Group Coverage Basics
What Is Group Coverage?
Is Insurance Required?
Is Your Business Eligible for Group Coverage?
Who Is Eligible for Coverage?
What Do Employers Have to Pay?
Buying insurance for the business, big or small (group coverage) has different rules and procedures than buying just for yourself or your family (individual coverage).
In the comprehensive guide corporate insurance guide for 2021 for corporate health insurance below, we have outlined group/corporate coverage basics.
What Is Group Coverage?
Group medical coverage refers to a single policy issued to a group (typically a business with employees, although there are other kinds of groups that can get coverage) that covers all eligible employees and their immediate dependents.
Individual medical/health coverage, on the other hand, is a single policy issued to a single person or family.
The rules are quite different for group coverage versus individual coverage, in large part because the insurance provider’s risk is calculated differently. With individual coverage, the insurance providers historically based their premium rates (or denies coverage) on the detailed medical history of the person or family.
With groups such as small businesses, the insurance provider determines a premium price based on risk dynamics balanced over the entire group being insured, using general information on members of the group, such as age or gender. Insurance providers are required by law to offer coverage to small groups and cannot deny the said requirement of any organization.
Is corporate health Insurance Required?
While there is no law requiring small business owners to provide health insurance but small business owners should be aware of when deciding whether to purchase insurance for their employees. If a small business owner does choose to offer coverage, some regulations are needed to be followed the most important of which we explain in this article.
Though large companies and corporations may face consequences if they do not offer coverage if small businesses with fewer than 50 full-time-equivalent employees will not be penalized if they do not provide coverage. If you have at least 50 full-time-equivalent employees but none receive an individual premium tax credit or cost-sharing reductions (both based on income), there’s no penalty whether or not you offer health insurance.
What makes your Business Eligible for Group Coverage?
Small employers can procure group coverage should they choose to purchase it, regardless of the employees’ health status. A “small employer” is defined as a business with 2 to 50 full-time workers. Owners are also generally counted as employees, so sole proprietorships with one employee usually fall into this group, as do partnerships without any employees (by definition partnerships have two or more partners). It is also defined as the self-employed as “groups of one” and require insurance provider to guarantee to issue them coverage in the small group insurance.
Who Is Eligible for Coverage?
The general rule is that if an employer offers group health coverage to any full-time employees, the company must offer coverage to all full-time employees. The company has the option to offer coverage to part-time employees (which can be defined as those working fewer than 30 hours per week). If the company offers coverage to any part-time employees, all of them must be offered health insurance coverage. These guidelines apply regardless of the medical condition of the employees. In other words, any suitable employee can’t be denied coverage based on previous medical complications, known as “preexisting condition”.
In addition, any dependents of entitled employees are generally entitled to the health insurance coverage under a group plan procured by the organization. Dependents include spouses, children, and in some cases if the organization allows parents of the employees. Dependents cannot enrol for coverage unless the employee has been enrolled in the health insurance plan.
What Do Employers Have to Pay?
Some companies who choose to offer health insurance coverage choose to pay the full premium, while others require staff to pay a portion. When considering what portion of the premium to pay, employers should be aware businesses can avail tax credits to help balance the cost of health insurance.
Corporate Health Insurance
A corporate health insurance plan is a type of coverage that covers groups in professional organizations from various risks and uncertainties such as employees’ health, accidents, financial losses, and more. Group health insurance is synonymous with corporate health insurance. Corporate medical insurance is becoming prevalent and customary in Pakistan as more and more companies are providing health benefit covers for the well-being of their employees and workers.
What Are The Benefits Of Corporate Health Insurance Policies?
Added Health Coverage
Incorporate medical insurance plans, employees can choose to opt for additional family health or individual health insurance plans. This provides them with added insurance cover if the employer provides the desired option to enhance the coverage umbrella.
Pre-Existing Disease Cover
Some organizations may provide their staff with health insurance coverage for a pre-existing medical condition. These covers and benefits are available for the employees from the very first day and some companies offer insurance even to employees suffering from chronic ailments such as diabetes, hypertension, and other chronic diseases.
