What is group health insurance?

The employees are the pillars of a company or an organisation. An employer does his best to attract the best employees and keep them intact with the organisation. These include paid leaves, paid vacations, team outings, gifts etc,. Along with this an employer can leverage some basic benefits like health insurance coverage and organizing wellness programs for employees. Offering group health insurance plans or (also known as group medical insurance - (GMC)) can build a sense of safety and keep the employees motivated towards the long term goals.

What is group health insurance?

Group health insurance or corporate health insurance plans provide health insurance coverage to the members or the employees of a company or organization. These are purchased as employee benefit packages by the employer.

81% of employees believe employers have a responsibility to foster trust through benefits including group health insurance.

What makes a group health insurance plan different?

In group health insurance, the insurer’s risk is spread among the fellow policy holders, as a result of which the members receive it at reduced premium costs compared to individual health insurance plans. Hence making them affordable and cheaper than individual plans available on the market.  Also differences like-insurers, plan types, costs, and terms also exist between them.A Group health insurance premium policy can provide maternity coverage to pre-existing diseases coverage. Apart from these they also cover a variety of diseases.

• Premiums are 30–50% cheaper than individual plans.
• Coverage ceases when employment ends, though portability options may be available.

How does group health insurance work?

Group health insurance plans are purchased by companies or organisations as part of their employee benefits program. Once enrolled, employees receive health coverage under a master policy negotiated between the employer and the insurer.

Here’s how it works:

• Employer-Paid or Shared Premium: The employer pays the premium either fully or partially on behalf of employees.
• Minimum Participation Requirement: Generally, at least 70% of eligible employees must opt-in for the plan to be activated (as per insurer guidelines).
• Family Coverage Included: Most group policies extend coverage not just to the employee, but also to their spouse, children, and dependent parents making it a comprehensive health safeguard.
• Coverage Duration: The insurance remains valid only while the employee is part of the organisation. Upon resignation or termination, coverage ends unless there’s an option for portability or conversion to an individual plan.
• Cashless Network Hospitals: Employees can avail cashless treatment at a wide network of hospitals affiliated with the TPA (Third Party Administrator) or insurer.

‍What is covered in group medical insurance plan?

Group medical insurance typically covers a range of health-related expenses for employees under a single policy. The exact coverage can vary depending on the policy details, but common inclusions are:

1. Hospitalization expenses: Costs associated with hospital stays, including room charges, doctor fees, medical tests, and surgeries.
2. Daycare procedures: Treatments that do not require 24-hour hospitalization due to technological advancements.
3. Pre and post-hospitalization: Medical costs incurred before and after hospitalization.
4. Maternity benefits: Coverage for maternity expenses, which may include both pre-natal and post-natal care as well as delivery costs. 
5. Newborn baby cover: Newborn is covered from day one under maternity benefit (up to a certain period/amount).
6. Ambulance fees: Charges for ambulance services used in case of an emergency.
7. Pre-existing diseases: Conditions that exist before obtaining insurance might be covered after a waiting period specified by the insurer.
8. Annual health check-ups: Free preventive health check-ups, usually offered once a year.
9. Dental and optical care: Some policies extend to include dental treatments and vision care, though these are less common and might come with limitations
10. ‍Alternative treatments: Costs for non-allopathic treatments such as Ayurveda, Homeopathy, Unani, and Siddha, if recognized under the policy.

It's essential for companies to review the specifics of their group medical insurance policy to understand the coverage details fully, as these can be tailored to the needs of the organization and its employees.

To better understand insurance-related terms like premium, copay, or sum insured, check out our Insurance Glossary

Who is eligible for group health insurance?

Any organization with at least 7 employees can buy a group health insurance policy in India. Both full-time and contractual employees can be included under the employer’s master policy.

Advantages of group health insurance

For Employers:

• Attract and retain top talent
• Lower premium costs through pooling
• Tax-deductible under Section 37
• Helps in fulfilling compliance (e.g., COVID-related SOPs)

For Employees:

• Immediate coverage from day one
• Coverage for family members
• Often no medical checkup needed
• Pre-existing diseases may be covered

How do group medical policies help reduce employee insurance costs?

Group medical insurance policies are one of the most cost-effective ways for companies to protect their employees’ health. 

