MSMEs struggle with a variety of issues because of lack of access to finance, technology and raw materials. Talent availability is also a problem, and one of the barriers in employee development and retention is the absence of health insurance coverage.
“Historically, only a small percentage of MSMEs provided healthcare benefits to their employees as most insurers required a minimum number of employees to extend insurance coverage,” says Yogesh Agarwal, Founder & CEO, Onsurity. “Offering comprehensive healthcare benefits is necessary to help businesses differentiate themselves in a competitive talent market.”
Only 5-7% of small businesses provide health insurance coverage to their employees, say industry observers.
Stakeholders say that health insurance coverage is a major factor that can increase or decrease the morale of employees. “Focusing on offering the right healthcare benefits is crucial because it can help mitigate these challenges by ensuring that employees are healthy, motivated, and less likely to leave,” says Agarwal.
MSMEs are considered the backbone of the economy as they contribute nearly 30% to the GDP and provide employment to over 100 million people. As they play such a key role in the economy, most small businesses need to get access to affordable skilled labour. Stakeholders say that providing healthcare coverage aids in attracting and retaining individuals, thereby fostering development.
Earlier, insurers needed a minimum number of subscribers from a company and MSMEs were not able to provide that number. But this is no longer a concern now as many new-age insurtech companies cover small teams, says Agarwal.
By extending insurance coverage to employees, the company enhances its image and demonstrates a commitment to employee welfare and social responsibility.
“Healthcare services businesses can sustain operations seamlessly without interruptions,” says Shashank Sinha, Head GMC Underwriting, Digit Insurance. “Opting for customised insurance schemes can be cost efficient. Investing in healthcare insurance is key to ensuring stability, employee well-being, talent retention, regulatory compliance risk management reputation enhancement business continuity cost effectiveness for MSMEs.”
Need of a good healthcare plan
Health-related concerns among employees can lead to increased absenteeism, lower productivity, and higher attrition rates, all of which can be detrimental to a business’ growth. With the rising cost of healthcare and medical inflation, employees without adequate health coverage are at risk of facing significant financial burdens, which can lead to decreased job satisfaction and loyalty. “A comprehensive healthcare plan not only safeguards the well-being of employees but also ensures that businesses avoid the long-term difficulties associated with a disengaged and unhealthy workforce,” says Agarwal.
Comprehensive group medical coverage can alleviate the financial stress employees often face if they get into an accident or experience complications due to illness. This, in turn, results in reduced focus and productivity, minimising their contributions to the company.
“With the continuous rise in medical inflation, even a minor medical emergency can lead to substantial out-of-pocket expenses for employees. It is paramount to realise the importance of healthcare benefits for employees. Providing health insurance plans that offer comprehensive coverage, including annual checkups and other health benefits such as early detection, is crucial for managing life-threatening illnesses. This proactive approach to healthcare not only improves employee well-being but also contributes to long-term loyalty to the company,” notes Sinha.
Companies in India can also enjoy significant tax benefits by providing corporate health insurance to their employees. The premiums paid for group health insurance policies are considered a tax-deductible business expense, says Sinha.
Comprehensive healthcare benefits package
Stakeholders say that a comprehensive healthcare benefits package should be a top priority for every business regardless of its size.
“Essential benefits should include hospitalisation coverage, preventive care (like lab tests and fitness plans), mental health support, and telemedicine access. For a more robust offering, consider including term life insurance to protect employees’ families. In today’s day and age, MSMEs have the option to leverage digital, Diagnose it Yourself (DIY) healthcare solutions that are easy to manage and require minimal administrative overhead,” says Agarwal.
Sinha says that the significance of having ample insurance coverage for employees can’t be understated. Companies should ensure that they provide their employees with an adequate sum insured to account for the erosive effects of inflation, he says.
Companies can enhance employee satisfaction and financial security by also offering flexible group insurance options. In addition, a variety of add-ons can create a comprehensive and holistic benefits package. Add-ons can include mental wellness programmes, dental coverage, outpatient care and diagnostic tests.
“Maternity benefits should be included to support female employees. Additionally, incorporating critical illness cover is essential to safeguard employees against the financial burden of life-threatening illnesses such as heart attacks, cancer and strokes. Providing employees with choices such as coverage through add-ons or increased sum insured for certain risks can make a significant impact on morale and productivity,” add Sinha.
