Do Small Businesses Have to Offer Health Insurance?

Employees are like the lifeblood of an organisation regardless of its type and size. It is an employer's responsibility to take care of their employees by providing them with the necessary care and financial support they need. One of the most common ways in which companies can take care of their workers is by providing them with health insurance.

But is it mandatory for small businesses to offer health insurance to their employees?
 

In this blog, we will discuss small business health insurance requirements in detail.

Do Small Businesses Have to Offer Health Insurance?

When searching for health insurance for small businesses, it is common to encounter terms like MSME. So, before understanding the small business employer health insurance requirements, let us see what is MSME.
 

MSME is a short-form for Micro, Small and Medium Enterprises. It is a specialised category for small and growing businesses in which businesses are classified depending on their yearly turnover and investment in plant and equipment.

This classification plays a very important role in checking the eligibility of a business for various government schemes, initiatives, and for the mandate of providing facilities like health insurance.

Whether you fall in the category of micro, small, or medium enterprise, it is always advisable to offer health insurance to your employees.

As discussed above, it is not a mandatory requirement for small businesses to offer health insurance to their employees. However, offering health insurance has several benefits. In fact, it is a common practice in Indian companies to offer health insurance benefits to their employees as a part of their employee welfare programs.

How Can Small Businesses Benefit by Offering Health Insurance to Their Employees

Now that we have discussed small business health insurance requirements, let us take a look at various advantages of offering health insurance to your employees. Following are some perks of health insurance to small businesses:
 

• Reduce Financial Strain: Health insurance offers much-needed financial security to employees to deal with unforeseen medical emergencies. It means they do not have to arrange huge sums of money to pay their healthcare bills at the last minute.
  
  Besides, comprehensive health insurance offers coverage for small-scale business owners alongside their employees. Therefore, both employers and employees can stay protected against unprecedented losses due to sickness, death, and other accidents.
  
  
• Keep Employees Motivated: The number of small businesses has grown dramatically over the last few years. It simply means that the competition is fierce, and it is becoming harder to retain good employees.
  
  This is where health insurance becomes very important for employers. It helps them retain their employees and instil a sense of loyalty. Simply put, it shows your employees that you care for them, and they will be protected in the face of unforeseen events.
  
  
• Offer Tax-saving^* Benefits: Taxes often impose a finance burden on small businesses and startups. Health insurance policies can help you maximise your tax savings. As per government policies, offering health insurance schemes to your employees may help you save a good amount on taxes.
  
  
• Increase Reputation: Most small businesses struggle to set themselves apart in the market even after making all kinds of business efforts. When you offer health insurance and related benefits to your employees, it showcases your financial status. This helps you establish a brand that is trusted and renowned in the market.
  
  
• Attract New Employees: Talented and hard working employees are the reason behind the success of small businesses. Besides retaining existing employees, health insurance also helps you attract new employees. Benefits like health insurance are among the most prominent factors that encourage new talents to join a company.

Different Types of Health Insurance for Small Businesses

After looking at business health insurance requirements and the benefits of offering health insurance to employees, you might want to look at different types of health insurance available for small businesses.

Below are some common health insurance types you can consider buying:

• Individual Health Insurance: These types of plans are designed for individuals. They offer coverage for healthcare expenses arising due to hospitalisation, medication, surgeries, and so on.
  
  
• Critical Illness Health Insurance: As the name suggests, critical illness insurance offers coverage for critical medical conditions such as parkinson’s disease, liver failure, specific cardiac disease, severe cancer, and so on. Besides, you can also consider getting group term insurance for your employees and add a critical illness rider^# to make it more comprehensive.
  
  
• Group Health Insurance: This is one of the most popular types of health insurance among small businesses. You can opt for group insurance even if you have only a few employees in your company. You can get in touch with insurance providers for details on small group health insurance requirements.
  
  
• Government Health Insurance Policies: With an aim to provide affordable health insurance schemes to the citizens, the Indian government has launched several healthcare insurance schemes such as Pradhan Mantri Jan Arogya Yojana (PMJAY) and Ayushman Bharat. These schemes allow eligible candidates to get cashless treatment for specific diseases and health conditions.

How to Choose the Right Health Insurance?

Following are some tips to help you navigate the process of purchasing the best health insurance plan for your staff:
 

• Identify Your Health Insurance Needs: First things first, identify your insurance requirements. This involves considering the total number of employees, collecting their medical and personal details, and so on. This will give you a clear idea on the right type of health insurance.
  
  
• Find Reliable Insurance Provider: Once you have identified your employer health insurance requirements, it is time to search for the most reliable health insurance provider. Make sure that your selected insurer is trusted and known for offering hassle-free claims settlements.
  
  
• Compare Multiple Health Insurance Plans: The best way to find the right health insurance plan is to compare the features and benefits of multiple policies. Doing so, you will be able to select the most suitable health insurance for your staff.
  
  
• Check Network Hospitals: Network hospitals play a key role in providing cashless claims settlement. They allow insured candidates to get cashless treatment by certified healthcare professionals at network facilities. Therefore, consider working with an insurance provider that has ties with several healthcare facilities.
  
  
• Pay Attention to Premiums and Deductibles: Pay special attention to the premium and deductibles and select an amount that aligns with your budget and financial situation. Remember, the higher the deductibles the lower will be the premium amount and vice-versa.
  
  
• Thoroughly Read and Understand Policy Documents: Last but not the least, read the policy papers carefully before finalising a policy. It is an extremely crucial step that will help you understand the policy coverage and claim settlement process in a better way.

Final Thoughts

Health insurance has become a basic necessity to deal with the increasing cost of healthcare in the country.  While small businesses are not mandated by the government to offer health insurance, doing so can bring numerous advantages as we have listed above.
 

The good news is, IRDAI allows small businesses with fewer employees to purchase a corporate group health insurance policy to safeguard their employees against sudden health emergencies. Alternatively, they can purchase a corporate group life insurance with a health rider^# to offer an overall protection to their employees.
 

We have discussed what is MSME, the benefits of offering health insurance, employer health insurance requirements and whether small businesses should offer health insurance to their employees. Hope this information helps.