6 Problems with Group Health Insurance

Concept of family coverage

Group health insurance is the most sought after health insurance policy by organizations to cover their employees under a single health insurance policy. The premium is paid by the employer under the group health insurance policy while the employees enjoy the health insurance cover.

While the group health insurance policy benefits both the employees and the employer, it is to be noted that there are certain disadvantages with the group health insurance policy which are mentioned below:-

1. Employer dependent

Group health insurance policies are taken by employers for their employees. Employees are dependent on their employers to avail of group health insurance benefits. As long as they are in the company they can avail of the benefits of the policy. If the employee chooses to leave the organization then it would not be possible for them to avail the same health insurance coverage with the new employer and it would also not be possible to avail the health insurance coverage after leaving the employer.

2. Member additions as per conditions

The member additions in the group health insurance policy are done under certain conditions such as new born baby addition & marriage would be done if the intimation is made within days of childbirth to the organization.

The addition of members to a group health insurance policy would be done only if the family option has been selected at the time of taking the policy.

3. Cannot be renewed by employee

The group health insurance policy cannot be renewed by the employee. It has to be renewed by the employer as per his/her wish and the employee should accept the terms and conditions of the policy.

The group health insurance policy can only be renewed or discontinued based on the decision of the employer. If the employer is not interested in renewing the group health insurance then the employee cannot take the policy on his/her own.

4. No tax benefit

The major disadvantage of group health insurance policies for employees is that they cannot claim income tax benefit. The IT exemption under group health insurance is available only to the employer who is paying the premium.

The income tax exemption under the group health insurance policy can be claimed only if the employee has paid a part of the full premium. In most cases, the premium would be paid by the employer for the group health insurance policy.

5. No personal customization

Group health insurance policies are taken by the employers keeping in mind the basic hospitalization needs of the employees. There would be little or no scope for the employees to customize the health insurance policies to their liking.

If an employee desires to cover his/her parents in the group health insurance policy then it might not be possible as the customization is applicable to all the members of the policy.

6. Inadequate Coverage

The coverage provided under the group health insurance might not be adequate for the employees. The sum insured provided by the employer under the group health insurance would not be adequate for the employees and employees cannot avail of extra coverage under the same policy on payment of additional premium.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.