Is employer-provided group health insurance sufficient?

Ramesh Sitaraman is a 27-year-old employee of an MNC software firm. He is recently married, and the couple stays with his parents, one of whom is a senior citizen. One of the reasons why Ramesh took up this job was that his company provides insurance coverage for the whole family. However, a co-worker has advised him that apart from the group insurance, it would be prudent to buy additional health insurance for his family. Ramesh is confused as to what he needs to do.

What’s the difference between both plans? They are both health insurance plans, right?

Well, yes. Both are insurance plans - one provided by an employer and the other bought by the individual. Here are the key features of both:

1.Who pays the premium?

The employer pays the premium for group health insurance. Employees get it for free. In individual health insurance, the person insured will have to make a separate payment.

2. Who is covered under the insurance plan?

Most employers’ group plans cover the employee, spouse and children. Some companies may cover their parents too. Individual health insurance plans only cover the individual or the family if Ramesh opts for a family floater plan.

3. What about the waiting period?

A waiting period is when an individual must wait before one or all of the benefits under their plan come into effect. There is no waiting period for group health insurance. All coverage starts from the day you are insured. On the other hand, there is a waiting period of one to four years for individual or family floater plans.

[Also Read: Six benefits of a family floater health insurance policy]

4. Do both plans require you to take medical tests?

Individual health policies may require you to take a medical test, but employer-provided group health policies typically do not need you to take one.

From the looks of it, employer-provided group health insurance is so much better. Why, then, would someone advise Ramesh to take individual health coverage as well? Well, there are several strong reasons.

• Group plans are a perk, and if the company is doing poorly and needs to make budget cuts, it could reduce the coverage. 
• The coverage offered by most group health policies may be inadequate for the family as a whole. If you have senior citizens in your family you may need a higher amount to cover their medical expenses.
• Health insurance costs increase with age. Therefore, it makes sense to buy an individual or family floater plan early as you get a lower premium rate. The longer you wait to buy your individual health plan, the higher will be your premium. 
• Buying an individual (or family floater plan) gives an arbitrage opportunity for the waiting period. As mentioned earlier, there is no waiting period for Ramesh's employer's group health plan. There will however be a waiting period for the individual (or family floater plan he buys). If he purchases this plan as soon as he starts with his company, he can use the group plan to take care of his family's medical bills, till the full benefits of his individual plans kick in.

Because of all these reasons, Ramesh must also buy individual health insurance (or a family floater plan) even though his employer’s group insurance provides him with coverage.

Axis Bank has tie-ups with multiple health insurance companies including Aditya Birla, Digit and Tata AIG that provide a range of well-crafted coverage options. Click here to check out the plans. 

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