Running a successful business requires balancing costs with investments that yield long-term returns. There are numerous costs involved in conducting business in India. These include startup costs, sunk costs, and employee expenditures such as salaries, employee benefits etc. The major costs apart from the initial investment would be the operational and employee benefits costs. Any business would like to reduce its costs in one way or the other to improve its profitability. It is impossible to reduce employee benefits to reduce the overall costs, as employees would be reluctant to work with your organization if they do not get enough benefits. But there is a way you can save money; by investing in Group Health I nsurance. Any organization that doesn’t have employee benefits would suffer to retain the employees as group health insurance is the basic employee benefit one can offer to their employees.
Group health insurance is one such investment that not only supports employee well-being but also delivers significant cost savings for businesses.
From reducing turnover costs to leveraging tax benefits, group health insurance is an effective tool for optimizing financial resources. It is particularly valuable for small and medium-sized enterprises aiming to attract and retain top talent.
What’s on this page?
How Employers can save money using Group Health Insurance
Retain Employees:
Today, employee benefits have become a part of what Frederick Herzberg, the famous American psychologist, called the hygiene factor. While their presence might not add a significant value incrementally, their absence is surely noticed and felt. Organizations that do not offer group health insurance & life insurance as a part of their employee benefits find it difficult to retain employees. Most organizations offer group health insurance to their full-time or permanent employees. Still, only some organizations have started offering their employee’s group health insurance or ESIC on third-party payroll. The key to retaining employees is to provide employee benefits that would benefit the employees and their families. The group health insurance plan can extend to family members of employees to improve the likelihood of retaining employees. Employees who find it difficult to get individual health insurance plans for their parents are happy to include them in their group health insurance plan and continue their loyalty towards their organization, thereby reducing the attrition rate.
Less Cost, More Coverage:
An organization can save with a group health insurance plan by negotiating with the insurance company and getting high coverage at a low premium. This can be done by using the services of an insurance broker. The Broker has the right skill set to negotiate with the insurance companies. In addition to negotiation support, brokers like Ethika offer their customer’s group health insurance software. The software not only brings down the time investment of the company but is also extremely critical in monitoring employee addition, deletion, and modification to the group health policy. Imagine that your policy provides day 1 coverage for illnesses and one of your employees must be hospitalized in the first week of joining. The feeling of gratitude encompassing the employee when she gets to avail of the treatment without paying any money out of pocket is unparalleled.
Tax Benefits:
Employers can claim tax benefits for the premiums paid towards the group health insurance under business expense. The income tax department gives you an exemption on a display of your loyalty toward your employees.
Flexibility:
A group health insurance plan can be renewed with the same or different insurance company, offering great flexibility to the insured. Flexibility is also offered in the sum insured usage – a family floater sum insured in the group health insurance plan enables the family members to utilize the sum insured without any restrictions. Suppose the employer feels that the service of the group health insurance plan needs to be more satisfactory. In that case, they can immediately cancel the policy or shift to another insurance company for their group health insurance needs.
No Waiting Period:
Most individual health insurance plans compel you to wait for a certain period of time before making a claim, thereby spending a certain amount from their pocket even after purchasing a health insurance plan. However, in a group health insurance policy, such waiting periods can be bought off by paying an additional premium. This additional premium is significantly lower when you compare it to the benefits that it brings. Coverage of any hospitalization from Day 1 is an unparalleled benefit.
Less Expense of Health Insurance Coverage for Employees:
Health insurance costs are increasing yearly due to medical inflation and the rise in the claims ratio. Individual health insurance plans are becoming costlier every year due to various reasons. The group health insurance plan tends to be more affordable when compared to similar plans, i.e. private health insurance plans that cost the exact amount of insurance. Moreover, there are certain restrictions in the individual health insurance plans which are not there in the group health insurance plans, such as waiting periods, co-payments and sub-limits etc. The overall coverage under the group health insurance plans can be increased by opting for a super top-up health insurance plan with a high sum insured and low premiums. The deductible under the super top-up health insurance plan decides the plan’s premium. The higher the deductible, the lower would be the sum insured. A group health insurance plan is less expensive and more inclusive when compared with individual health insurance plans and offers a wide range of benefits to insured customers.
Group health insurance can greatly help your business by reducing the cost of doing business in various ways and is better than an individual health insurance policy. For more details on the group health insurance policy benefits please book a call with our health insurance experts at Ethika insurance broking.
Frequently Asked Questions (FAQs)
- How does group health insurance save money for businesses?
Group health insurance reduces recruitment costs, leverages tax advantages, and minimizes expenses related to absenteeism and employee turnover.
- Are group health insurance premiums tax-deductible?
Yes, premiums paid by employers are often tax-deductible, lowering the company’s taxable income.
- Can small businesses afford group health insurance?
Absolutely. Group plans offer affordable per-person rates and flexible options tailored to small business budgets.
- What are the productivity benefits of group health insurance?
Healthy employees are more engaged, focused, and less stressed, which leads to higher productivity and better performance.
- Why is group health insurance more cost-effective than individual plans?
Group insurance spreads risk across a larger pool, resulting in lower premiums and greater value for money.
