What is Group Health Insurance?
A health insurance policy traditionally is a type of insurance that offers coverage for medical and surgical expenses incurred by the policyholder when he/she is hospitalised during the policy period. Today, the coverage can be extended for day care hospitalisation, pre-hospitalisation, and post-hospitalisation. The expenses incurred are either reimbursed to the insured individual or are paid to the healthcare provider directly.
A Group Health Insurance, on the other hand is a health insurance plan that provides coverage to members of a group. Group members usually receive insurance at a reduced cost because the insurer’s risk is spread across a group of policyholders. This benefits the group members by keeping premiums low, and insurers can better manage risk when they have a clearer idea of who they are covering.
The vast majority of group health insurance plans are employer-sponsored benefit plans as part of employee benefits scheme offered to reward, retain and attract talents. Health benefits can also deliver a range of benefits, such as increasing productivity, boosting morale, and helping shape a positive company culture.
How are Group Health Insurance premiums calculated?
Since every business is different, premium may end up being higher or lower depending on the following factors:
- Size and health of the group – A larger group of people generally can help lower your premium by spreading the associated health risks of a few people over an entire group.
- Average age of group
- Employer’s claims history – Insurance providers use the number of total claims and how expensive those claims are to determine adjustments to your premiums over time. When it’s time to renew your policy, an insurer will review your group’s claims history and adjust accordingly.
- Type of occupation – clerical staff don’t face the same health risks as factory, construction, or offshore workers, hence insurance premiums for a group of office workers may be less than other occupations.
- The type of coverage and add on benefits – Bundling extra add-ons such as dental and optical plans can also increase your premiums due to the extra coverage.
How can employers save on Group Health Insurance premiums?
Since the number of claims has a direct impact on your premiums, it can pay to improve the overall health of your employees. A customized workplace wellness program can help foster healthier lifestyle choices through health education and wellness activities leading to fewer doctor’s visits caused by preventable diseases. This creates healthier employees and lower the overall premiums. Here are some examples of wellness programs offered by some companies:
- On-site fitness centre
- Subsidised health screening programs
- Wellness programs
- Employee assistance programs to cope with work stress
- Office nap pods