A QUICK GUIDE

TO GROUP
HEALTH
INSURANCE
POLICIES
Health insurance policies can be confusing-
for both first timers and long term enrollees.
We are going to break it down for you so that
you are never lost again.
Common Jargons Related To Health Insurance

1. Sum Insured
The sum insured is the maximum value for a particular
year that the insurance company can pay if you are
hospitalized. Any amount exceeding the sum insured will
have to be borne by the policyholder. The amount you
agree on for sum insured will be the maximum amount
you get in case of hospitalization or medical procedures.

2. Room Charge
The limit imposed on the coverage of boarding expenses
at the hospital or room rent of the hospital is called room
rent limit. The limit is either expressed as an absolute
amount or as a percentage of the Sum Insured.

3. ICU Charge
This refers to covering the charges of being admitted in
the Intensive Care Unit.

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4. Co-Pay
Health insurance co-pay refers to an arrangement in
which the policyholder will need to pay a portion of the
medical expenses on their own and the insurance
company will pay the remaining amount. This is usually
covered under the portion of co-pay clause of any policy.

5. Waiting Period
Refers to the time period before a selected list of ailments
begin to get covered by your policy. Usually this applies
for pre-existing ailments and some ailments may have a
waiting period of a year or two.

6. Pre-Existing Covered
This refers to the question of if the policy will cover the
expenses for treatment of pre-existing diseases of the
policyholder.

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Understanding Group Health Insurance Policies
What is a Group Health Insurance Policy?
A group health insurance policy provides employees with
health insurance coverage. The policy covers the
medical costs incurred if the employees suffer a medical
emergency and give them financial relief.

What are common features of a Group Health

Insurance Policy ?
The policy can be bought by employers and other
registered groups like clubs, trade unions, etc.
One Master Policy is issued in the name of the
employer while the employees are named as the
insured members.
The employer can pay the premium on behalf of its
employees, or the employees can also pay their
individual premium themselves. In some cases, the
premium is paid by both the employer and the
employees in a pre-defined proportion.
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A minimum number of employees are required for
availing the coverage. There is, however, no limit on the
maximum number of employees that can be covered
under the plan.
The policy is issued for one year after which it should
be renewed for continued coverage.
Employees can enjoy coverage under a group health
insurance policy till they are employees of the
organization that has affected the policy. If they leave
the organization, the coverage terminates. Similarly,
new employees get added to the coverage when they
join the organization.
In case of a claim, the insurance company settles the
claim raised by the employees. However, coverage for
other employees continues unaffected.
The sum insured is decided mutually by the employer
and the insurance company. The coverage might
depend on their age, income level, or hierarchy in the
organization for employees.

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Have You Decided To Get A Health Insurance
Policy For Your Company Yet?
If you have- great! Your employees will thank you for it!

What next?

These are the questions you need to answer to take the

right policy

1. What policy terms should you go for?

2. How to ensure there are no hidden clauses?
3. Which insurer should you go with?
4. How do you trust that claims of your employees are
honored and serviced on time?
5. How do you ensure you're getting the right price for
your policy?

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1. What policy terms should you go for?

The five most important policy terms that you need to take a
call on are

Family definition: (Self) or (Self + Spouse + Children) or

(Self + Spouse + Children + Parents)
Sum Insured: Typically between 3-5 Lakhs
Room-rent limits: Typically between INR 3,000 - 10,000
or no-room rent limits
Maternity limit: Typically covered up to INR 25-50,000;
you can choose not to provide this

We've also included some policy benchmarks from other

companies here for your comparison.

Apart from the above, there are some policy terms you
should ensure are checked by default.

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Many sellers will exclude pre-existing disease coverage or
have waiting periods which you need to be careful of

Pre-existing diseases - Should be covered

30 day / 2 year / 4 year waiting periods - Should be
waived off

Pre-existing disease coverage is one of the major

advantages of a group health policy over individual health
policies and ensure that this is covered. Read more about it
here.

Now you need to make trade-offs between your policy

terms and pricing.

To understand how pricing changes with policy terms,

we've built a calculator for you 🙌
Try changing the sum-insured, room rent limits, family
definitions to see how your estimated premium
changes.

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2. How to ensure there are no hidden clauses?

Now that you have decided on your policy terms let's look at
how to ensure there are no hidden clauses.
The most common hidden clauses are the following

i. Low room rent limits

Oftentimes a company offers a high sum-insured of say 7-
10L but the room rent limits would be capped at 3,000. This
defeats the whole purpose of taking a higher sum-insured.
When your room-rent limit is capped at 3,000 any expenses
in hospital rooms with a higher per day rent will also be
capped no matter what your sum-insured is. To understand
what the room rent limits are look for clauses like these
1% of sum-insured for regular room and 2% of sum-
insured for ICU room
2% of sum-insured upto Rs 7000 for regular room
5,000 for regular room and 10,000 for ICU room

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ii. Pre-existing diseases are not being covered
The primary advantage of a group health policy is that
pre-existing diseases are covered from day one. Many
sellers, in order to give you a lower price would insert
this clause. Be very careful of it. The most common
argument for having this clause inserted is that the
population is a young and healthy demographic and
hence pre-existing diseases need not be covered. If
you're having this clause, just make sure you're making
an informed choice about it.

iii. 30 day / 2 year /4 year waiting periods are

applied

This clause goes hand-in-hand with pre-existing

diseases not being covered. In retail policies there are
waiting periods of 2-4 years for many common illnesses.
This is a way for insurers to reduce risk and prevent
adverse selection. However in a group policy because a
larger number of people are insured, this clause is
removed in most cases and you should insist on the
same.
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3. Which insurer should you go with?

