Is Medical Insurance Mandatory For Employees In India?

Answers to key questions

Covid-19 pandemic drastically changed lives all over the world. India went into its first lockdown in March 2020, owing to which fundamental things, such as the way people shop, work, learn, move, and interact underwent a transformation.

People had to reflect and re-evaluate old habits and perceptions. The journey ahead was unclear. However, after two years of the pandemic, one of the most immediate and apparent lessons we learned is that health is important. 

Health Insurance for Employees in India

The world has slowly started prioritizing health after global and national health agencies continually stressed the need to keep the immune system strong to get through these times. People are eating clean, exercising, drinking sufficient water, and increasing their hygiene to remain healthy and strong. 

Another indispensable tool in this fight is health insurance. In April 2020, the Indian government made it mandatory for all employers to provide mediclaim policy for employees in India.

Most of the employees in India did not offer medical benefits to employees before Covid-19.

Following the events of 2020, new regulations were put in place by the government. These regulations also focussed on employees, who do not work in metros or large companies.  

Today, most of the companies in India offer group health insurance plans to employees. 

Benefits of providing health insurance to employees and employees.
 

• It’s a good retention tool as employees know employers take care of their needs.
• It boosts employee morale and productivity.
• Employers offering health insurance to their employees can receive tax benefits under several sections of the Income Tax Department.
• It’s a more affordable option compared to retail health insurance.
• Group health insurance can also provide coverage to spouses, children, and family members.
• It covers pre-existing diseases and illnesses and offers maternity cover from day one which is unavailable with retail policies.

Benefits of offering group health insurance for employees:
 

• Employee group health insurance has lower premiums than individual or family health insurance because the total amount is shared with other employees.
• Group health insurance plans include insurance for family members and friends.
• It offers a hassle-free claim settlement process for employees.
• Employee medical insurance policies also cover maternity benefits as well OPD (out-patient- department) benefits for preventive care of the employees.
• Group health insurance allows you to file a claim for pre-existing diseases. So, there are no waiting periods for covering pre-existing conditions in group medical insurance.

Are All Employers Required to Offer Health Insurance?

Yes. As a part of the Consolidated Revised Guidelines for resuming workplace operations by the Ministry of Home Affairs, on 15th April, 2020, the Insurance Regulatory and Development Authority of India (IRDAI) released an order (No. 40-3/2020-DM-I (A)) that states that all commercial and industrial establishments, offices, workplaces, etc. shall follow a Standard Operating Procedure (SOP).

The SOP includes social distancing for offices, workplaces, factories, and establishments, medical insurance for workers to be compulsory.

In the circular, the regulator recommends insurers offer comprehensive health insurance policies to individuals or groups. The regulator has also encouraged insurance companies to create comprehensive health insurance products with simple wordings at an affordable cost for the organizations.

This way, organizations can comply with the directives in place. It also stated that organizations should be able to continue the medical insurance policies given by insurance companies not just for the time being, but for the rest of their lives.

Those employees who are below the wage limit of Rs.21,000 can get coverage under Employee State Insurance (ESI) and those above can seek cover under Group Medical Cover (GMC). 

Finding the Right Balance Between Affordability and Rewards

As organizations get busy researching online about the best-priced plans for their employees, it is equally important to note that the additional health benefits play a crucial role in deciding the best plans for the employees. Generally, a group health insurance policy covers the hospital bills for the employees and their families (up to a certain limit of family members).

When it comes to benefits, there are different types, such as sickness, maternity, disablement. OPD is also one of the popular medical benefits for employees in India. It covers physician, clinic visits, lab testing, or doctor’s visit to home (virtually or physically).

The government has ordered employers to offer comprehensive health insurance plans for their employees. The plan has to be affordable with uncomplicated terms and conditions. The decision is expected to benefit both small and large-scale organizations.

As the HRs scan for the best group health insurance quotes out there in the market, they would require balancing factors like rewarding benefits, better coverage, customizable and economic plans.

This is, indeed, a very well-welcomed decision by the employees since a healthy employee is a happy employee, as well as by the employers as they get to engage with their employees and increase their organization retention rate by using health care benefits for employees as a motivation tool.

As an employer, you can either take out an employee group health insurance for employees or assist your employees with buying a retail policy by tying up with an insurance company.

FAQs

1. What is the minimum number of employees required for group health insurance?
A company with 7 employees can be covered by group medical insurance. Read this blog to know more about employer group health insurance requirements

2. When did group health insurance for employees become a legal requirement in India?
The Indian government makes it necessary for all firms to provide medical insurance to their employees in April 2020.

3. What is the best time to purchase group health insurance for my employees?
When it comes to health insurance, the Corona pandemic taught us all a good lesson about being proactive rather than reactive. Because having health insurance is the most effective weapon against foes like Coronavirus. So you should buy group health insurance as early as possible.

4. What is the cost of group health insurance in India?
A variety of factors influence the cost of group health insurance.

Advaitaa Ravi is a Freelance Writer at Loop Health. Visit Loop Health   Connect Advaitaa Ravi