Top 10 Employer-based Health Insurance Pros And Cons (2023)

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Looking for Employer-based Health Insurance Pros And Cons. You've come to right place. Inside you'll find top 10 pros and cons. Read to know more

Looking for Employer-based Health Insurance Pros And Cons. You've come to right place. Inside you'll find top 10 pros and cons. Read to know more

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July 12, 2022
Top 10 Employer-based Health Insurance Pros And Cons (2023)
Top 10 Employer-based Health Insurance Pros And Cons (2023)

Health Insurance is an important financial cover. It acts as a cushion in case of uncertain hospitalization and other health contingencies. While you can buy health insurance individually, many employers these days offer lucrative group health insurance plans as part of the overall benefits package to employees.

Let us understand the types of group medical insurance plans that are offered by employers and also learn about employer-based health insurance pros and cons below:

Quick Summary

Want to know about the pros and cons of group medical insurance? Let’s find out! In this article, we cover:

  1. Types of employer-based health insurance plans:
    • Contributory Plan
    • Non-Contributory Plan
  2. Difference between an employer-based health insurance plan and general health insurance.
  3. Pros and cons of group health insurance
    • Advantages of group health insurance
      • Holistic coverage for employee health
      • Tax benefits
      • Better market goodwill
      • Compliance with law
      • Preventive healthcare
    • Disadvantages of group health insurance
      • Added cost
      • Dependency on employer
      • Lack of control for employees
      • Complications in management
      • Insufficient cover

There has been an age-old debate between employer-based medical insurance and individual health insurance. However, the two cannot be pitted against each other as they come with their own set of advantages and disadvantages.

Before diving into the pros and cons of group and individual health insurance cover, let us first understand the main types of employer-based health insurance plans in detail:

Types Of Employer-Based Health Insurance Plans

While there are various segments to group health insurance plans, they can mainly be divided into two categories i.e., Non- contributory and Contributory. Each plan offers health benefits to employees, with the key distinction being around the financial contribution made towards it. Let’s find out the difference between the two below:

1. Contributory plan:

In this type of medical insurance plan, the insurance premiums are paid by both the employer and the employee. The contribution can either be equal or in a pre-decided percentage ratio. The employee’s contribution is usually deducted from his or her salary at regular intervals.

2. Non-contributory plan:

In this type of plan, the group members or employees do not need to pay the premium to avail of the policy benefits. When it comes to paying the premium, the employer bears the financial costs solely.

Employee healthcare handbook

Employee healthcare handbook

A quick and easy-to-read guide for implementing employee benefits that work for you and your organization

How Does An Employer-Based Health Insurance Plan Differ From General Health Insurance?

An employer-based health insurance plan covers a group of people i.e., the employees of an organization, and is also called a group health insurance plan. On the other hand, general health insurance or individual health insurance plans covers only one person i.e., the policyholder.

In a group health insurance plan, the premium is either paid by the employer fully or by the employer and the employee together. As opposed to this, the premium under an individual health insurance plan is paid entirely by the policyholder. 

An employer-based health insurance plan benefits both parties. Employers can ensure better employee health and earn tax benefits, whereas employees can enjoy coverage for pre-existing ailments with no or low load of premium payments.

At the same time though, an individual health coverage could provide a better sum insured, no-claim bonus, and few other benefits over a group health insurance plan. Let’s understand the advantages and disadvantages of employer-based health insurance a little more in detail below:

Quick read: Here’s a detailed comparative analysis between employer-based health insurance and individual health insurance.

Advantages And Disadvantages Of Employer-based Health Insurance

More and more employers are now opting for group health providers as part of their comprehensive employee welfare plan. This is due to the correlation of employee wellbeing with the company’s overall revenue/performance and the demand for a fitting benefits package from the country’s resource pool.

Further, providing group health coverage to employees is mandatory and companies are required to offer it as per the law. Despite the growing reliance on group health insurance coverage, however, its advantages, and disadvantages are little known. Let’s understand the pros and cons of employer-based health insurance below:

Top 5 Advantages Of Group Health Insurance

1. Holistic coverage for employee health

Group health insurance is an instrument to ensure overall employee wellbeing. It covers pre-existing ailments which are not covered by individual health insurance and enables employees to seek financial cover in such circumstances.

Yes, I Want Employer Health Insurance

2. Tax benefits

Employers can earn lucrative tax benefits with group medical insurance. The premium payments in the case of employer-based group health insurance are deductible under the Income Tax Act, 1961. This ensures huge savings for companies.

Read more about are group health insurance premiums tax deductible?

3. Better market goodwill

Providing a comprehensive group insurance cover can help employers attract the right talent from the market. It enables companies to up their reputation as an employee-friendly organizations and thereby retain and pool talented resources.

4. Compliance with law

Providing group insurance enables companies to stay compliant with the law. This comes after the Indian Government’s mandate which made it compulsory for all commercial and industrial establishments, offices, and workplaces to offer comprehensive health insurance policies to employees.

5. Preventive healthcare

Providing group health insurance isn’t just about aiding employees in case of a medical emergency. Modern-day insurance plans also entail preventive health care measures and reward employees for healthy habits. This helps companies prevent instances of sickness and improve overall employee efficiency.

Read more about the advantages of group health insurance here.

Top 5 Disadvantages Of Group Health Insurance

1. Added cost

Group medical insurance could be an expensive affair for employers especially if they want to ensure comprehensive coverage for employees with added features. However, Loop ensures this isn’t the case. Our group insurance plans are available at competitive rates and come with several added benefits. Reach out us now to know more cost-effective health insurance plans.

2. Dependency on employer

From the employee perspective, group health insurance could mean complete dependence on the employer in case of health contingencies. However, certain insurance companies and employers offer employees the option to switch from group insurance to individual insurance to remedy this.

3. Lack of control for employees

Group health insurance plans are controlled by employers. They choose the features, and the coverage and employees don’t get a say in the plan or scheme so selected. This lack of control could be a deterrent for employees.

4. Complications in management

Group health insurance could also mean added pressure for the company in terms of managing employee claims or providing the right support to them or their family members in critical circumstances. However, with Loop’s comprehensive plans, companies can ensure 24/7 help for employees in case of health contingencies and more.

5. Insufficient coverage 

Although this varies from organization to organization, the typical employee health plan cover is anywhere between INR 2 lakhs to INR 5 lakhs. Sometimes, this cover is not sufficient. Especially, if you’re including your family members in the policy. 

Make The Right Choice 

Group health insurance and individual health insurance plans come with their own set of advantages and disadvantages. A group health insurance, in addition to being mandatory, also entails a long list of benefits for employers.

To ensure the advantages of employer-based group health insurance reach both the employer and the employees, Loop has devised a range of comprehensive health offerings. We have a panel of medical advisors that are available round the clock to attend to employee health emergencies and a host of wellness schemes to avail of as well.

Additionally, our health insurance plans allow employers to save up to 30% on group medical insurance. To know more about our customizable and comprehensive health offering talk to our experts today!

Top 10 Employer-based Health Insurance Pros And Cons (2023)
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Team Loop
Team Loop
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