10 Commandments of Group Health Insurance for Small Businesses (SMEs)

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We are observing a fast growing interest from Small and Medium Businesses/Enterprises for Group Health Insurance. Group Health Insurance in India has gradually become a benchmark benefit as well as a retention tool for every employer.

Here are some basic Do's and Don'ts created from our experience in managing Group Health Insurance for SMEs:

1.       Take a minimum 2 Lakh cover for employees:

Most policies now have a Room Rent limit of 1% and 2% for General and ICU Claims. In major cities, shared rooms in decent hospitals (and sometimes not decent ones too), cost anywhere close to Rs. 2000/-. A cover above Rs. 2 Lakhs will ensure your employees get a good room and enjoy the benefits.  The entire perception of providing benefits would change, if the employee would be required to pay half of the room rent from his own pocket.

2.       Linking of other expenses to the Room Rent:

Hospitals charge various expenses, like Surgery Costs, Doctor Consultations differentially according to the room the patient has selected. For instance, the doctor consultation fee for the same doctor is higher (mostly proportionate) to the kind of room you have booked. So, a Doctor consultation can cost Rs. 500 for a shared room and Rs. 1000 for a Private AC Room.  

Insurance Companies could cap such expenses with the room rent. So when you upgrade your room from a shared room which costs 1% of the Sum Insured, to a Private room which say costs 2%, the general impression is that only the difference between the room rent costs would be required to be paid from our pockets. Note, some insurance companies or policies limit their expenses to the proportion of room rent limit. In the given example, the limit could be restricted to 50% of such expenses. This could be a major blow to the insured/patient’s wallet.  

3.       Take abundant care before covering Parents:

“That’s mean!” one of our clients said, when we asked them to drop parents cover from the group cover.  The problem is yes, we do play mean (the geometric one) between the Insurance Company and the Insurance Client. Parents cover is not sustainable in the long run, since it has proven to be hugely loss making for the Insurance Company.  

If you must cover parents, the other options would be:

- Get the Employees to pay for it. [OR]

- Put a minimum co-pay of 30% on the claims from Parents.

4.       Opt for Photo-less cards:

Photo Cards maybe more attractive for you and your team, but the mess that it can create is unimaginable.  Having photo-less cards, ensures the right person gets the right card, on time, every time.

5.       Maintain Sufficient CD Balance:

In most SMEs (and in many large companies too), list of Additions & Deletions are provided once a month. In true benefit, the new recruits need to be covered from their date of joining. A sufficient premium balance, to debit and cover the new recruits should be available with the Insurer on that date of joining.  This will also take care of any claims on hospitalization that may occur between the periods.

6.       Pro-rata V/s Short Period Additions:

Unless specifically waived, some insurance companies (notably ICICI Lombard) calculate additions and deletions for SME accounts based on Short Period premium. The premium that gets debited at short premium method is much higher than the standard pro-rata method of debiting/crediting proportionate premium.  Get the short period calculation waived in favor of pro-rata.

7.       Insist on Printed, Signed and Stamped Policy Wordings:

Many offices of Govt. Insurance Companies in particular do not provide printed, signed and stamped policy wordings.  Insist on the same. Take an hour out and read it carefully.

8.       Know Time bound Claim Procedures:

In a bid to control claims, Insurance Companies, particularly the Govt. Insurance Companies have reinforced and tightened claims procedures, since June 2010. Claims are rejected on not meeting the claims procedures related to intimation and submission of the claims. Get a detailed download of claims procedures, particularly the time bound ones.

9.       Insist on Claim Reports. Keep a tab on them:

Ensure you get regular reports on claims from your Insurance Company or Health Insurance Consultant/Broker. Analysis always helps.  Understand the claims in detail, and if necessary explore tweaking the policy conditions to control the subsequent year’s claims. You need to manage your claims and balance the benefits to avoid abuse/misuse – this will help you keep your health insurance costs in control.

10.   Employing an expert does not cost you:

Employing a specialized Health Insurance Broker is very smart. It does not cost you as they are paid brokerage by the Insurance Company selected by you. On the other hand, it pays to have a good Health Insurance Broker, as they can help you:

-          Structure/restructure your employee health insurance scheme, making it more long term, without hurting the core benefits. 

-          Help you understand policy benefits, conditions and procedures.

-          Take away the pain of administering the policy, adding/deleting members.

-          Keep you updated on changes in procedures/policies. Help you manage the change.  

-          Educate & Assist your employees on Claims settlement – both cashless & reimbursement.


Medimanage is the only Dedicated Health Insurance Broker in India. It provides expert advisory, end to end processing and administration of the policy round the year, and professional claims assistance, including cashless claims coordination to Fortune 500 companies and home grown corporate giants since 2005. Know more about Medimanage.

-          Medimanage, itself being an SME, recently opened up a dedicated cell to provide its services to SMEs. Here's a brief presentation of the services. Group Health Insurance for SMEs

-          Fill in the the inquiry form for a customized quote.

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