Maternity Coverage
Many companies provide high maternity health insurance coverage to take care of their female staff and the dependents of male employees. The plan procured by the organization also covers childbirth expenses under these benefits. Moreover, many businesses also include/ add newborn babies under the group health insurance plan without undertaking any waiting period.
Job Satisfaction
Providing corporate medical health insurance policies shows the employees that the company cares for their health and well-being. This leads to greater job satisfaction, comforts employees, makes them feel valued and content working in the organization. This benefit leads to overall better employee performance and decreases employee turnover as well.
Support in Times of Sudden Medical Emergencies
Corporate health insurance policies provide much-needed financial assistance in times of need. If a worker or his/her dependent relative come across a sudden medical emergency, then the organization’s health insurance benefit safeguards that they do not have to compromise on the quality of medical treatment that is required for the employee or its dependents.
Attracting Good Employees
A corporate health insurance policy is a great perk and benefit for any individual seeking a job in an organization. Having good health insurance coverage for employees and their families helps in finding and retaining good employees/workers.
Performance and Morale-Boosting
When an organization provides concrete corporate health insurance coverage to its employees, it offers them peace of mind and increases their morale, which, in turn, benefits their organizational overall performance.
How Are Corporate Health Insurance Policies Different From Regular Plans?
Corporate health insurance coverage is not the same as regular health insurance plans as they are provided to employees and their dependents by the company as opposed to the individual buying it for himself/herself. Moreover, the waiting period under health insurance plans, which are generally prolonged durations of one month usually, a condition placed by the insurance provider is waived off under corporate health insurance policy. Under these plans, medical examinations are skipped as well. The premiums are significantly smaller in amount than the regular individual or family health insurance policy. This is because of the larger number of employees insured. Leading to a simple formula of “economies of scale”.
Before joining any business, it is important to look into the corporate health insurance policy and coverage offered. An organization may have a custom-made plan for their workers or may adopt from the plans offered by the insurers. Have a look at the necessary policy documentation before getting yourself enrolled in one such corporate health insurance policy. Make sure you do a good amount of research before buying any health insurance coverage. Our health insurance comprehensive guide for 2021 and 2022 has all the information related to, types of health insurance policies, the status of chronic health-related problems, premiums etc. Be well informed and make the right choice to secure yourself and your family future.
What does this mean for small companies?
In a post-COVID world and after the world has seen the importance of health and the expenses if and when required related to it, as the job market rebounds, companies looking to recruit and retain top talent can expect a quality health benefit to be top of mind for candidates applying for the job and working at the organization.
Health benefits are an essential tool in recruiting and retention, but due to rising costs, less than half of small companies can offer them. Even among those that do, the majority of them offer employee’s just one policy choice.
2. Fortunately, small employers have options in 2021 in Pakistan. A stabilized individual health insurance market and an innovative commercial health insurance sector have produced several viable health insurance options small employers can use to win the war for talent.
Of course, in this article, we’ll cover what all of this means more as we go over health reimbursement arrangements (HRAs) to provide full and in-depth information.
• Eligibility requirements
• Pros and cons
• Budget guidelines
• First steps for implementation
We’ll also deliberate how to react to the best decision for your business, including considerations you should make when evaluating your options. We will also take a look at the future of health benefits for small employers, what you might see going forward, and how you can ensure you’re positioned for a safe pocket.
Pros
• It’s tax-free
The organizations can deduct 100 per cent of group health insurance premiums, and employee’s share of the premium can be paid with pretax money and save big.
• Small employers can get a tax credit
According to the laws and regulatory bodies, small business health care can avail the tax credit option available to the companies with a group policy purchased, and pay at least half of the health insurance premiums for their workers. The tax credit is usually worth up to 50 per cent of the costs that organizations pay for employees’ premiums.
• It’s easily obtainable online or through a health insurance facilitator
Small employers can purchase a policy directly from a health insurance company or keeping themselves one step ahead they can compare and buy from health insurance facilitators with minimal effort.
