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2023 Health Budget Highlights - Key Announcements
Jan 28, 2023

Tax Benefit Of Group Health Insurance For Employers: Explained

When you start looking for a new job, there are different criteria on your list before you find a suitable job. Better pay, flexible working hours and work-life balance are the most common ones. However, you should look for the medical benefits that the employer is providing. Many government and private organisations offer group health insurance to their employees. While you, as an employee, are the one who benefits greatly from this insurance, your employer also gets to enjoy benefits, mainly tax benefits. Keep reading to know more about it.

What is group health insurance?

Group health insurance is provided by employers to their employees. Organisations that have more than 20 employees are required to provide this insurance for their employees. Banks, MNCs and NGOs are some of the organisations that provide their employees with this insurance.

Benefits of group health insurance for employees

The following are the benefits of this health insurance that you can enjoy as an employee:
  1. Expenses of hospitalisation are covered.
  2. Coverage is offered to spouses, children, and parents.
  3. OPD Coverage and consultation charges.
  4. Coverage for medical tests.
  5. Critical illnesses cover.
These are some of the benefits that are offered to you under this insurance. Make sure to read the documents properly to get a better idea. *Standard T&C apply

 Benefits of group health insurance for employers

While the focus is always on the employees, employers also get to enjoy the benefits of this insurance. Employers get tax benefits on group health insurance. Under the Income Tax Act of India, the premiums that an employer pays for the insurance are considered a business expense. As the insurance coverage is for a large number of employees, the premium is also paid in a lump sum. This allows the employer to display the premium paid as a business expense in their statement of affairs to claim tax benefits thereon. However, the tax benefit is limited only to the premium paid by the employer and not that paid by the employee. * Standard T&C Apply

Which types of employers can avail of group health insurance benefits?

Listed below are some of the types of employers who can avail of tax benefits on group health insurance:
  1. Private companies
  2. Public companies
  3. MSME (Micro, Small and Medium enterprises)
  4. Start ups

Is group health insurance enough?

While it is suitable financially if you and your family are covered by group health insurance, relying solely on one could be a mistake in the long term. The coverage of this policy is in force till the time you are employed with that organisation. Once you resign, the coverage ceases to exist. If a medical emergency were to take place during your period of unemployment, you would have to bear the costs. Hence, you should never rely solely on group health insurance. It is always recommended to buy personal health insurance along with group insurance coverage. It is difficult to anticipate when a medical emergency might take place. If your employer offers health insurance, that is an added benefit. However, depending on just one policy is risky.

What are the benefits of health insurance?

The following are the benefits of health insurance:
  1. Expenses related to hospitalisation and treatment are covered in the policy.
  2. An individual policy offers coverage for you and your partner. Although, it can be converted to a family floater plan to include your parents too.
  3. Family health insurance offers financial coverage to your family for medical emergencies within the same policy.
  4. Additional charges such as ambulance fees, room charges, nurse charges and medicines are covered.
  5. Medical tests and check-up facility is also covered in their coverage.
  6. Coverage for OPD and consultation charges are also part of health insurance plans.
* Standard T&C Apply

Additional benefits

In addition to the benefits provided under health insurance, you get to enhance the coverage with add-on riders. Add-on riders are features offered by your insurer that you can include in your policy to get additional coverage. Add-ons include:
  1. Critical illness add-on

Cancer, diabetes, and heart diseases are some of the common critical ailments. The nature and treatment of these diseases are what makes them critical illness. The treatment cost of critical illnesses is high compared to ordinary illnesses. While the policy terms may not cover the expenses of these critical illnesses, a critical illness add-on offers you a lump-sum pay-out to cover the cost of treatment of a critical illness. *
  1. Room rent waiver

The room rent limit that your insurance policy covers can be upgraded with this add-on if you opt for a private room or other room with higher room rents during the treatment. *
  1. Personal accident cover

If the insured sustains injuries leading to disability, be it partially or totally, or were to pass away due to injuries from an accident, the personal accident cover provides monetary compensation to the beneficiary. *
  1. Daily cash allowance

This add-on ensures that you are provided with a daily allowance during the period of hospitalisation*. This allowance can be used to take care of medical expenses or personal expenses. *  *Standard T&C apply


While your employer might enjoy tax benefits on the policy provided by them, it would benefit you to opt for a personal policy. You can use the health insurance premium calculator to get a quote that suits your budget. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.  

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