When deciding which insurer to pick, you need to look at a

few data-points like

cashless hospital network,

reviews of the insurer from others,
claims settlement ratio,
claim settlement time,
how many claims they have experiencing processing,
how fast are their internal processes.

At Nova, we've preselected insurer's for you so you don't

have to worry about finding this information yourself.

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4. How do you trust that claims of your employees are
honored and serviced on time?
When I first started Nova Benefits, I was skeptical that
perhaps insurance companies did not have the right
intention to make claims. On digging deeper I realized they
have the right intentions, but often their processes are not
in place or are broken.

For example these are some of the problems that are

still unsolved by insurance companies
responding to an employee's query with a swift turn-around-
time
providing a view to track status of claims at the fingertips of
an employee or HR
being able to assist employees in filling the claim form and
filing the claim
insurer's also raise queries at the time of claims, which an
employee does not have expertise in responding to

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This is why you need a trusted intermediary or
insurance broker to help the employees at time of
need and working with an insurer directly can
create the above problems. Now to select the
intermediary, taking references from past clients is
the best way.

Ask the intermediary to share testimonials and reference and

speak to those folks. Understand how many claims they've had
and how helpful was the intermediary with the same. Ask the
intermediary if they have a separate claims team, what is their
process for assisting employees at the time of claims, what is
their claim escalation process, can you see all claims in a single
place along with their status

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5. How do you ensure you're getting the right price for
your policy?

Once you've selected the right policy terms, you want

to get quotes from multiple insures.
Don't trust the first quote you get, group health
insurance pricing is very opaque and the price
difference between insurers can be huge.

See a quote-sheet below for example:

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This data is from an actual quote.

There is a 40% difference in price between the first insurer

and second insurer quote 🤯
And even from the same insurer, there is usually some room
to negotiate.
Now the down-side of this approach is that is usually very
time consuming and there are 25+ insurers in the market. So
knowing which ones will give you the right advise on policy
terms, the best price and assurance of service quality is
tricky.

To save yourself the hassle, go through a trusted

intermediary who you know will give you:

the fair & transparent pricing

give you the best advise
will take care of your claims

...so that you can focus on your work!

You can also reach out to us for more help :-)

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Questions Each Company Should Ask Before
Purchasing Group Health Insurance

Our company’s policy terms were finalized on the basis of a set

of questions that we feel every company should ask before
buying their own policy. The questions were as follows:

Should we cover parents?

Many policies provide the ability to extend insurance

coverage to parents of the policy holder. Less than 30%
companies purchasing health insurance opt for parental
coverage.
Taking coverage for parents increases the premium by
2.5X but overall cost of the insurance is still about 1-1.5% of
CTC.
We thought this was worth the tradeoff as it provides
better security to our employees by safe-guarding their
family. However, we wanted to be ahead of the curve. 70%
companies only take an Employee only or Employee +
Spouse + Children policy.

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Should we provide maternity cover?

Maternity cover refers to covering charges for both regular

and C-Section Deliveries to a certain limit. Although no
member of our company was planning to immediately have
a family anytime soon, we had no way of confirming this.
Additionally, we wanted the policy to be a forward looking
one, not just to take into accounts the needs for current
team-members but also new joiners.

We also want to build a company where team-members

stay with us for four years and beyond and feel comfortable
starting families. We also plan to hire members who are in
the 25-35 age-group for whom this clause might be
important, which is why we considered this to be a
necessary inclusion in our employee policy plan.

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How do we ensure our policy does not become too
expensive next year?

One of the things you sign up for when you add

parents to the policy is that claims can go high. We
have 40 parents insured. If three of them make claims
of 3 Lakh each (unlikely but possible) we're looking at a
minimum of 10-12 Lakh health insurance cost next
year. More than 50% claims are made by parents. To
mitigate this, we opted to have a co-pay of 20% on
parental claims. This means for every 3 Lakh claim,
60,000 would be paid by the team-member and only
2.4 Lakh by the insurance.

This would also mean our insurance premium would

be lesser. By having a co-pay clause, team-members
would be more discerning on the medical cost since
they have some skin in the expenditure as well. We
were confused between having a co-pay clause vs
having a room-rent limit as a cost mitigating measure.
Finally, chose to go with the co-pay on parental
claims since we believed providing parental coverage
is a great thing to do for the team. Additionally,
adding some co-pay would balance providing the
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benefit but also containing the cost.
Why Are These Questions Important For Every
Company Looking To Buy Employee Health Insurance?

It is vital for every company to ask themselves these

basic set of questions before finalising their policy
terms. These questions should be answered keeping in
mind the well-being of both the company as well as its
team members.
Employee Health Benefits have become an important
part of every organisation and therefore need to be
given considerable thought before finalisation.

Still need guidance?

Feel free to reach out to us for more help.

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To conclude, choosing the right group health insurance
plan is not an easy decision. You will have to thoroughly
understand each insurer's policy terms and make sure
there are no hidden clauses.
It would be best if you customized the policy based on
your employee's needs and budget. The goal should be
to minimize your costs while providing a pleasant
experience to your employee.
If your employees are not getting cashless claims or are
incurring too many out-of-pocket expenses, you will not
get value for money on your group health insurance
policy.

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