• Most employees are familiar with it
Because employees often associate health benefits with group health insurance, offering a group policy requires minimal hand-holding or small employers’ facilitation.
Cons
• It can be expensive
Many companies can’t afford a group health insurance policy. Group health insurance has roughly increased in cost over the past few years, keeping in view the customization and benefits undertaken by the organization and there’s no indication those cost increases will slow down. By 2025, group health insurance penetration is expected to increase double the fold keeping in view the present scenario but that would also indicate that there would be a surge in the prices as well which the companies need to understand and deliberate upon.
• It’s complex
Ongoing regulatory changes and the lengthy annual renewal process leech away time that most small employers don’t have. Usually, they must also play the facilitator, negotiating between employees and the insurance provider.
• It’s one-size-fits-all
Personnel of small organizations are often in varied situations, but with group health insurance, the company typically chooses just one policy to satisfy everyone. This inevitably causes dissatisfaction among some employees. It is the issue that one thing desired by one may not be ideal for another, but while corporate health insurance policy, an organization needs to be extra vigilant and careful.
• Minimum participation requirements can be difficult to meet
With an unpredictable economy in this Post- Covid19 situation and many employees who choose to use their spouse’s plan instead, small companies often struggle to meet these minimum participation inceptions to qualify and sustain the cost incurred for group health insurance.
• Employees who have other health care solutions don’t get a benefit
Employees who choose not to participate in the organization’s policy, whether because they’re enrolled through a family member’s plan or because they’re using an alternative. It is presumed that with no concrete benefits except health insurance which they are unable to make most of it and nothing more to gain outside of salary, they’re more likely to leave the organization or might be on the constant lookout for opportunities.
• Would the employees who live in different states may not get a benefit?
While living in Pakistan, rest assured that employers can purchase a health insurance policy that has a national coverage policy, these policies are both easy to use and provide a huge coverage area. Companies procuring corporate health insurance can do so without leaving out any employee from any part of Pakistan. This may be one of the unique selling points for the organization to retain and recruit top talent.
How can I choose the best health benefit for my organization?
Choosing between these five health benefits options can be difficult.
In this section, we’ll walk you through the most important questions you should ask when weighing each option, including:
1. Based on eligibility criteria, which options can my organization offer?
2. What is my organization willing and able to spend on health benefits?
3. Which employees do I want to include in the benefit
4. How much time do I have to administer the benefit?
5. What are employees’ current insurance statuses?
6. What do my employees prefer?
7. Should I give maternity benefits?
8. Would OPD’s be an attractive feature for the employees?
Let’s dive in.
Based on eligibility criteria, which options can my organization offer?
The first step is to use eligibility criteria to weed out all options your organization can’t offer. For example, if you have just one full-time employee, you can’t offer group health insurance, in Pakistan, you can buy group health insurance for as low as 10 employees in your organization.
Once you’ve narrowed down your list, you can proceed to the next question.
What’s my organization willing and able to spend on health benefits?
For most small companies, the cost is the single biggest factor in their health benefits decisions. If this is the case for your organization, you can use cost to help narrow your options down further. First, determine how much you are willing and able to spend on health benefits. In general, you should aim to spend as much as you can afford on health benefits; next to salaries, they’re the top influencer on where people work.
Once you’ve calculated this figure, compare it to the estimated cost of each health benefit option your organization is eligible for. You should research estimates for your geographic area and industry to get a more accurate projection.
After comparing these projections to your budget, you may be able to eliminate some options. Many small employers can’t afford traditional group or self-funded health insurance, for example. Some companies may offer group health insurance to their employees on hospitalization but it may not offer the frill benefits of OPD’s and maternity since they increase the health insurance plans cost many folds for an organization.
How much time do I have to administer the benefit?
Another consideration is how much time you have or a designated employee has to administer health benefits. Small employers and employees wear many hats, so their time is limited. Some health benefit options require more administration time than others. Self-funded health insurance typically requires the most time, followed by a group health policy and since you have to manage a group plan and an HRA. You need a policy that is very much less time-intensive.
If you don’t have a lot of time to administer health benefits, consider one of the last three options listed above.
