Health insurance has become a necessity for every individual, especially when the whole world is fighting against COVID-19 pandemic. Also, the government has mandated businesses to provide group health insurance to their employees as a part of Post-COVID operating guidelines. 

Therefore, it’s time for SMEs to consider providing health insurance cover to their employees. This will build a feeling of safety among employees and will keep them motivated towards achieving organisational goals even during such difficult times. 

There are many reasons why group insurance can work in favour of an organisation. But before we get into the significance of providing group health insurance to your employees, some context about group health insurance. 

What is Group health insurance?

A group health insurance is similar to medical insurance that covers all the members of a particular group. In this case, the particular group referred are the employees of an organisation. 

Under a group insurance policy, members get insurance cover at a reduced price as the provider’s risk is spread across a larger group of policyholders. This scheme covers the financial distress of employees against unexpected health issues, accidents, or any mishaps. Such policy works under specified terms and conditions which apply to the entire group of insured people. 

Generally, employees, their spouses, dependent parents and children are covered under group health insurance schemes. Also, some policies cover pre-existing diseases and maternity from the first day; while others provide a cover after the completion of a specific period. 

Why SMEs should offer group insurance to their employees? 

Here are some of the key features of group insurance for employees.

1. Lower premiums, better benefits when compared to individual health cover

Availing a group health insurance plan is more affordable than enrolling for an individual insurance plan. Individuals are covered from the first day of taking this health cover. The coverage includes maternity and pre-existing diseases too. 

Whereas, a personal health cover is more expensive than a group medical cover. In individual health cover, pre-existing diseases are covered after 4 years of taking the policy. Maternity cover is also costly in this insurance as compared to group medical cover.

Group health insurance schemes tend to have a lower per-person cost due to a significant risk pool. Also, the risk of loss spreads out among more number of people, thereby reducing the average cost per employee. 

The group size and number of employees receiving health cover makes a significant difference in group health insurance premiums. Generally, the insurance plan is cheaper for larger group size.  

2. Improves hiring and recruitment 

SMEs with group health insurance is preferred by the employees over employers who don’t offer health coverage. These businesses can attract and retain talented individuals by offering incentives like health insurance.  

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Offering health insurance cover substantially distinguishes businesses from their competitors because it creates a sense of belonging among candidates. The candidates tend to choose employers where employees’ well being is of utmost importance. 

3. Enhances loyalty and retention

A rise in employees’ pay is not the only way to retain employees, and it is also not always a feasible option for small businesses. 

Offering group health insurance to employees might prove to be an effective way to gain employee loyalty and retain quality talent. According to a 2015 Glassdoor survey, about 4 of 5 employees prefer benefits or incentives over a pay raise, with 40% valuing health insurance higher than any other benefit.

Moreover, small businesses might lose a considerable amount if their employees are not provided with benefits or perks. Given the time and cost needed to find the right fit for a job profile and train them, it will be worth prioritising employee loyalty and keeping the business running smoothly. 

The cost of providing health coverage to employees at lower rates might be much lower than extra costs borne by high employee turnover. 

4. Healthier employees are often more productive

With group medical cover, employees gain greater access to medical resources. They work with peace of mind as they can rely on health insurance coverage in case of any medical emergency or illness.  

For small businesses, providing health insurance to employees can lead to fewer sick leaves and more productive and focussed hours. It is more cost-effective for SMEs to offer health cover rather than deal with lost time and lower productivity due to frequent absences. 

Easy access to medical resources might contribute to early return to work from employees. Ultimately, healthier employees can add to workforce productivity and help bolster the success of a small business. 

5. Fosters a conducive company culture 

Happy and satisfied employees can help build a healthy culture for your organisation. 

Offering group health insurance will make employees believe that employers are concerned about their health; hence boosting their morale to outperform their responsibilities. 

Often, employees are happier with a slight reduction in their take-home salary with group insurance, as an individual health insurance policy might cost them a fortune. 

Benefits of group health insurance for employees

Here are the direct benefits an employee can get with group health insurance which they don’t receive with individual health insurance. 

  • The policy covers the insured from day one of joining a company
  • Maternity benefits for an employee or their spouse, which is not included in personal health cover
  • Cheaper for employees than individual health insurance plans

Challenges in providing group health insurance

The idea behind group health insurance is to insure a larger group of people with minimum insurance premium; hence minimising the risk of insurance providers. Therefore, small businesses and startups do not have access to group health insurance due to the lesser number of employees. 

Moreover, the Insurance Regulatory Department (IRDA) mandates a minimum of 7 employees to avail group health insurance policy.

That’s not all! 

Here are more challenges faced by businesses and employees in SMEs.

  1. Lack of higher employee strength makes group health insurance an expensive affair for small businesses 
  2. For a smaller group of people, insurance providers do not offer customisations in policy structure. Benefits like maternity cover, pre-existing disease coverage are rarely offered by policy providers 
  3. There are certain times when an employer cherry-picks some employees for providing health insurance, leaving others behind

The prescription – RazorpayX Payroll

We, at RazorpayX Payroll, understand your concern for the well-being of employees, and we strive to simplify all things employees for small and medium businesses. 

RazorpayX Payroll is an automated payroll system that helps businesses to effortlessly execute every element of their payroll cycle. It is user-friendly software with a neat interactive dashboard that can reduce time spent on payroll execution from 6-7 hours to just 10 minutes per month. 

All you need to do is get your employees’ data into the software and let the magic of RazorpayX Payroll work.

Moreover, the software automatically takes care of TDS, PT, PF and ESI payments along with their periodic return filings. 

What’s new in store 

RazorpayX Payroll provides group health insurance to all the employees of its customers, even if employee strength is 2. 

Now, you must be thinking how an automated payroll software will help you avail group health insurance for your employees. Here’s how.

  1. Being an automated payroll execution platform, RazorpayX Payroll can easily manage your employee data. Any recruitment or exit will automatically synchronise with the insurance providers’ database. You can focus on your business while we take care of your payroll execution along with the employees’ well-being
  2. RazorpayX Payroll has partnered with an insurance provider that will provide customised policies to your employees at a very economical premium. These policies will include coverage for pre-existing diseases as well

All you have to do to access the best-in-class group medical cover is automate your payroll processing and execution with RazorpayX Payroll!


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