Here’s how group health insurance helps reduce employee healthcare costs:

1. Lower premiums due to group pooling:
   The insurer’s risk is distributed among all employees, allowing companies to secure lower premiums typically 30–50% cheaper than individual health insurance.
2. No medical tests for employees:
   Unlike individual plans, employees don’t need to undergo medical check-ups before enrollment, saving both time and money.
3. Immediate coverage:
   Most group health insurance policies offer day-one coverage for hospitalization, maternity, and even pre-existing diseases (based on policy terms).
4. Preventive care and wellness programs:
   With free health check-ups and wellness initiatives included, companies can prevent major health expenses in the long run by promoting early diagnosis and healthy lifestyles.

Steps to buy a group health policy using online platforms

Buying group health insurance online has become faster and easier than ever. Here’s how companies can get started in just a few steps:

Research and compare plans:
Visit digital platforms like Pazcare to compare group health insurance plans from top insurers in India.

Customize your coverage:
Select features based on your workforce for example, maternity cover, parental insurance, mental wellness, or OPD benefits.

Get a quote:
Give your company size, employee age group, and coverage preferences to receive premium quotes from multiple insurers.

Consult an expert:
Schedule a consultation with a Pazcare benefits advisor to understand plan inclusions, exclusions, and tax benefits before finalizing.

Onboard your team digitally:
Once the policy is chosen, onboarding and employee enrollment are completed online with access to a live dashboard and health cards for all employees.

Manage claims and renewals online:
Employees can raise claims, track approvals, and download policy documents through a single platform, making the process completely paperless and transparent.

Tax deductions for a group health insurance premium plan

A win-win situation for the employee and employer is created as some of the plan creates eligibility to get tax deductions under the Income Tax act. Tax deductions for health insurance premium paid by the individuals come under the Section 80D of the Income Tax Act.

For an insurance premium paid for self, spouse and dependent children an individual can claim a deduction of Rs 25,000.Also, an additional deduction on health insurance up to Rs 25,000  for parents’ are applicable  if the parents are less than 60 years of age. When the age is more than 60 years, the deduction benefit increases to Rs 50,000.If both individual and parents are 60 years or above, the maximum deduction available under this section goes up to Rs 1 lakh.

If employees contribute toward the group insurance premium (e.g., in co-pay or top-up plans), their portion is eligible for deduction under Section 80D.

They can claim tax relief up to standard 80D limits for themselves and dependents.

Group health insurance during covid

In the current situation, especially as the world is fighting a Covid-19 pandemic, health insurance has become the need of the hour. As a result the government has made the group health insurance for the employees mandatory as a part of COVID operating guidelines.

In the recent Insurance Regulatory and Development Authority of India(IRDAI) circular, it states that "Reference is invited to Order No. 40-3/2020-DM-I (A) dated 15th April 2020 issued as part of the Consolidated Revised Guidelines by Ministry of Home Affairs (MHA), GOI. As per the said order, inter alia; the following are stipulated:All industrial and commercial establishments, workplaces, offices etc. shall put in place arrangements for the implementation of Standard Operating Procedure (SOP) before starting their functioning. As per clause no. 5 of Annexure - II of the said SOP for social distancing for offices, workplace, factories and establishments, medical insurance for the workers to be made mandatory, as per the circular”

In this circular, the insurers have been advised to offer comprehensive health insurance policies to individuals or groups to enable the organisations to fall in with the Government’s directions. Also the regulatory board has advised that these comprehensive health insurance plans be created with simple wordings and conditions and at an affordable cost for the stated organisations.It is noted that under Covid-19 coverage a variety of Insurance providers cover hospitalization charges, treatment expenditure, ICU expenses and many more.

To wrap it up

Group health insurance or corporate health insurance policies are purchased as employee benefit packages  by the employer. The cost of the premium is much lesser in  the Group Health Insurance policy when compared to an Individual health Insurance policy. This is because the insurer’s risk is spread among the fellow policy holders. In the current Covid-19 pandemic era a Group Health Insurance policy can cover from hospitalization to treatment for Covid-19 which can make an employee be less worried about him and the family and focus on the long term goals of the company

Ready to offer group health insurance that truly cares?

At Pazcare, we simplify group health insurance plan for modern Indian businesses. From seamless onboarding to flexible wellness add-ons and mental health support, we help you craft an employee benefits package that actually matters.

• Tailor-made group health insurance plans
• Covers families, pre-existing conditions & maternity
• HRMS integration + Live dashboards
• Mental wellness, OPD, and dental add-ons
• Trusted by 2,000+ growing companies across India

👉 Talk to our benefits expert and build a healthier, happier workplace today.