Group medical insurance plans offered by a company as the employer provide financial protection against healthcare contingencies to the employees. In some companies, the coverage is extended to the families of the employees. Group medical insurance policies are attractive benefits offered by the employer to employees.
Though medical insurance is one of the crucial social welfare areas, group medical insurance is not a mandatory requirement across all sectors, be it the organised sector or unorganised sector and for businesses across their sizes. However, many organisations, business groups, banks, housing societies and large companies offer group health insurance policies to their employees and their families as a part of their employee welfare program. Most of the companies see this as an employee-retention and tax incentive tool.
For businesses with more than 50 full-time employees, it’s mandatory to provide health insurance coverage to employees. They may have to pay penalties for not providing health insurance benefits to employees. Companies with less than 50 full-time employees are not legally obliged to provide health insurance coverage to employees. However, providing the benefit of health insurance to employees can help businesses to save tax. Companies also have the flexibility to pay a premium as per their convenience, either monthly, quarterly, half-yearly or yearly.
Additional Read: How does a Group Health Insurance benefit an organisation?
When it is referred to as a ‘tax incentive’ tool, it’s important to understand that the group medical insurance plans can be of two different types – contributory and non-contributory. Contributory plans are employer-sponsored medical insurance plans wherein an employee has to pay part of the premium. On the other hand, non-contributory plans require the employer to bear the entire premium cost on behalf of employees.
Depending on the type of plan chosen, the employer can avail the tax benefit according to the cost they have incurred. However, industry experts recommend that small businesses having less than 50 full-time employees’ can avail group medical insurance coverage for their employees if they meet all the coverage requirements to make it beneficial for the company as well.
Offering health insurance benefits to employees can help in increasing productivity at work, retain good talent required for the growth of the business. The well-being of employees can contribute a lot to the success of the business.
Group health insurance plans are also offered at a subsidised rate as the risk is spread across a large number of employees. This policy can provide a fixed amount of healthcare cover to employees by covering the cost of hospitalisation and healthcare treatments needed due to an illness or an injury. Coverage can include other members of the family including dependent parents, with similar benefits. However, policy coverage and benefits may vary.