover). The commonest form in India covers hospitalisation costs, according to IRDAI.
How it works
Cover and payment
Health policies either pay the hospital directly (cashless facility), reimburse your expenses, or pay a fixed benefit when an illness occurs. Under cashless, treatment at a network hospital is paid for by a Third Party Administrator (TPA, the firm that handles claims) on the insurer’s behalf. Expenses beyond the policy limits or sub-limits, or not covered at all, you must settle with the hospital yourself. Cashless is not available at hospitals outside the network.
Limits to look for
- Sum insured: this is the maximum the policy pays. After a claim is settled, the cover available is reduced by the amount paid. IRDAI’s example: a ₹5 lakh cover and a ₹2 lakh claim leaves ₹3 lakh for the rest of the year.
- Family floater: one sum insured shared by the whole family, usable by any member in any proportion, up to the overall limit. Check whether your employer’s policy is individual or floater.
- Waiting periods: a new policy generally has a 30-day waiting period from the start date, except for accident emergencies. It does not apply on renewal.
- Pre-existing conditions: these are generally excluded, and can be considered after 48 months of continuous cover, according to IRDAI.
- Exclusions: items such as spectacles, hearing aids, and pregnancy-related treatment are generally not covered. Read your own policy to see what applies.
Policies are usually for one year. An employer group cover is normally tied to the employer’s own policy term, so check the dates with your HR team.
What it means for you
Your group certificate and policy terms are the documents to read. For non-employer groups, IRDAI says you are entitled to a certificate of insurance showing the schedule of benefits, the premium charged and the terms and conditions. The group manager should also disclose the premium rate, any group discounts and pass them on to members, and disclose any administrative charges collected over and above the insurer’s premium.
If you leave the job
IRDAI states that your cover could cease when you leave the group. When you leave, the insurer should offer you continued coverage under an individual policy. Ask about this before your last day, and in writing, so there is no gap in cover.
If you move to a new insurer, IRDAI says a circular effective 1 October 2011 requires insurers to allow portability, so you do not lose renewal credits for pre-existing conditions. The credit is limited to the sum insured, including bonus, under the previous policy. Check the details with the insurer, as the portal’s own advice states.
Tax
IRDAI’s page describes deductions under Section 80D of the Income Tax Act for health insurance premiums paid by modes other than cash. The figures it quotes are ₹15,000 for self, spouse and dependent children (₹20,000 for senior citizens) and an additional ₹15,000 for parents (₹20,000 if they are senior citizens). These amounts come from an older description of the rule, so check current limits and whether they apply under your tax regime before relying on them. You can estimate your tax with the income tax calculator.
Common mistakes to avoid
- Assuming employer cover continues after you resign.
- Not checking the sum insured, sub-limits and whether family members are included.
- Missing the grace period on a policy that needs renewal. IRDAI says renewal is possible if the premium is paid within 15 days of expiry, but there is no cover for the gap period and the policy lapses if the grace period is missed.
- Not reading the exclusions list. Read the basics on health insurance before comparing plans.
When comparing an individual policy with your group cover, look at the sum insured, waiting periods, pre-existing disease terms, network hospitals and premium. This article does not recommend any insurer or plan.
