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Shifting From ESI to Group Health Insurance

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Shifting From ESI to Group Health Insurance

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Health insurance is the perfect safety net against the financial crisis that may accompany sickness, hospitalization, and poor health. Employers can extend such a facility as perks in addition to salaries for maintaining the health and well-being of their employees.

A Change Towards an Employee-Centric Future

Interestingly, until recent times, company health insurance was not compulsory in India. But all that changed following the nationwide lockdown in 2020 in the wake of the COVID-19 pandemic. Since then, the Government has made it compulsory for employers to offer medical insurance to their employeINR This announcement was made by the Insurance Regulatory and Development Authority of India (IRDAI) vide their circular dated 16 April 2020 that mandated medical insurance under the directives of the Ministry of Home Affairs (MHA). As a result, social security schemes, such as the government-operated Employees’ State Insurance Corporation (ESIC) and group health insurance, came back into the spotlight. Read on to know how they differ and why one should consider Group Health Insurance over Employee State Insurance.

ESIC vs. Group Health Insurance: What Are These?

Employees drawing a salary of INR 21,000 per month or less (INR 25,000 per month for Persons with Disabilities) can gain coverage under the Employee State Insurance (ESI) scheme. The policy came into effect through the Employees’ State Insurance Act,1948 (ESI Act) and undergoes changes from time to time. Under the scheme, both the employee and the employer make contributions of 1% and 4% respectively to the Employee State Insurance Corporation (ESIC). The resultant corpus comes in handy when the beneficiary wishes to avail the services, which extends to the employee and their dependent family members for various benefits ranging from sickness, disability, or death. Group Health Insurance is a form of ESI, where the employer purchases insurance for the employees. The major difference between ESI and Group Health Insurance rests in the fact that the policy in the case of the latter can be tailored to suit the employee’s needs and work conditions. The scheme does not have any wage/salary capping, and quite often, it is used to extend insurance services to those making more than INR 21,000 per month.

Why Should One Consider Shifting From ESIC to Group Health Insurance?

The customization capabilities offer one of the greatest advantages of switching from ESI to Group Health Insurance schemes. A few other notable benefits include:

1. Higher Negotiation Power

The nature of health insurance coverage offered to someone working in a hazardous factory would not be the same as someone working a desk job. However, ESI as a social welfare scheme clubs all beneficiaries under the same umbrella. In contrast, Group Health Insurance transfers the negotiation power to the employers and employees, who will be directly benefiting from this service. As a result, they can add or subtract features and facilities to align them with their requirements. Additionally, they can work out the specifics of the sick leaves and nature or intensity of sickness to devise a more employee-friendly scheme.

2. Excellent Coverage

As stated previously, the employees can lobby for higher quality insurance coverage that can extend to even minor sicknesses, OPD services, teleconsultation, and other health-related concerns such as maternity, postpartum care, etc. At the same time, the coverage offered to family members can also be redefined as it no longer comes under the ambit of the definition of “family” or “dependents” as dictated by the ESIC. As a result, employees can settle claims for routine bills for their ENT, dental examination, or newborn care. You can even modify it to cover short hospitalization expenses, such as overnight stays, that include doctor fees, room rent, medicines, ambulance charges, etc. Such facilities may also be made available to those who do not come under the traditional definition of “family,” further extending its scope and value.

3. Free Health Insurance

ESI requires both employers and employees to contribute to the scheme. But with Group Health Insurance, the facility is free to the employees as they do not have to contribute to it. In this case, the onus lies on the employer to pay the premiums and maintain that the policy is up to date. It is an excellent incentive for employees as it will cover their health and that of their family members as well.

4. Preventive Healthcare Benefits

Preventive health checkups and routine pathological lab tests can locate potential health conditions before they aggravate. It can also offer insights into the dietary and lifestyle changes that an employee can make to mitigate its effects. By incorporating preventive healthcare and incentivizing wellness, insurers will no longer deem the insurance as a liability. As a result, they may extend additional benefits like ‘zero wait time’ for those attending these routine checkups. Plus, this consideration can be a savior for those struggling with chronic diseases and conditions like diabetes, cancer, hypertension, COPD, etc., that require them to monitor their health routinely.

5. Wider Network

While ESIC does enjoy a network of Government-backed hospitals, Group Health Insurance casts a wider net and includes private parties, such as commercial insurers and hospitals as well. Additionally, these registered hospitals offer cashless services, virtually making healthcare services accessible to everyone and anywhere. However, even if such a facility is not available, insurers can settle claims through reimbursements.

Qualification Parameters for Group Health Insurance

The following is the eligibility criteria for applying for a Group Health Insurance Plan:

Who Can Apply?

A “group” can apply for benefits under Group Health Insurance. The IRDAI defines a group in two primary forms: Employer-employee Non-employer-employee In the case of the latter, the group has to define a common interest that binds them together, which could be financial, cultural, social, professional, etc. Based on this, individuals belonging to welfare associations, recognized societies, banks and borrowers/lenders, and customers of certain financial institutions, come under the purview of a group and can benefit from Group Health Insurance.

What is the Minimum Number of Beneficiaries?

Typically, the minimum number of beneficiaries is 20. However, this number changes from one insurance provider to another. So, check with your insurer while identifying this number. Do bear in mind that the minimum number of beneficiaries also includes the number of family members covered under the scheme. As such, even if the number is large and your group is small, you can still reach the minimum number and avail the benefits.

Are Sole Entrepreneurs Eligible for Group Health Insurance?

Solopreneurs are not eligible for Group Health Insurance and have to opt for individual health insurance.

Are Family Businesses Covered Under Group Health Insurance?

In the case of family businesses, the spouse is not covered under Group Health Insurance. However, if the family business has other employees who are non-members of the family, then Group Health Insurance is available for the spouse as well.

Why is Not Eligible for Group Health Insurance?

Individuals who form a group to avail of lower insurance premiums and cannot justify the “common interest” are not eligible for Group Health Insurance.

Concluding Thoughts

A Group Health Insurance can be an excellent way to instill trust between employers and employees. For employees, it offers a sense of security and safety. As for employers, it grants improved employee retention and loyalty. Speak to your insurance provider for more details on Group Health Insurance and how you can get the best for everyone.

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