Strengthen Catastrophic Health Coverage and lower Out-of-Pocket Spend
India’s employer-sponsored health benefits system is at a turning point. Companies spend crores on group medical insurance (GMC) every year. Yet, employees continue to shoulder a large share of their healthcare costs—especially outpatient (OPD) expenses for consultations, diagnostics, chronic care, and preventive treatments. Loop Health’s workforce data reveals the underlying issue: India’s benefits system fails not because employees lack choice, but because plans are poorly designed, fragmented, and severely underutilised.
To fix this, organisations must rethink how they design and negotiate healthcare benefits—not just as insurance policies, but as integrated healthcare systems that reduce real-world costs and protect employees more effectively.
The Underutilisation Crisis in Indian Employee Healthcare
Traditional group insurance in India primarily covers hospitalisation, but only 10% of employees use hospitalisation benefits each year. In contrast, 39.4% of India’s total health expenditure is borne out-of-pocket by households on OPD consultations, medicines, prenatal care, diagnostics, physical therapy, and preventive screenings (National Health Accounts 2021–22). The result is a benefits structure misaligned with actual healthcare consumption patterns.
This is further aggravated by a 73% health protection gap and 14% medical inflation, the highest in Asia. Employees find themselves underinsured for critical everyday healthcare needs while organisations continue investing in plans that deliver limited utilisation. The core issue isn’t premium size—it’s a fundamental mismatch between what insurance covers and what employees need year-round.
Why Traditional Benefit Designs Fail: A Design and Delivery Problem
It is often assumed that employees avoid benefits because they face too many choices. However, data indicates the opposite: utilisation remains low because employees cannot navigate complex, jargon-heavy systems and disconnected vendor ecosystems.
Annual enrollment windows compress decision-making into a matter of days. Brochures are filled with insurance terminology that employees cannot interpret. Claims are rejected because of exclusions that employees were unaware of. Additionally, HR teams manage four to six separate vendors for insurance, TPAs, wellness apps, telemedicine platforms, and diagnostics providers—resulting in a fragmented, inefficient experience.
More critically, traditional plans do not cover preventive or chronic care, even though such needs are prevalent. Loop Health’s Workforce Health Index, based on 214,000 biomarkers and 3,437 working professionals, reveals that 37% exhibit abnormal glucose metabolism—a precursor to diabetes that requires ongoing monitoring. Yet insurance pays only when a catastrophic event occurs, not when early intervention could prevent it.
How Flexible and Integrated Design Drives Higher Utilisation
Enterprises adopting flexible, employee-centric benefits—supported by integrated healthcare platforms—are seeing significantly higher utilisation. For instance, Loop Health’s HealthFlex 2025 model, used by organisations such as Zepto, Ola, Nasdaq, ShareChat, BluPine, and Data Direct Networks, demonstrates how redesigning benefits around life-stage-specific needs transforms employee engagement. Instead of allocating the entire budget to traditional hospitalisation-only insurance, organisations can split the spend between:
- Optimised catastrophic insurance, and
- A flexible, spendable OPD health wallet
Employees can then choose from transparent, pre-configured care packages—such as chronic disease management, maternity care, mental health therapy, and elder care—depending on their life stage. Early implementations show 30–40% utilisation (compared to the industry average of 7–10%), with Zepto reporting a 31% improvement in employee utilisation. When employees see a clearly defined ₹8,000–₹12,000 OPD wallet they can use for consultations, diagnostics, therapy, or nutrition, benefits shift from abstract entitlements to tangible care resources.
Why Integrated Healthcare Infrastructure Determines Success
Flexible benefits succeed only when supported by a consolidated infrastructure. Loop’s model—combining an IRDAI-licensed Direct Broker with its own care delivery ecosystem—illustrates how unified systems outperform fragmented ones. Instead of navigating multiple apps and helplines, employees access everything through one platform:
- Group insurance
- TPA coordination
- Telemedicine
- Diagnostics
- Therapy and mental health
- Nutrition and chronic care
- Cashless OPD networks
- Claims support
- Real-time utilisation dashboards
For HR teams, this eliminates the operational strain of managing multiple vendors and drastically reduces implementation timelines. For mid-sized enterprises (50–500 employees), which typically lack the bandwidth or budgets for complex integration, unified delivery is the only path to offering enterprise-grade benefits at scale.
How HR Should Negotiate Healthcare Plans to Reduce OPD Costs
To deliver meaningful value and reduce employees’ out-of-pocket spending, HR leaders must shift from premium-based negotiation to total healthcare cost optimisation. This requires a new strategy anchored on seven key priorities:
1. Move from “Insurance-First” to “Healthcare-First” Negotiation
HR teams must ask: What drives everyday employee spending—and how can we cover it?
This shifts the focus to OPD coverage, diagnostics, therapy, maternity OPD, nutrition, and mental health. Medical concierges help employees find the right specialist, interpret lab reports, and book appointments—improving trust and outcomes.
2.Secure OPD Wallets for All Employees
Shift a meaningful percentage of the plan—15–25% of the total benefit value—towards OPD, diagnostics, mental health, medicines, therapy, dental, or chronic care follow-ups. This directly reduces employee out-of-pocket spending.
3. Building Hybrid Plans Rather Than Bigger Hospitalisation Covers
Instead of topping up hospitalisation (which only a small fraction use), negotiate hybrid plans where OPD + preventive services + navigation support sit alongside hospitalisation.
4. Reducing Exclusions and Sub-Limits Through Group Negotiation
Use bargaining power to remove room rent caps, disease sub-limits, or hidden exclusions. These changes cost little but improve claim success dramatically.
5. Bundled Pricing and Network Optimisation
Push for bundled diagnostic pricing and curated provider networks to reduce frequent OPD costs by 20–30% without reducing quality. By shifting from “more insurance” to “smarter allocation,” employers unlock significant savings for employees while still controlling organisational costs.
6. Integrate Preventive and Chronic Care into the Plan
Conditions like diabetes, hypertension, thyroid disorders, PCOS, anxiety, and back pain require continuous management. Negotiated plans should include monitoring, care navigation, unlimited telemedicine, and specialist access.
7. Demand a Single, Integrated Platform
A unified system for insurance, OPD, navigation, therapy, and diagnostics drastically increases utilisation. HR teams must demand data dashboards that reveal patterns, risks, and fraud—allowing mid-year interventions instead of annual guesswork.
Why HR Must Negotiate What Employees Cannot Achieve Individually
The future of employee healthcare in India hinges on HR’s ability to negotiate group-level benefits that individual employees could never secure on their own. A retail buyer has no bargaining power; they simply accept retail prices and limited coverage.
Company HR, however, represents the collective power of the workforce. This allows organisations to shape insurance products, secure OPD inclusions, eliminate exclusions, demand integrated care delivery, and negotiate cost efficiencies at scale. Group-level negotiation empowers companies to deliver what matters most: reduced out-of-pocket OPD expenses, stronger hospitalisation protection, and accessible, equitable everyday care.
As healthcare costs rise and chronic conditions become more prevalent, HR’s role moves beyond benefit administration to healthcare system architecture. Companies that lead this transition—by adopting hybrid, flexible, preventive-care-driven models—will build healthier, more resilient, and more productive teams while dramatically improving the real value employees receive from their benefits.
