Why Only 5% of Employees Use Health Insurance

In India, more than 90% of corporate workers are covered under some version of employer-provided health benefits. This may sound like a big win in terms of employee wellness; however, dig a little deeper, and you’ll discover a shocking truth: less than 5% of workers ever use their health insurance in a year.

This number should catch your attention, especially in light of the increasing burden of chronic conditions, the increase in mental health stressors, and the increasing need for day-to-day preventive care.

So what is going on?

This blog examines the solutions for the enormous gap in health insurance usage and why the workforce in India deserves a healthcare solution that actually meets their true needs, such as welUp by SaveIN.

The Illusion of Health Insurance Coverage

Let’s start with the basics: Corporate health insurance exists to protect employees from catastrophic outcomes due to hospitalization financially. Most group health insurance plans' benefits kick in only once the employee is admitted to a hospital for 24 hours.

In theory, this sounds fine. Isn't that the point of insurance? When do you truly need it?

In practice, here’s what we see:

• Most Indian employees are now in their 20s or 30s, and this age group typically does not experience hospitalization regularly.
• Most health concerns employees face are outpatient: dental visits, mental health therapy, skincare consultations, fertility treatments, fitness needs, and chronic care management like diabetes or PCOS.
• These everyday healthcare needs are not covered by traditional health insurance, rendering it practically useless for the majority of employees, most of the time.

And thus, the paradox: coverage exists, but care does not.

Top Reasons why only 5% of employees will use their health plan

1. Insurance is for Hospitalization

The vast majority of group health insurance in India is inpatient, so if an employee has therapy, a doctor's appointment, a diner visit, nutrition consult, fertility assessment, gym membership, physiotherapy, or acne appointment, it will never be covered by a traditional insurance plan.

In the post-COVID world, most of the employees are now health-aware people who need health support outside of hospitals in prevention, wellness, and everyday care.

2. Complex Process of Insurance Claims

Claims often require lots of paperwork, hidden approval criteria, and several granular timelines. For most employees, the effort-to-reward ratio will leave them discouraged, particularly if it's a relatively small bill.

A Policybazaar survey indicated that over 60% of insured persons have trouble with filing or following up on claims, which causes them to skip it altogether.

3. Limited Network and Access

Most insurance plans deal with a limited petit of network hospitals, often not near where employees live or work. So getting even what is entitled is tedious.

Residents of smaller towns or rural service areas have found that the closest empanelled hospital is sometimes hours away, and coverage is hence limited.

4. Employees Don’t Know What Is Covered

According to a report by Plum, 70% of employees don’t know what is covered when they look at their health insurance policies. This can lead to member confusion, inaction, and ultimately undermine their own use of healthcare entitlement provided in the insurance policy.

Many don't know their policy limits, pre-existing exclusions, and importantly, how to seek reimbursement by way of claims. If you don't know what you are entitled to, you won't use it.

5. Preventive Care is Neglected

Traditional insurance models are designed for curative care, rather than preventive care. Now, however, the workforce of the 2020s wants to be healthy, rather than treated sick.

Mental health, especially, is a glaring omission. The National Mental Health Survey found that 1 in 7 Indians suffers from some form of mental illness, yet most insurance policies exclude therapy, counseling, and psychiatric consultations unless they're part of a hospitalization event.

6. Fear of Premium Hikes and Job Switches

Employees often avoid using their insurance out of fear that:

• Future premiums may rise (especially for family coverage).
• Claims might affect their standing with HR.
• Coverage may lapse if they leave their job.

In other words, the “use it and lose it” fear is real, pushing employees to avoid utilizing benefits they’ve technically earned.

A New Health Reality: The Rise of Outpatient and Preventive Care

Let’s look at how healthcare has shifted:

The gap between traditional insurance and modern needs is widening, and employers are taking notice.

Post-pandemic, there’s been a 300% spike in demand for outpatient services, including telehealth, dental care, fertility support, and therapy, especially among younger employees.

This is where platforms like welUp come in, not as insurance alternatives, but as care enablers.

Introducing welUp: Healthcare Designed for Real Life

welUp by SaveIN is not insurance; it’s better.

It’s a health membership plan designed specifically for modern workforces who want convenient, flexible, and affordable access to care.

Here’s how welUp solves the very problems that plague traditional insurance:

• Covers 99% of Everyday Health Needs: From mental health therapy to dental care, from fitness programs to fertility consultations, welUp covers what employees need day-to-day.
• Works Across 7,000+ Centers in 100+ Cities: Unlike insurance that limits you to empanelled hospitals, welUp is a distributed care network available where your employees live, work, and move.
• ₹5 Lakh Credit Limit with 0% EMI: High-quality care often comes at high costs. welUp solves this by offering a credit limit of ₹5 lakh per employee, with zero-cost EMI so they can pay at their convenience.
• No Paperwork, No Waiting, No Claims: welUp removes the red tape- employees can book services directly through the app or platform, without any claim forms or approval chains.
• Fully Digital, Fully Transparent: Employees get full visibility into their entitlements, providers, and usage. It’s not just coverage; it’s control.
• Loved by Employees, Trusted by Employers: welUp has a 4.8-star rating from over 10,000 reviews. It’s not just a benefit; it’s a talent magnet.

Why Employers Are Choosing welUp

More than just a wellness perk, welUp is a strategic retention and productivity lever.

Here’s why leading HR leaders and founders are opting for platforms like welUp:

• Attract top talent: Young professionals now expect modern wellness benefits, not just old-school insurance.
• Improve utilization: With 90 %+ usage rates, welUp delivers actual ROI, unlike insurance that only 5% use.
• Reduce absenteeism: Preventive care means fewer sick days and faster recovery.
• Boost engagement: Employees feel genuinely cared for when benefits match their life needs.
• Lower insurance burden: Many employers are choosing to pair welUp with high-deductible or minimal insurance plans, cutting costs without compromising care.

The Future of Employee Healthcare

The traditional insurance model is broken, outdated, underused, and mismatched to the needs of today’s workforce.

It’s time to stop confusing "coverage" with "care." Insurance might protect against worst-case scenarios, but who’s helping employees with everything else?

That’s where welUp steps in: not as a replacement, but as the real solution to modern health needs.

If only 5% of employees use insurance, it’s not because they’re unhealthy; it’s because insurance isn’t built for them.