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Group health insurance can be a great asset for employers and employees alike in Pakistan. It provides access to quality medical care and coverage for many medical procedures. But, like any other type of insurance, it has its own set of pros and cons.
Do you know what they are? Are you aware of the potential benefits and drawbacks of group health insurance in Pakistan?
This article will provide an overview of the pros and cons of group health insurance so that you can make an informed decision about whether it is right for your business or organization.
What is Employer-Sponsored Health Insurance?
Employers often offer health insurance to their staff through an insurance plan known as employer-sponsored health insurance in Pakistan.
This type of insurance is often provided in the form of group health insurance, which is designed to cover a group of people. One of the benefits of group health insurance is that the risk is spread out among all members, leading to lower costs for each individual.
To keep their health coverage in effect, employees participating in the plan are usually required to pay a monthly premium, which is often taken out of their salary before taxes are calculated.
The most prevalent forms of group health insurance policies available in the health insurance market include:
- Exclusive Provider Organization (EPO)
- Health Maintenance Organization (HMO)
- Preferred Provider Organization (PPO)
Group health insurance policies typically feature a deductible in Pakistan; which employers can opt for either a low or high amount. Once the deductible is satisfied, the coinsurance kicks in.
Additionally, there is an out-of-pocket maximum, beyond which the insurance provider will pay 100% of all covered healthcare expenses for the remainder of the policy year.
What Are the Pros of Group Health Insurance?
Group health insurance is a widely used option among employers to provide healthcare coverage to their workers. Here are the specific advantages of this type of insurance:
Tax Advantages
There may be significant tax advantages associated with group health insurance.
Employers can frequently deduct the costs of paying employment insurance premiums. Instead, employees use pre-tax money to pay their premiums, which can reduce their taxable income.
Furthermore, small firms that meet the requirements could be able to benefit from the small company healthcare tax credit.
Familiarity
Group insurance is a well-known concept, which can make it simpler to attract employees with a familiar and valuable benefit. One of the key selling points of group health plans is the cost-sharing feature, where the employer pays a portion of the premium.
This is an aspect that employees often find appealing.
Aids in Retention
A notable advantage of offering health insurance benefits is that it can enhance employee morale and retention in Pakistan.
A study conducted by the Society for Human Resource Management (SHRM) revealed that 56% of adults who have employer-sponsored health benefits considered the quality of their health coverage to be a crucial factor in their decision to remain with their current employer.
Group health insurance plans provide employees with access to preventive services and medical coverage that can help them steer clear of serious health problems.
In the event that health issues arise, the insurance plan acts as a financial safeguard against costly medical debts that may accumulate without insurance.
What Are the Cons of Group Health Insurance?
Group health insurance is a popular option among employers, but it’s not without its flaws. Let’s take a closer look at some of the cons associated with this type of insurance:
Lack of Flexibility
The lack of flexibility is a drawback of group health insurance by a health insurance company in Pakistan. Employees may be grateful for the benefit but may feel limited in their options, as the plan selected by the employer may not meet everyone’s needs.
The employer makes the decisions regarding the network, deductible, and premium, leaving the employees without a say in the matter.
This lack of control and personalized options can detract from the appeal of group medical insurance for many individuals in Pakistan.
Besides the basic health coverage provided by the company, some team members might need further insurance for extra treatments not covered by the plan. This can include things like dental and vision care, leading to an impression that the general healthcare package isn’t thorough enough.
Increase of Cost
The best group health insurance also comes with a high price tag in Pakistan.
The cost of this type of insurance has risen in recent years, putting a strain on both businesses and their employees. Premiums and deductibles have gone up, and as a result, many employers are feeling the strain of these costs.
According to a recent survey, 87% of large companies believe that the cost of group health insurance will become unaffordable within the next ten years.
This has led many businesses to explore alternative, more cost-effective options for providing health benefits, such as through a health reimbursement arrangement (HRA).
Adopting group health insurance for your employees’ benefits can seem like a natural choice, as it is widely recognized. However, it is crucial to consider the advantages and disadvantages before finalizing the decision, as group health insurance has its limitations as well.