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Micro, Small, and Medium Enterprises (MSMEs) form the backbone of the Indian economy. They account for approximately 30% of the country’s GDP(Source: the Ministry of MSMEs). Given their pivotal role, securing the health and financial stability of these entities is crucial.

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This is where MSME Health Insurance scheme comes into play. These policies are significantly designed for MSMEs. Let us move ahead and explore the different insurance products available and how it can benefit MSMEs.

MSME health insurance: An overview

MSME Health Insurance scheme is a scheme introduced by DIC (Department of Industries and Commerce). It was introduces with the alignment of government’s vision to create a sustainable ecosystem in the state. The scheme aims to provide financial protection to Micro, Small and Medium Enterprises (MSMEs) against uncertain risks. That may have a detrimental impact on their businesses. Apart from this, this initiative also aims to address the low health insurance penetration among MSMEs and foster a healthier workforce by offering additional benefits such as wellness programs for employees, free health checkups, etc.

Additionally, the scheme intends to provide reimbursement of up to 50% of the annual insurance premium paid by MSMEs and shall be implemented via DICs. This scheme is operated through the four leading Public Sector Insurance companies, including, National Insurance Company Ltd., United India Insurance Company Ltd., Oriental Insurance Company Ltd. and New India Assurance Company Ltd. However, there isn’t any specific health insurance scheme in India, MSMEs can opt for group health insurance policies for their employees offered by different insurance providers in India.

MSME health insurance features

  • Customised packages

Similar to other insurance, companies providing health insurance to MSMEs also offer customised packages. Keeping in mind to meet the diverse needs of MSMEs. These can include various coverages. It includes, hospitalisation, outpatient treatment, and more.

  • Group health insurance

Many MSMEs opt for group health insurance policies. It offers the benefit of a single policy covering all employees, often at a lower premium compared to individual health insurance policies.

  • Add-on benefits

MSME health insurance policies may offer additional benefits such as free health check-ups, wellness programs, and more. Thus, promoting a healthier workforce.

MSME health insurance benefits

The MSME health insurance scheme in India offeres various benefits, addressing the specific needs of MSMEs and their employees. Apart from this, it also elevates the company’s reputation. Thereby, showcasing a business that cares for its workforce. Here are some of the benefits of the health insurance in India:

  • Financial protection: It will help mitigate high direct medical expenses. And, therby, safeguards the company’s finances.
  • Retaining talent and loyalty: By providing health insurance, MSMEs can attractive more prospective employees. Apart from this, it even encourages existing employees to stay. Thus, fostering a stable and committed workforce.
  • Tax benefits: In India, there are various tax benefits for MSMEs that offer health insurance to their employees. It further helps in reducing their overall tax liability.
  • Boosting productivity: With a health insurance policy in place, employees can avail themselves of timely medical care. This can help in reducing absenteeism and enhancing productivity. It is particularly important after the COVID-19 pandemic.

How to apply for MSME health insurance in India?

The specific application process may vary based on the insurance provider you choose and the type of health insurance policy. However, here the common steps you can follow to apply for health insurance in India:

  • Do the research and opt for a suitable insurance provider that offers MSME health insurance policies. Also consider the factors such as premium, coverage, benefits it provides, etc.
  • Contact the insurance provider you chose to understand in-detail the application process and the documents required.
  • Fill out the application form provided by the insurance company. And make sure you fill accurate information about your MSMEs and employees.
  • Submit the necessary documents required along with the application form. Common documents required by insurance companies include, business registration details, employee information, etc.
  • After that, do pay the premium as per the terms and conditions of the health insurance policy you opted for.
  • Once the application is processed and approved, the MSMEs and their employees will be now covered under the health insurance policy.

Also read: NI MSME: Full form, functions, recruitment, notifications, login, training courses list

Top companies offering- MSME health insurance

While choosing the best health insurance companies for MSMEs in India, it’s crucial to consider several factors. It includes coverage options, customer service, claim settlement ratio, network hospitals, etc.

Below, we have listed down some of the top health insurance companies with their last year’s claim settlement ratio and hospital networks.

Health insurance company Health claim settlement ratio FY22 Cashless network hospitals
HDFC Ergo Health Insurance 98.49% 12,000+
Care Health Insurance 95.22% 21,100+
Aditya Birla Health Insurance 96% 10,500+
Star Health Insurance 89.90% 14,000+
ICICI Lombard Health Insurance 99.70% 7,500+
Reliance Health Insurance 100% 8,600+
Digit Health Insurance 93% 11,300+
SBI Health Insurance 66.08% 6,000+
Royal Sundaram Health Insurance 92% 10,000+
Future Generali Health Insurance 96.01% 8,400+
Liberty Health Insurance 97.3% 6,000+
Zuno Health Insurance 94% 5,000+

Challenges faced by MSMEs in India in term sof health insurance

There are several challenges faces by MSME in India when it comes to health insurance coverage. As per recent survey, health insurance penetration in India is alarmingly low, with less than 30% of the population covered by any type of MSME health insurance policy in India (Source: KPMG in association with FICCI). Let’s explore below some of the health insurance challenges faced by MSMEs in India:

  • Affordability and cost management: Balancing the cost of providing comprehensive healthcare coverage with the financial constraints often faced by MSMEs can be a significant challenge. Limited resources and budget constraints can make it difficult to offer comprehensive healthcare coverage without compromising the company’s financial stability.
  • ⁠Lack of awareness: Many MSMEs are not aware of the importance of health insurance and the benefits it can provide to their employees. This lack of awareness can lead to a low uptake of health insurance policies among MSMEs.
  • ⁠Limited availability of suitable products: MSMEs may face challenges in finding the right health insurance products suitable for small teams. This can lead to a lack of interest in health insurance policies among MSMEs.
  • ⁠Exclusion from government healthcare schemes: The scope of the government’s current healthcare schemes such as Pradhan Mantri Suraksha Bima Yojana (PMSBY) and the Employee’s State Insurance Corporation (ESI) does not cater to the unorganised workforce. Thus, leaving out employees of 86% MSMEs from obtaining any kind of healthcare coverage.
  • Retention of skilled workforce: MSMEs often struggle with retaining skilled workers due to the lack of social security benefits, including healthcare coverage. Group health insurance can be a crucial employee perk that aids MSMEs in retaining staff in the face of escalating healthcare expenses.

To address these challenges, MSMEs need to prioritise the health and overall well-being of their workforce. With the help of increasing awareness about the importance of health insurance, exploring affordable and cost-efficient coverage options, and leveraging technology and InsurTech solutions can help MSMEs overcome these challenges and provide comprehensive healthcare coverage to their employees.

Also read: DC MSME: Full form, contact list, schemes project profile, login, application

Charul Nalwaya

Charul is a content marketing professional and seasoned content writer who loves writing on various topics with 3 years of experience. At Tata nexarc, it has been 2 years since she is helping business to understand jargon better and deeper to make strategical decisions. While not writing, she loves listing pop music.