Corporate Health Insurance: Types, Advantages And Disadvantages

By Okbima 13 Jun 2024
corporate health insurance

 

Corporate health insurance is a benefit offered by many companies to their employees. One of the main advantages of a corporate insurance policy is that it provides coverage for medical expenses, ensuring employees have access to necessary healthcare services without worrying about the financial burden. Let’s understand its advantages & disadvantages in detail.

 

What Is Corporate Health Insurance?

Corporate health insurance is a type of insurance that provides medical coverage to employees of a company. Corporate health insurance covers hospitalization expenses, surgical procedures, doctor’s consultations, diagnostic tests, and other medical expenses. The coverage and benefits provided by corporate health insurance plans can vary depending on the company and the insurance provider. In many cases, employees may have the option to include their family members in the insurance plan as well.

 

Types Of Corporate Health Insurance Plans

There are two main types of corporate health insurance plans in India which include contributory plans & non-contributory plans.

1. Contributory Plan

In this plan, both the employer and the employee share the premium cost. The employer contributes a certain portion, and the remaining amount is deducted from the employee's salary. This is a common structure, allowing employers to offer health insurance as a benefit while keeping costs manageable. The contribution ratio between employer and employee can vary depending on the company's policy and negotiations.

2. Non-Contributory Plan

In this plan, the employer pays the entire premium cost for the employee's health insurance. The employee does not contribute financially. This is a more attractive benefit for employees as they get health insurance coverage without any out-of-pocket expense. However, non-contributory plans are less common as they cost more for the employer. They may be offered by larger companies or for attracting and retaining talented employees.

 

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Difference Between Corporate Insurance And Individual Health Insurance

Here are the differences between Corporate Insurance & Individual Health Insurance based on coverage, customization, premium payment, cost, etc.

 

Aspect

Corporate Health Insurance

Individual Health Insurance

Policyholder

Employer (company).

Individual or family.

Coverage

Group of employees (and sometimes their dependents).

Individual policyholder (and their family if opted for).

Customization

Customizable based on company requirements.

Customizable based on individual needs.

Premium Payment

Paid by employer.

Paid by the individual.

Cost

Lower per employee due to group rates.

Higher, as premiums are based on individual risk assessment.

Eligibility

All eligible employees are covered as per company policy.

Based on the individual’s health condition, age, and medical history.

Medical Check-up

Generally, no pre-policy medical check-up is required.

Requires a pre-policy medical check-up for older individuals or those with pre-existing conditions.

Renewability

Depends on the employer's decision to renew.

Individual's decision to renew; lifelong renewability options.

Flexibility

Less flexible, as the terms are decided by the employer.

More flexible, allowing individuals to choose plan details.

Sum Insured

Lower sum insured per individual.

Higher sum insured options are available.

Additional Benefits

May include wellness programs, and preventive health check-ups.

Add-ons available like maternity cover, and critical illness cover.

Tax Benefits

Tax benefits to the employer under business expense.

Tax benefits to individuals under Section 80D of the Income Tax Act.

Cashless Network

Network hospitals as per the group policy.

Network hospitals as per the insurance provider’s offerings.

Portability

Non-portable when changing jobs.

Portable under IRDAI guidelines, allowing switching providers.

 

Advantages Of Corporate Health Insurance Plans

Corporate medical insurance plans offer many advantages for both employers and employees in India like affordability, no medical checkup, family coverage, tax benefits, etc.

For Employees

  • Affordability: One of the biggest advantages is the cost. Since it's a group plan, the premiums are much lower than what an individual would pay for a similar plan on their own. In some cases, employers may even cover the entire premium cost.

  • No Medical Checkup: There's no requirement for medical checkups when getting a corporate health plan, making it easier for people with pre-existing diseases to get coverage.

  • Pre-existing Disease Coverage: Some corporate plans even offer coverage for pre-existing conditions, after a specified waiting period.

  • Family Coverage: Many plans extend coverage to the employee's spouse and children, providing security for the whole family.

  • Cashless Hospitalization: Many plans offer cashless hospitalization facilities at network hospitals, eliminating the financial burden during a medical emergency.

  • Preventive Care Benefits: Some plans are going beyond just hospitalization coverage and include benefits for preventive health checkups and wellness programs.

For Employers

  • Attracting and Retaining Talent: Offering a good health insurance plan is a valuable benefit that can help attract and retain top talent in a competitive job market.

  • Increased Employee Morale: Knowing they have health insurance security can improve employee morale and satisfaction which increases their productivity.

  • Tax Benefits: The premiums paid for the corporate health insurance plan are tax-deductible for the employer.

 

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Disadvantages Of Corporate Health Insurance Policy

While corporate health insurance plans in India offer many advantages, there are also some disadvantages to consider like limited control, no family coverage, etc.

For Employees

  • Limited Control: Employees have no choice in the plan options. The employer selects the insurance company, coverage level, and network of hospitals. This may not align with an employee's specific needs.

  • Inadequate Coverage: Some plans may have limitations on coverage amounts, room rent caps in hospitals, or exclusions on certain treatments.

  • No Family Coverage: Not all plans cover the employee's family. This can be a disadvantage for employees with dependents.

  • Job Change Gap: If you leave the company, the health insurance coverage ceases. This can create a gap until you can get new coverage which can cost higher premium due to pre-existing conditions.

  • Tax Implications: Unlike individual plans, there is no tax benefit for employees on the premiums paid by the employer.

For Employers

  • Cost: While there are tax benefits, employers still pay some or all of the premium cost, which can be a significant expense.

  • Renewal Hassles: Negotiating renewals with insurance companies and managing plan changes can be time-consuming for HR departments.

 

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Conclusion

In conclusion, corporate health insurance plans in India offer many benefits for both employers and employees, including affordable coverage, tax benefits, and cashless hospitalization. However, there are some disadvantages such as limited control and coverage. For any assistance, contact “Our Experts”.

FAQs

Yes, many corporate health insurance plans cover pre-existing conditions, ensuring employees receive necessary medical care without exclusions or waiting periods.

Yes, premiums paid for corporate health insurance are often tax-deductible for employers, offering financial incentives for providing healthcare benefits to employees.

Employees can choose from various coverage options to tailor their health insurance plans according to their individual needs and preferences.

High premiums, limited coverage options, and administrative complexities are common drawbacks of corporate health insurance plans.

Eligibility criteria may vary, but, full-time employees are eligible for corporate health insurance, while part-time or contract workers may not be covered.

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