Advantages and Disadvantages of Corporate Health Insurance plan

Health insurance is one of the most important investments you can make. Knowing more about health insurance benefits can help you decide on the most suitable health insurance plan for yourself and your family.

A corporate health insurance plan is designed for the employees of a company or organisation. It is also known as group health insurance and is offered by employers to their employees. Since Covid-19 pandemic hit in 2020, it is mandatory for companies to provide best health insurance plans to their employees.

Read further to understand the types of corporate healthcare insurance, its advantages and disadvantages and the factors that influence it.

Types of Corporate Health Insurance

Based on contribution, there are two types of corporate medical insurance: a contributory plan and a non-contributory plan. Let’s have a brief look at them.

1. Contributory Plan

In a contributory health insurance plan, the employees and employers both have to pay a part of the health insurance premium to avail of the health insurance claims.

2. Non-Contributory Plan

In this type of plan, employers pay health insurance premiums without anything from the employees.

Difference between Corporate Insurance and Individual Health Insurance

Group healthcare insurance is like a company-sponsored insurance plan that takes care of the medical needs of the employees. Here is a table with the difference between corporate and individual medical insurance.

But before buying the policy, it is essential to know about the advantages and disadvantages of corporate health plans.

Advantages of Corporate Health Insurance

Corporate health insurance comes up with many added benefits like pre and post-hospitalisation help, teleconsultation, lab bookings, etc. Some of the other advantages are:

No Medical Examination

Many insurance plans require taking a pre-medical checkup depending on the age and history of medical conditions before buying it. But with corporate health insurance, there is no such requirement.

No Waiting Period

Many policies have a waiting period where you have to wait for a fixed number of days before you can raise a health insurance claim. Corporate health insurance plans do not have such waiting days and start from the first day. This can be counted as a significant advantage, as individual health insurance has a waiting period of 36 months.

Family Coverage

Group health insurance gives the option to include family members in the health insurance benefits. Another advantage is that it also covers maternity-related costs. Group Health Insurances also covers the newborn baby for around ninety days under maternity-related health insurance claims.

Network Hospital

Many insurance companies have tied up with hospitals for an easy, hassle-free experience. This benefit allows employees to settle their health insurance claims smoothly.

Preventive Healthcare and Extra Benefits

Corporate health insurance comes up with many added benefits like pre- and post-hospitalisation help, tele-consultation, lab bookings, etc.

Pre-Existing Diseases

Pre-existing diseases mean diseases you might have had before the corporate health insurance plan started. But many group insurance plans allow you to get health insurance claims for those diseases.

Above, we discussed many advantages that come with corporate health insurance. But before choosing the best health insurance policy, it's essential to focus on the disadvantages.

Disadvantages of Corporate Health Insurance

As an employee/policyholder, you don't have much leeway in tailoring the plan to your preferences. In some cases, you may be required to pay an additional fee for certain freedoms. For example, if you want to increase your coverage, you must pay the applicable premium out of pocket. Here are some other disadvantages of corporate health policies:

Policy Tenure

One of the disadvantages of corporate health insurance is the tenure period. You can only raise group health insurance claims until you're working with the organisation. The policy ends as soon as you leave the company. So in challenging situations, if you get laid off by the organisation, your policy will also terminate. This condition makes corporate health insurance less reliable due to fear of discontinuation.

Discontinuation

You will no longer be covered by the group health policy if you are laid off by your employer or choose to leave the company. In other words, you will be covered by the policy as long as you are a member of the group, which in this case means as long as you are an employee of the company.

Not All Plans Come with Family Coverage

Many group insurance plans do not cover the family members. It is one of the significant disadvantages of corporate health insurance. In other cases, the health insurance benefits are only limited to the spouse and not the parents. For many sole breadwinners of the family with dependent children and parents, corporate health insurances are not the best health insurance. If you are in such situations, it is better to look for individual health insurance plans.

Predetermined Limit

Many corporate insurance plans come up with pre-decided hospital room rent limits. So if you choose to go for a higher tariff, you'll have to pay for all the additional costs yourself. Not only the room-rent limit, but you will also have to pay the health insurance premium as well if you choose a plan higher than that of the organisation.

Coverage Amount

You may notice that the group health insurance plans have a coverage limit of only 2-4 lakhs. So, this amount will not account for much in severe accidents and diseases.

Employer Dependent Cover

As the employers pay the health insurance premiums with group health insurance, they also hold power. Your employer will have control over it. They can decide the coverage and other added benefits. Such plans end up as a generic for every employee and will not offer to you as per your needs.

Lack of Control

As an employee, you will not have much control over the health insurance benefits. In many cases, employees have to pay extra to have a plan based on their needs.

No Tax Benefit

Section 80D of the Income Tax Act provides for the health insurance premium. But since employees are not paying for the premium, they can not avail the tax benefits.

Trouble in Claiming

Since employees do not get to choose the health insurance or the coverage, they face many troubles regarding health insurance claims. Such difficulties get added up if the insurer hasn't offered a hassle-free claim.

Conclusion

Choosing between Corporate and Individual health insurance can be confusing. It is important to study the situation and see what works best for you. Advantages and disadvantages concerning family coverage, predetermined amount and health insurance claims shouldn’t be dealt with lightly. Consider all these points before you decide on either. Niva Bupa’s plans offer a wide range of options. There are coverage plans as well covering post and pre hospitalisation bills to lower your overall cost.

FAQ

1. What is the difference between corporate health insurance and normal health insurance?

Corporate health insurance, also known as corporate medical insurance, is a group health policy provided by an employer to its employees. It typically offers basic coverage for hospitalisation, pre-existing diseases, and maternity benefits at a lower cost or free of charge.

In contrast, normal health insurance (individual or family policies) is purchased personally and offers broader coverage options, including add-ons like critical illness cover, higher sum insured, and lifelong renewability.

While corporate health insurance is cost-effective and convenient, its coverage ends when you leave the job, whereas normal health insurance remains valid regardless of employment status.

2. What does corporate insurance cover?

A corporate medical insurance policy generally covers:

• Hospitalisation expenses (including room rent, doctor fees, and surgeries)
• Pre-existing diseases (covered from day one in many cases)
• Maternity benefits (including newborn cover in some policies)
• Daycare procedures
• Ambulance charges
• Group coverage for employees (sometimes extended to family members)

3. What are the disadvantages of switching health insurance?

Switching from one health insurance provider to another is known as health insurance portability. While portability can offer benefits like better coverage and no-claim bonuses, it also comes with challenges. Some key disadvantages of health insurance portability include:

• Waiting Periods: Pre-existing diseases may have a new waiting period with the new insurer.
• Loss of Benefits: Certain benefits from the old policy, like no-claim bonuses, may not transfer fully.
• Higher Premiums: The new insurer might charge a higher premium based on your health conditions.
• Underwriting Risks: The new insurer may reject the application based on medical history.

4. Is corporate health insurance valid after resignation?

No, corporate health insurance usually becomes invalid once an employee resigns, retires, or is terminated. Since it is employer-sponsored, coverage is directly linked to employment status.

To avoid a coverage gap, employees should consider buying an individual health policy early or checking if the insurer allows portability from corporate to individual plans.