What are employees’ current insurance statuses?
Beyond business considerations, companies should also evaluate each benefit option from the workers’ perspective. The first step is to consider their current insurance status and determine how the company can provide value from the benefit.
Organizations need to understand that all workers are valuable to the organization, companies should narrow the list of options to those that will best serve them, their interest and their employees. In general, a company aim should be to provide the employees with the best value regardless of their situation even if some compensations are subject to income tax.
What do usually employees prefer?
Every organization should consider their employees’ preferences on health benefits they need and want. The employees are more likely to use benefits that deliver on what they want, which ultimately helps the company accomplish the goal of hiring and keeping them for a longer run.
Employees generally evaluate and assess health benefits by three standards:
• How much the benefit will cost them or be useful to them?
• How the benefit will integrate with their individual health care preferences
• How familiar they are with the benefit and the actual usefulness of Benefit-cost affects employees with most health benefits options, but it’s especially true with h group and self-bought health insurance. Corporate health insurance offered by the organization in contrast, don’t involve employee contributions at all, though low allowance amounts typically require employees to shoulder more out-of-pocket costs.
Employees also want to know how your benefit will integrate with their individual health care preferences. Will your group health insurance policy cover their doctor, for example? Or provide coverage for mental health services? The provision of the right information is typically the best way to ensure employees can use their benefit to cover the health care they value get the most out of the offered benefit and utilize them. Finally, employees gravitate toward benefits that are familiar to them. This generally favors group health insurance over newer offerings.
Making the final decision
Employers must balance each of these contemplations to arrive at the best health insurance policy decision for their organization and workers. Although each organization is different, group health insurance is typically the least disruptive value offering. If the organization can afford it and the majority of employees would receive significant value from it, group health may be the best choice.
This is not the case for many small employers, though. Rising costs and increased administrative complexity have put group health insurance out of reach. What’s more and ineffective is that these benefits often fail to meet the needs of an increasingly diverse set of employees.
In this case, comparing the quotes from multiple providers and buying insurance is almost always the best choice for small employers. There are no minimum contribution requirements, no arguing with health insurance providers, and no decisions that benefit some employees but not others. And rather than forcing employers to select and sponsor a limited number of programs an organization to give its employees tax-free money to spend on the health care services they find most valuable.
Any new benefit has already helped thousands of small employers offer health benefits and compete for the most talented employees.
What’s the future of small business health benefits in Pakistan?
Personalized solutions like the tailored and customized are the future of small employer health benefits. This is because employees can take their own individual policies with them from job to job.
And this is a bonus for employees since we’ve seen how unpredictable the economy is during the pandemic and post-COVID19. No matter if they’re employed at one company or another, employees still need health insurance, and being able to take their policy from one employer to another helps reduce the amount of change they have to face when changing jobs. As traditional options like group health insurance become untenable for many organizations, the pressure to create alternatives that allow employers to control costs and employees to make their own health care choices has grown. This will continue to be the case through 2021 and beyond.
Which companies provide group health insurance?
There are many insurance providers in Pakistan that provide corporate health insurance. Providers like Jubilee General Insurance, IGI General, TPL, Askari general insurance and other big insurance companies have A+ and AA++ ratings and have the capacity to ensure against premiums and provide coverage.
What customization can be provided or procured in the corporate health insurance plans?
The plans can be customized and tailored as per the needs and requirements of the organization. These plans offer high value to the employees and provide benefits and coverage that are not available in the individual and family retail health insurance plans.
One of the major health insurance benefits is that that many organizations can provide is OPD and maternity benefits it which are rarely part of any health insurance plans in Pakistan. Hence the health insurance plans can be customized and made on the “basis-to-fit-everybody’s-requirements.
Conclusion
2021 is set to be an eventful year for employers. Between managing the business during an epidemic and navigating a change in the present administration, employers have their work cut out for them. Small employers are prepared to meet this opportunity with more health benefits options available than ever before. By carefully considering their benefits goals, budget, and employee situations and preferences, these employers can make a choice that will help them hire and keep employees and succeed in 2021 and the future.
