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A corporate health insurance policy, more commonly known as a group health insurance policy, is a type of employee benefit purchased by the employer on behalf of the employees. The employer often extends the group health benefit to the dependents of the employee, making it an even more lucrative proposition. With new employees rotating (new ones joining the company and a few leaving), updating the employee details in the group health insurance plan is essential.
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A group health insurance is provided to the employee when joining the organization. The employee receives coverage from day one of his time on the job. It is to be noted that the insurer has no limit (maximum number of times) in terms of changing the employee list. That means the employer can add or delete the names and details of the employees multiple times throughout the year.
But have you ever wondered how he is covered on an immediate basis? To understand this, we need to understand the function of a ‘cash deposit account’.
The cash deposit account is just like a regular bank account, but for the purpose of group health insurance, it is maintained by the insurance provider for the company. A cash deposit account, unlike a banking account, is non-interest-bearing. That is, the employer does not receive any interest on the amount lying in the account.
The employer must deposit a minimum of 20% of the initial buffer amount in the cash deposit account. Thus, the account maintains a credit balance.
Mostly, a dedicated relationship manager is allotted for group health plans. Any instructions with regards to the addition or deleting of the employee data from the policy can be given to the relationship manager. Alternatively, with an online and app-based service, the employer himself can submit and track requests for any changes.
As we know, if a new employee joins the group, the insurance policy is purchased by endorsement. This endorsement document is attached to the main insurance contract and amends the policy. Once the endorsement is done, the premium amount is debited from the employer's cash deposit account. The employee is then covered for the mentioned health risks from day one of his joining.
*An endorsement in a group health insurance policy is a formal change to the original terms, allowing the policyholder (often the employer) to adjust coverage. This could involve altering limits, adding benefits, changing policy terms as well as adding or removing employees.
Similarly, in case the employee leaves the company, a process to delete the employee data and record needs to be initiated. While deleting the employee from the employee list. In other terms, addition and deletion of employees is also known as group health insurance endorsement process.
Critical Job Factor
According to a report by Society for Human Resource Management (SHRM), 60% of employees consider health insurance essential when choosing a job.
Boost Productivity
According to World Health organisation (WHO), poor health can cause a 20-25% drop in productivity.
Tax Benefits
Employer-paid health insurance premiums are tax-deductible under Section 80D .Not offering this can mean missing out on tax savings.
Regulatory Compliance
The Indian government has introduced regulations like Social Security Code, 2020 the which mandates health insurance for certain sectors. Non-compliance can lead to penalties.
Ensure you're covering all bases with group health insurance to attract top talent, improve productivity, and stay compliant!
Conclusion
Adding or deleting employees from group insurance plans is no longer a tedious task. Thanks to technological advancement in the insurance sector, administrative processes like these are now instant and hassle-free. A sufficiently funded cash deposit account ensures that no risk is uncovered.
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Wellness At Work
Benefits of group health insurance