Employee Benefits: Group Life and

Health Insurance
 Meaning of Employee Benefits
Employee benefits are employer- sponsored benefits, other than wages, that enhance
the economic security of individuals and families and are partly or fully paid for by
employers.
Some of the benefits involved:
● Group life insurance
● Group medical expense
● Dental insurance plans
● Wellness programs
● Employee assistance programs
● Educational assistance
 Fundamentals of Group Insurance

1) Differences between Group Insurance and Individual Insurance

Group Insurance Individual Insurance

● Coverages of many persons under ● Coverage of one person under one
one contract contract
● Costs less ● Costs more
● Individual evidence of insurability is ● Individual evidence of insurability is
not required required
● Experience rating is used in group ● Experience rating is not required
insurance plans
 2) Basic Underwriting Principles

To make the overall loss experience of the group favourable there are certain
underwriting principles:

● Insurance incidental to the group

● Flow of persons through the group
● Automatic determination of benefits
● Minimum participation requirements
● Efficient Administration

3) Eligibility Requirements in Group Insurance

● Be a full-time employee
● Satisfy a probationary period
● Apply for insurance during the eligibility period
● Be actively at work when insurance becomes effective
 Group Life Insurance
Characteristics of group life insurance:

● Group life insurance coverages

○ Provides yearly term insurance coverage
○ Make supplemental term insurance available
○ Offer group accidental death and dismemberment benefits
● Non contributory and contributory plans
● Probationary period and eligibility period
● Experience rating
● Insurance on spouse and dependent children
● Conversion of term insurance
● Credit life insurance
 Group Medical Expense Insurance
● Group medical expense insurance is a type of insurance policy that provides
healthcare coverage to a group of people, typically employees of an organization
● The policy pays for medical expenses incurred by covered individuals, including
hospitalization, surgery, diagnostic tests, prescription drugs, and preventive care.
● It is often provided by an employer as a benefit to employees, and the cost of the
policy is shared between the employer and the employees.
● The premium for the policy is typically lower than individual health insurance policies
because the risk is spread across a group of people.
● These plans are available from a number of source:
○ Commercial insurers
○ Blue cross and Blue Shield
○ Health Maintenance organizations
○ Self-insured plans by employers
 Managed Care Plans
Managed care plans are health insurance plans that aim to control healthcare costs
while still providing quality healthcare to their members.
In managed care plans, the insurance company contracts with healthcare providers,
such as hospitals and doctors, to provide medical services to their members.
There are several types of managed care plans:
● Health Maintenance Organizations (HMOs)
● Preferred Provider Organizations (PPOs)
● Point of Service (POS) plans
Health Maintenance Organizations (HMOs)

● Provides healthcare services to members for a fixed monthly fee.

● Have a network of healthcare providers, including doctors, hospitals, and clinics,
that members can use for medical services.
● Members may be limited to using healthcare providers within the HMO's network,
which can be a disadvantage if the member needs to see a specialist outside of
the network.
● HMOs can be a good option for individuals and families who prioritize cost
savings and are willing to work within the limitations of the plan's network.
 Preferred Provider Organizations (PPOs)
● Type of managed care plan that provides members with more flexibility in
choosing healthcare providers than Health Maintenance Organizations
(HMOs)
● They have a network of healthcare providers, including doctors, hospitals,
and clinics, that members can use for medical services
● Members are also able to see healthcare providers outside of the network,
albeit at a higher cost
● Members do not usually need a referral from a primary care physician to see
a specialist
● Can be a good option for individuals and families who prioritize flexibility and
choice in their healthcare providers, and are willing to pay a higher cost for
that flexibility.
 Point of Service (POS) plans

● They are a type of managed care plan that combine features of Health
Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs)
● They offer more flexibility in choosing healthcare providers compared to HMOs,
but at a lower cost than PPOs
● POS plans can be a good option for individuals and families who want a balance
between cost savings and flexibility in their healthcare providers
Recent Developments In Employer-Sponsored
Health Plans

● Continued escalation in health insurance premiums

● Higher deductibles for employees
● Dominance of PPOs
● Decline in medical coverage for early retirement over time
● Wellness Benefits
● Health risk assessments
● Onsite health clinics
● Tighter eligibility requirements for spousal coverage
 Group dental insurance

● It is a type of insurance policy that provides dental coverage to a group of

people, usually through an employer or organization.
● Group dental insurance plans may also have different levels of coverage,
depending on the needs of the group.
● It can be a cost-effective way to provide dental coverage to a group of people
 Group disability income insurance
● It is a type of insurance policy that provides income replacement to a group of
people, typically employees of a company, if they become disabled and are
unable to work due to an illness or injury.
● Disability insurance can help individuals and their families maintain financial
stability during a difficult time.
● It may be offered as short-term or long-term coverage.
● Short-term disability insurance typically provides coverage for a period of up to
six months
● Long-term disability insurance may provide coverage for several years or until the
policyholder reaches retirement age.
 Cafeteria Plans
● It is a type of employee benefit plan that allows employees to choose from a
menu of options to create a customized benefits package that meets their
individual needs.
● With a cafeteria plan, employees are typically given a set amount of money that
they can use to purchase various benefits or services, such as health insurance,
dental insurance, vision insurance, life insurance, disability insurance, and flexible
spending accounts (FSAs) for healthcare or dependent care expenses.
● They provide employees with greater flexibility and choice when it comes to their
benefits, and can help employers attract and retain talented employees.
 Insurance Companies in India
The public insurance companies that offer health insurance in India include:

● National Insurance Company Limited

● The New India Assurance Company Limited
● United India Insurance Company Limited
● Oriental Insurance Company Limited

Private insurance companies that offer health insurance in India include:

● Apollo Munich Health Insurance

● Bajaj Allianz General Insurance
● HDFC ERGO Health Insurance
● ICICI Lombard General Insurance
Questions:
● Difference between group insurance and individual insurance
● Basic underwriting principles required
● Why is minimum participation required in group insurance?
● What are the eligibility requirements for participating in group insurance?
● What are the characteristics of group life insurance?
● Describe different types of managed care plans
● Differences between HMOs, PPOs and POS plans
● Explain cafeteria plans