Individual vs Small Business Health Insurance – Which is Cheaper & Why?

By Laxita Gautam
  | Published: 15 July 2021

Don’t gamble with your health, get the right cover at the right price.

Average Rating / 5 (ratings ) | 416 Views
Health Insurance

T&C Apply

Buying health insurance for?
  • Self/Family
  • Domestic Workers
  • Investor

Running a small business can be a bit challenging considering the initial instability of the functions and operations and the kind of efforts it takes to keep everything smooth and steady. Having to worry about spending a lot of funds on healthcare for the employees can add to this nightmare significantly. But healthcare is something that is no longer optional in the UAE. Every organization has to provide at least a basic level of medical insurance in Dubai and the UAE to their employees as of July 2015. But since small businesses often work with a small workforce, it is common for them to be torn between choosing individual healthcare plans and group health insurance plans for small businesses. Apart from the difference in benefits, cost plays the biggest role in this dilemma.

Average Cost of Individual Health Insurance

Individual plans with decent coverage and benefits can cost up to AED 6000 in the UAE when bought in young years. This is assuming that there are no add-ons and any over-the-top benefits. Increasing age or the number of benefits, the premium can go up to AED 10,000 per year for individual plans. If you consider family plans or dependent plans, the combined cost can go up to AED 30,000 per year on average.

Average Cost of Small Business Health Insurance

The cheapest small business health insurance come for AED 650 which is the essential benefits plan mandated by the government of the UAE. Non-essential, non-basic healthcare insurance plans are a little more expensive per person ranging from AED 1000 – AED 5000 per person. A plan costing AED 5000 per person would cover all the basic benefits along with a few additional ones. Small business healthcare insurance plans are designed with keeping “affordable healthcare” insurance in mind this is why they are inclusive of as many benefits as possible at the least possible price.

Which One is More Cost-Effective?

Both individual and small business healthcare insurance plans are worth the money spent on them. But when it comes to choosing the option that saves the most money, small business health insurance plans are it. They cost a lot less than it would you bought individual plans for each employee. Individual plans for every employee can add the benefits of the divided risk pool since all the employees are covered under a separate plan. But benefit wise, small business medical insurance plans are more cost-effective than individual health insurance plans.

Why are Small Business Health Insurance Plans Cheaper?

There can be several reasons for a product to be cheaper apart from the basic demand-supply law. So far, we have established that small business health insurance plans are cheaper, let us examine some of the reasons for that:

Lower Cost Per-Person

Since business or group insurance plans come as lump sum insurance for all the employees under a single plan, the per-person cost for the company gets reduced. Think of it as a wholesale shopping experience – when you buy in bulk, you save more money as compared to retail shopping. Small business healthcare insurances are kind of the same – buying one plan that covers everyone ends up being a rather cost-saving deal on a per-person basis.

More Stability Over Time

Among all different kinds of health and other general insurance plans available in the UAE, group insurance plans are generally the least affected by market forces. This means that when other kinds of offline and online health insurance plans see a huge hike in the premiums, group insurance plans may not get any hike at all or get an almost negligible hike.

More Cost-Effective Top-Tier Plans

Several comparative studies showed that the essential and primary level group healthcare plans along with the exclusive level top-tiered healthcare plans end up being cheaper than the same levels of individual plans. Exclusive-level group insurance plans which are generally labelled as Platinum, Deluxe or Gold are some of the top-savers in this category. Even if you go with a med-level group medical insurance Dubai for your employees, you still won’t have to spend more than you would have on individual plans for everyone.

Essential Benefits Coverage

When you opt for a small business group health insurance plan, you can go for the essential coverage plan instead of choosing a basic level individual health insurance plan. The essential benefits plan designed for small businesses contains all the minimum required healthcare benefits and come at a very low price too. This makes having mandatory group medical insurance in Dubai and the UAE for employees rather cost-effective.

Lesser Effectors of Premium-Influencing Factors

Factors that influence premium rates in individual plans have a lot less effect on the group health insurance plans than it does on the individual health insurance plans. These factors can include  

Increasing age, change in living areas and environmental changes. Since the premium of the group insurance plans is decided for the whole group, such factors take effect rarely to maintain fairness.

Constant Increase in the Rate of Individual Plans

Individual healthcare plans have been seeing a steady rise in their premium for quite a while now. The reason for this could be the improving quality of the healthcare sector which also increases the cost. This in turn makes the group health insurance plans a lot cheaper choice to go with as compared to the individual healthcare plans.

Limited Network

Group health insurance plans like the essential benefits plan come with quite a limited network of hospitals and registered physicians and doctors. Even though this makes getting treatment under group insurance plans a little harder than other insurance plans, it also ensures that these group health insurance plans for small businesses are a lot cheaper than individual plans.

VAT Benefits

Business plans get the benefit of claiming VAT charges that are put on the plans and getting them returned to the business. General insurance is charged with 5% in the UAE which can be filed for tax returns by any small or big business. This makes group health insurance plans for small businesses a lot more cost-efficient.

Conclusion

Both individual and small business group healthcare plans are an excellent choice for your business. They come with an individual set of strengths and benefits. If you want the health insurance plans to be customisable as per each employee individual health insurance plans are the ideal choice. But if you need to cut some costs but still want the employees to have a decent cover for healthcare expenses, group insurance plans for small businesses are the perfect choice to go with. With proper research and a little assistance from the financial experts at PolicyBazaar UAE in selecting and buying your online health insurance, you can easily find the right, cost-efficient small business health insurance plan for your employees.

Laxita Gautam
Laxita Gautam

Senior Content Writer | She functions on classic British fiction, Japanese manga, and strong americanos. Laxita is tailor-made to create engaging, interactive pieces that offer simplified insights into complex subjects.