Corp Tax Advantages: Group Health Insurance as Your Secret Weapon

In today’s competitive landscape, attracting and retaining talent is crucial for any organization. Beyond competitive salaries and growth opportunities, offering employee benefits like group health insurance plays a significant role in fostering a positive work environment and promoting employee well-being. But did you know that providing group health insurance also unlocks several tax advantages for both employers and employees? This article delves into the comprehensive tax benefits associated with group health insurance in India, highlighting its value proposition for businesses and individuals alike.

Tax Benefits for Employers – Tax Deductible and GST Credit

The Government of India through the Ministry of Home Affairs, and IRDAI (Insurance Regulatory and Development Authority of India), notified that corporate health insurance is mandatory for all employer-employees across organisations in India. This directive was put into effect from 1st April 2020 during the pandemic. What this essentially means is that employers can fully deduct this as a tax expense providing more confidence for employers to subscribe for group health insurance as a tax benefit. Moreover, this also meant that the GST on the group insurance premium could also be availed as an input tax credit providing an additional benefit.

Unlocking Tax Benefits for Employees: Contributing to Shared Prosperity
While employers reap the primary benefits of sponsoring group health insurance, employees also stand to gain. If employees contribute towards the premium, they can claim a tax deduction under Section 80D, up to a limit of ₹25,000 for individuals and ₹50,000 for families with senior citizen parents. This incentivizes employees to actively participate in their well-being while offering them a tax-saving avenue.

Flexibility at its Best: Joint Contribution Models
Many organizations recognize the value of shared responsibility and offer flexible contribution models. This allows both employers and employees to contribute to the group health insurance plan, maximizing tax advantages for both parties. Employers can contribute a fixed amount, while employees can choose to contribute a specific percentage of their salary or opt for a fixed contribution depending on their needs and budget. This flexibility promotes a sense of ownership and encourages employees to actively engage in their health and financial well-being.

Top-ups bringing down the cost of comprehensive health insurance
Organizations generally provide an insurance coverage ranging from Rs 1 Lakh to Rs 10 Lakhs of sum insured. Employees can avail insurance products like super top ups that can increase this coverage to even Rs 1 Crore at a nominal cost. That is because the initial coverage is taken care of by the employer sponsored group health insurance coverage. When this cover is exhausted, the super top up kicks in and you can claim higher. This concept significantly reduces the burden of insurance costs for the employees for a comprehensive coverage and is especially useful for scenarios which require huge medical costs.

Investing in Health, Investing in the Future
Offering group health insurance is not just a responsible practice, it’s a strategic investment in your employees’ well-being and your company’s financial health. By understanding the comprehensive tax benefits associated with group health insurance, both employers and employees can make informed decisions, fostering a culture of shared responsibility and creating a win-win scenario for everyone involved. Remember, investing in your employees’ health is an investment in your company’s future.

The author is cofounder and CEO at Bharatsure. Views are personal.