Group Mediclaim Policy Explained for Indian Employers

If you run HR or finance in India, you already live with the term group mediclaim policy (GMC). It’s the master health-insurance contract your company buys, with employees (and often families) enrolled as members. Done right, GMC cushions households from hospital bills, steadies absenteeism, and quietly lifts offer acceptance. Done vaguely, it spawns confusion at the worst possible moment—admission. This guide cuts the jargon, aligns with current IRDAI rules, and shows you how to design and communicate a group mediclaim policy people can actually use.

What a group mediclaim policy is

A GMC policy is an indemnity health plan issued to your company (the policyholder). Employees and eligible dependants are covered as members under one master number. In practice, the benefits envelope includes in-patient hospitalisation (room and nursing, ICU/OT charges, surgeons’ and specialists’ fees, diagnostics, medicines and consumables), day-care procedures that no longer need 24-hour stays, pre- and post-hospitalisation windows for to the same illness/injury, and ambulance charges. Most modern group policies also include AYUSH hospitalisation when admitted to registered facilities, though details live in your schedule. By regulation, these essentials must be reflected in a Customer Information Sheet (CIS)—a one-glance, plain-language summary that accompanies the policy. Keep your CIS easy to find on the intranet; it’s the single most useful page for employees under time pressure.

GMC is not life insurance (that’s group term life) and not accident-only cover (that’s group personal accident). For complete protection, you’ll likely run all three—just keep the purposes and claims paths distinct in your handbook.

What changed under IRDAI’s 2024–25 framework

IRDAI consolidated and refreshed health-insurance rules into Master Circulars in 2024. Three elements are especially practical for employers:

1) Moratorium is now five years (60 months).
Once a member completes 60 continuous months of coverage, a health policy/claim can’t be contested for non-disclosure or misrepresentation—except for proven fraud. Credits from portability and migration count toward the 60 months. If your renewal is post-May 29, 2024, the updated five-year rule applies; older policies inherit it at their next renewal.

2) The Customer Information Sheet (CIS) is mandatory and central.
Insurers must issue a Customer Information Sheet (CIS) that sets out benefits, key exclusions, waiting periods, claims steps, service contacts, and grievance paths in plain English. Treat the CIS as your internal “one-pager”—link it alongside your network search and claims walkthrough.

3) TPA oversight is explicit.
Third-Party Administrators (TPAs) handle cashless authorisations and claims coordination per the insurer’s product rules, and they remain governed by IRDAI (Third Party Administrators—Health Services) Regulations, 2016. Keep your TPA’s name, cashless helpline, and escalation path visible on e-cards and your intranet.

There’s also a draft IRDAI circular proposing uniform norms for proportionate deductions when members choose rooms above their eligible category. It’s worth tracking while you design realistic room categories today.

Cashless vs reimbursement: set expectations before anyone needs care

Employees don’t care about product jargon; they care about what happens at the admission desk.

Cashless works at network hospitals: the hospital sends a pre-authorisation request to the insurer/TPA with the diagnosis and cost estimate; once approved, the hospital bills the insurer/TPA directly. Reimbursement covers treatment at non-network providers: the member pays first and submits originals (discharge summary, itemised bills, investigation reports, prescriptions, bank details) for repayment. Cashless isn’t “better”—it’s smoother; reimbursement is flexibility. Document both flows with a checklist and screenshots in your handbook, and put the network search link one click away from the CIS.

Room rent caps and proportionate deduction

If a member selects a room above the eligible category, many policies apply proportionate deduction—prorating associated charges (doctor’s fees, nursing, OT, etc.) in addition to the room difference. Two things reduce friction:

1. Design humane room eligibility based on what private rooms actually cost in your cities—avoid caps that make “cashless” feel theoretical.
   
   
2. Explain the math in your handbook with one worked example (eligible ₹5,000 room vs chosen ₹7,500 room), so no one discovers it at discharge.
   
   

Why the emphasis? IRDAI has proposed standardising how proportionate deduction should work; while it’s a draft, the direction is clear: transparency and consistency.

Waiting periods, exclusions, and what you can (and can’t) waive

Groups often secure reduced or waived waiting periods versus retail products, especially at scale. What’s not flexible are the boundaries on exclusions: IRDAI’s Guidelines on Standardization of Exclusions in Health Insurance Contracts (2019) define what can’t be excluded, require standard wordings, and brought important guardrails (e.g., harmonisation with mental-health coverage). Keep your certificate and handbook language aligned to these standards so employees aren’t surprised at claim time.

Optional levers that change how your plan feels

Small design choices deliver outsized trust:

• A corporate buffer for exceptional, high-cost cases (with clear criteria and approval turnarounds).
  
