Can I buy a group health insurance cover for my retired employees?

Can I buy a group health cover for my retired employees? Would pre-existing diseases be covered immediately? How would the payment process work? Many of my employees do not have a private health insurance policy, so after retirement they would be without cover. Would this plan provide better coverage than off-the-shelf market plans?

- Name withheld on request

Yes, it is possible to structure a group health insurance policy for your retired employees. Such a policy can be custom-designed with varying waiting periods for pre-existing diseases based on the size and composition of the group. It is also possible to cover pre-existing diseases from day 1. 

Group plans are highly customizable. One can incorporate various add-ons, which are not available in a regular health insurance plan. Further, due to a large group, the negotiated per-person premium for a group plan is generally lower than an individual plan. Another aspect would be easy availability of coverage. Under a retail plan, each individual would be specifically underwritten. If an individual has developed certain chronic health conditions, then it would be difficult for them to get coverage without loading or an exclusion.

Typically, in a group policy, the employer pays the insurer. It is common for employers to recover the cost of retiree health insurance from the individual, so the cost is ultimately borne by the retiree.

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I am leaving my current company after 10 years. So far, the company was providing health coverage through their group health insurance policy. Now, I am starting a consultancy firm, with me being the sole employee. What is the best way for me to buy health insurance cover?

- Name withheld on request

The most preferred option would be to avail group to individual portability with the current insurer. Under the group to individual portability guidelines, one can port into a retail plan of the same insurer that had issued group coverage. In such a case, the waiting period for pre-existing disease in the retail plan would get reduced to the extent that the insurer was providing continuous coverage in the group plan. 

This will help you migrate to a retail plan with lower waiting period. The other alternative would be to buy a regular health insurance plan from the market. As your firm grows in headcount, you could consider buying a group insurance policy too.

(Abhishek Bondia is a principal officer and managing director at SecureNow Insurance Broker Pvt. Ltd.)