The Group Policy That Disappeared — When Your Employer's Lapse Becomes Your Crisis

How Group Health Insurance Actually Works

Most salaried employees in India receive health coverage through a group policy — also called a corporate mediclaim. Here is how it works:

The employer holds a master policy with the insurer. The employer pays the premium for all covered employees (and sometimes their dependants). The employees and their families are "members" of the group — beneficiaries, not policyholders.

The employee receives a health card showing their name, the group policy number, and a validity period. They have no direct contractual relationship with the insurer. The insurer's obligation is to the employer (the master policyholder), not to the individual employee.

This structure creates a critical vulnerability: If the employer fails to pay the renewal premium, the group policy lapses — for all members simultaneously. If an employee leaves the company, their membership in the group ceases on approximately their last working day.

In neither case is the individual employee necessarily notified. The insurer communicates with the employer. The employer may or may not communicate with the employee. And the health card in the employee's wallet continues to exist — showing a future validity date — until it is recalled or the employee checks their status.

The Contradiction at the Heart of This Case

The health card showed coverage until May 2026. The rejection happened in February 2026. That is a three-month gap during which the card indicated active coverage.

Either:

1. The policy was cancelled before the date of admission — in which case, the employee should have been notified, and the health card was misleading
2. The policy was cancelled after the date of admission — in which case, the claim should be honoured because coverage existed at the time of the event
3. The employee left the employer before the date of admission — in which case, his membership in the group policy would have lapsed on his last working day, regardless of the card's validity date

The answer to this question determines the outcome of the case. The most important date is: when exactly was the policy (or the employee's membership in it) cancelled — and how does that compare to the date of admission?

What to Do If This Happens to You

Step 1: Establish your employment status on the date of admission. Were you still employed on the day you were admitted? Obtain a letter from your employer's HR department confirming your last working day and whether your health coverage was active on the admission date.

Step 2: Obtain the exact cancellation date from the insurer in writing. Send a formal request asking them to state: (a) the exact effective date of policy cancellation; (b) the reason for cancellation; and (c) whether notice of cancellation was sent to the employer, and when.

Step 3: Check whether the cancellation pre-dated the admission. If the policy was cancelled after your date of admission, the claim should be honoured. Insurance coverage at the time of the insured event is the operative test — not the date the claim is processed.

Step 4: File a grievance highlighting the health card discrepancy. If your health card showed a future validity date at the time of admission, the insurer cannot issue a card showing future coverage and then deny a claim that falls within that period on the ground that the coverage was actually cancelled.

Step 5: Escalate to the Insurance Ombudsman. The Ombudsman can examine whether the cancellation was properly communicated and whether the claim was validly denied given the dates involved.

The Employer's Responsibility

If the policy lapsed because your employer failed to pay the premium:

• As a member of the group, you were not responsible for premium payment
• You had no way to verify the premium payment status
• You relied in good faith on a health card that appeared valid

This creates a separate action against the employer for failure of duty of care — particularly if the employer continued to deduct a health insurance contribution from your salary while failing to pay the premium to the insurer.

What This Case Teaches Policyholders

Your group health card is not proof of coverage. It is a document issued at the time of policy inception. It does not update in real time when coverage lapses.

Know your last day of coverage. If you change jobs, resign, or are made redundant, confirm with HR exactly when your health cover ends. Arrange alternative cover immediately.

Ask HR for an annual confirmation that the group policy is active and that premium payments are current.

If you receive a cashless rejection that says "policy cancelled," do not accept it at face value. Verify the exact cancellation date and compare it to your admission date. The answer may be in your favour.

Case details have been anonymised. This article is based on documents reviewed as part of FairClaims' 2026 case intake. It is for informational purposes only and does not constitute legal advice.