  
• Restoration of the sum insured after a large claim (spell out triggers to avoid mismatched expectations).
  
  
• Voluntary top-ups employees can buy at enrolment (including parental cover), so the base stays sustainable while households get the headroom they want.
  
  

Capture these in one page of plain language; ambiguity and benefits don’t mix.

Inclusion by design and why insurers can support you

IRDAI’s 2024 framework leans into access and inclusion—product availability across age bands and pre-existing illnesses, contemporary care (day-care and modern procedures), and alignment with broader Indian law (e.g., the Mental Healthcare Act, the RPwD Act, HIV/AIDS Act, Surrogacy law). In short: the regulator’s intent and market practice now point the same way. As an employer, pick an insurer that can operationalise this, and mirror that tone in your internal policy docs.

Designing sums insured and room categories without confusing fine print

Rather than asking “What’s everyone else buying?” anchor sums insured in local hospital tariffs for common procedures, plus an ICU buffer. Tier by grade if you must, but avoid punitive room-rent logic; nothing destroys faith faster than a proportionate-deduction surprise. If you do use disease-wise sub-limits or co-pays, show one worked scenario (“appendectomy, non-ICU room”) and keep the list short. Your goal is coverage people understand and can actually use.

TPAs, SLAs, and what to print on the ID card

TPAs aren’t vendors to your employees; they’re the front line. Under the TPA Regulations (2016), they admit claims, authorise cashless per insurer rules, and recommend payments; the insurer remains ultimately responsible. On your e-card and intranet, print the TPA’s name, cashless helpline, email for reimbursement submissions, escalation path, and a line that says “Carry a government photo ID and your e-card for admissions.” Measure what matters: pre-auth turnaround, query-closure time, and denial-to-appeal outcomes.

Finance and tax: the two paragraphs your CFO needs

For the employer, premiums you pay for a group mediclaim policy are generally treated as ordinary business expenditure when incurred wholly and exclusively for business—your finance memo will typically cite Section 37(1) of the Income-tax Act for that baseline.

For the employee, the Income Tax Department’s own guidance states that medical insurance premium paid or reimbursed by the employer is not chargeable to tax in the employee’s hands. If employees contribute (say, for parental add-ons), their share typically qualifies for Section 80D deductions within limits. Link both references in your onboarding mailers and payroll wiki; it prevents folklore and reduces ticket volume each enrolment season.

Communication kit: make GMC usable before day one

Create a single “Start Here” page on your intranet or benefits app that answers five questions in order:

1. Who’s covered?
   
   
2. What’s covered? (link the CIS)
   
   
3. Which hospitals are cashless? (link the network search)
   
   
4. How do I start a claim—planned vs emergency? (show screenshots)
   
   
5. Whom do I call at 10 p.m.? (TPA helpline and escalation path)
   
   

The more you front-load clarity, the less your team learns insurance on a gurney.

Renewal strategy: treat GMC like an operating system, not a purchase order

Quarterly, not annually, look at utilisation (cashless vs reimbursement ratio, top admitting hospitals, average pre-auth time), friction (repeat document gaps, denials by reason), and equity (are certain locations hitting room caps more often?). At renewal, renegotiate the levers that matter—room eligibility, sub-limits, buffers, restoration—using your data to justify each change. Update the handbook the same day you sign the endorsement, and publish a short “what changed this year” note.

Frequently asked questions

How many people do we need to buy a group plan?
Insurers write small groups (often from five members up), with richer waivers at higher headcounts. Spell out eligibility (full-time, part-time, interns) in one line to avoid case-by-case decisions.

Is maternity covered? From when?
Group plans can include maternity with defined sub-limits and waiting periods; decide your stance and put it in the CIS so families can plan.

What’s the portability window if someone leaves?
Most insurers allow portability from group to individual within a short window (often 30–60 days) with underwriting. Publish the window and contact to avoid last-minute scrambles.

Do top-ups make sense?
Yes, especially for parental cover or higher sums insured. Offer voluntary top-ups at enrolment; they protect households without ballooning the base premium.

Where this sits in the broader benefits stack

A group mediclaim policy is the health-cost shield in your stack. Pair it with group term life for any-cause family protection and group personal accident for disability risks—together they close the catastrophic-risk triangle. Use telemedicine to route minor issues away from OPD queues so small problems stay small. For employees, the tangible questions remain simple: Is my hospital cashless? Is my family covered? Your job is to make the answers reliably “yes.”

‍
Resources:

• Group Health Insurance (how GMC works in practice, from cashless to reimbursements)
  
  
• How to file e-claims (step-by-step screenshots)
  
  
• How to file reimbursement claims
  
  
• GMC vs GPA (what each policy actually does)
  
  
• Telehealth (24×7 virtual care that plugs into GMC)