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Group health insurance is one of the most valuable employee benefits today. For HR professionals, it's not just about offering a policy, it's about knowing how it works, communicating it clearly, and helping employees make the most of it. Whether you're onboarding new employees, renewing insurance policies, or explaining terms like co-pay and pre-existing conditions, knowing these key terms makes it easier to communicate and helps build trust with your team.
Why HRs Need to Know These Terms
Confusion around insurance terms often leads to issues during onboarding, claims, or policy renewals. When HR professionals are confident with the language of health insurance, they can evaluate plans better, support employees efficiently, and build stronger relationships with brokers & insurers.
Group Health Insurance Glossary: 20 Must-Know Terms
1. Sum Insured
What it is:
The maximum amount that an insurance company will pay for medical expenses per policy year.
Why it matters for HR:
As an HR, you decide the level of coverage for your team. For example, a ₹3 lakh sum insured may be fine for young employees, but not enough for families or employees with dependents. If the sum insured is exhausted, the rest of the expenses come from the employee’s pocket so choosing the right amount helps prevent dissatisfaction later.
2. Premium
What it is:
This is the cost of the insurance policy, usually paid by the employer or shared with employees.
Why it matters for HR:
You have to manage company budgets. Some employers pay the full premium; others may split it with employees. Understanding premiums helps you choose plans that balance affordability with good coverage.
3. Co-payment (Co-pay)
What it is:
This means the employee has to pay a fixed percentage of the claim amount. The insurer covers the rest.For example, if there's a 10% co-pay on maternity, and the bill is ₹1,00,000, the employee pays ₹10,000.
Why it matters for HR:
Employees often get upset when they hear they must pay something during a claim. As HR, you should be upfront about co-pay terms especially for parents, maternity, or high-age categories so there are no unpleasant surprises.
4. Deductible
What it is:
A deductible is the amount the employee must pay out of pocket before the insurance starts covering expenses.
Why it matters for HR:
Often confused with co-pay. For example, if there’s a ₹5,000 deductible, the employee has to bear that amount first.
What it is:
These are medical conditions that an employee already has before joining the group policy like diabetes or cancer.
Why it matters for HR:
Most policies won’t cover PEDs immediately. There might be a waiting period of 1–4 years. This impacts claim eligibility and should be explained to new joiners or employees with known health issues.
6. Waiting Period
What it is:
This is the time an employee has to wait before certain conditions or benefits are covered under the policy.
Why it matters for HR:
Maternity, hernia, or orthopedic issues often come with waiting periods. You need to manage expectations and help employees plan accordingly.
7. Cashless Network Hospital
What it is:
A hospital that has a tie-up with the insurer or TPA, where the employee doesn't have to pay upfront, only shows their health card or insurance ID.
Why it matters for HR:
It reduces financial stress for the employee. You should maintain and circulate the latest list of network hospitals so employees can choose wisely during emergencies.
8. Reimbursement Claim
What it is:
If an employee visits a non-network hospital or pays for treatment upfront, they can file a reimbursement claim by submitting bills and documents.
Why it matters for HR:
HRs should guide on the documentation required for smooth processing of claims.
9. TPA (Third Party Administrator)
What it is:
TPAs are service providers that handle claim processing and support on behalf of the insurer.
Why it matters for HR:
HR deals with the TPA when there’s a hospitalization or claim. Knowing who your TPA is and keeping their contact handy helps resolve issues faster.
10. Daycare Procedure
What it is:
These are medical treatments or surgeries that don't require a full 24-hour hospital stay (like cataract surgery or dialysis) but are still covered under group insurance.
Why it matters for HR:
Employees may assume that only long hospital stays are covered. You should educate them about these covered procedures to encourage use of benefits.
11. Domiciliary Hospitalisation
What it is:
This means receiving medical treatment at home when hospital admission isn’t possible due to unavailability or the patient’s condition. It became common during COVID.
Why it matters for HR:
Many policies added this during COVID. You should know whether your insurer allows it, as it can help employees during emergencies or for elderly family members.
12. OPD (Outpatient Department)
What it is:
OPD covers doctor consultations, tests, health check-ups and minor treatments that don’t require hospitalization. It's often an add-on feature and is increasingly popular among young teams.
Why it matters for HR:
13. Endorsement
What it is:
An endorsement is any mid-policy change like adding a new employee, new baby born, spouse or removing an employee or dependent.
Why it matters for HR:
Missed endorsements mean denied claims. You should regularly update the insurer or broker with changes in employee or dependent data.
14. Policy Inception Date
What it is:
This is the date the policy starts. It’s used to track waiting periods, renewals, and eligibility for claims.
Why it matters for HR:
It helps calculate waiting periods, renewal timelines, and continuity benefits. Always keep a record of the inception date for audit and claims tracking.
15. Grace Period
What it is:
If a policy expires, the grace period is the additional time given (usually 15–30 days) to renew without losing continuity benefits.
Why it matters for HR:
Missing this window can mean your entire team loses coverage. Make sure policy renewals happen well in advance.
16. Floater Cover
What it is:
Under this type of plan, a single sum insured is shared between an employee and their family (like spouse or kids).
Why it matters for HR:
Many family floater plans cover employee + spouse + children under a single amount. You should explain how one person’s major claim can exhaust the full cover.
What it is:
Inpatient treatment requires hospitalization (admitted for 24+ hours), while outpatient doesn’t.
Why it matters for HR:
This affects claim eligibility. HR must help employees understand what kind of treatment is covered where.
18. Portability
What it is:
Portability allows an employee to shift from a group health plan to an individual policy while retaining certain benefits like continuity for PEDs or waiting periods.
Why it matters for HR:
Important for employees exiting the company, they might want to continue coverage. HR can support by sharing portability options.
19. Sub-limits
What it is:
These are caps on specific treatments or expenses, like a ₹6,000 daily room rent or ₹50,000 maternity limit. Even if the total sum insured is high, these sub-limits restrict certain claims.
Why it matters for HR:
These limits often cause confusion or rejected claim amounts. HR should highlight sub-limits clearly during onboarding.
20. Exclusions
What it is:
Exclusions are conditions or treatments that are not covered by the policy like cosmetic surgery, dental (unless accidental).
Why it matters for HR:
Employees might assume “everything is covered.” It's your job to communicate exclusions to avoid disappointment.
Bonus Tips for HR Professionals
- Use simple language when explaining benefits to employees.
- Keep a ready FAQ or sheet handy during onboarding and claims seasons.
- Send a ‘Benefits Activation’ Checklist Email by explaining every term.
- Choose partners like Pazcare that offer HR training, tools, and live claim support.
Read: How to Onboard Employees on Their Insurance Benefits
Conclusion
Mastering group health insurance terminology helps HR professionals navigate benefits with confidence. It makes conversations with insurers smoother, claim processes faster, and employee support much more effective.
📌 Bookmark this glossary or share it with your HR network, it’s a quick guide that can save time.
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