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Over the past few years, spending on health care has risen sharply, encompassing spending on preventive control, medical insurance, etc. With rising treatment costs, having a health insurance policy has become a necessity to lessen financial demands in the event of a medical emergency.
Realizing this need, many multinational companies across the world, including in India, are offering medical insurance policies to their employees. These employer-funded policies help employees in the event of illness, accident, or any medical condition. The biggest advantage of the health insurance policy provided by employers is that it also covers the spouse, children and parents of the policy holder in some cases. This means that the health plan covers the cost of treatment if the insured (who is also the employee) or their co-dependents are hospitalized.
However, it is important to remember that the health policy provided by the employer is valid until the employee works for that organization. After leaving the company, it becomes null and void. Generally, many employees depend on the insurance policy provided by the company because they do not have a personal medical insurance policy. Thus, when the employee leaves the organization, his health expenses as well as those dependent on them are not covered by any health policy.
An important question that arises here is: Are there health insurance tax benefits reimbursed by the employer?
Premiums paid for group health insurance policies by the employer are not eligible for tax benefits. However, a salaried person may claim a deduction from their total income for part payment of the medical insurance premium for themselves, their children and their spouse under section 80D of the Income Tax Act 1961 on income. In addition, those who wish to benefit from higher coverage can contribute towards an additional premium available for health and critical illness plans, which is eligible for a deduction under Section 80D and the employer can take this into account. when calculating the TDS on the taxable salary.
The salaried class can also benefit from an additional deduction for parents’ health insurance up to INR 25,000 provided they are not elderly. In addition, any expense incurred for preventive health check ups up to INR 5,000 by the insured, whether for himself, his parents or his family can also be deducted. This is regardless of age and other limitations mentioned above. These deductions can be made when calculating the TDS on taxable income, upon presentation of supporting documents/documents by the employee. Alternatively, the employee can also claim it when filing an income tax return for that specific fiscal year.
It’s definitely a necessity to have health insurance coverage through your employer, but from a tax-benefit perspective, there’s not much to be gained unless the premiums are paid. at your own expense. So, when getting a group or corporate health insurance policy, it is important to remember that insurance providers and plans differ from organization to organization. Your company may have a great health insurance policy or a less beneficial one – you need to analyze it to understand how much coverage you have, how good it is, and how much more you would need.
This brings us to another question: can employers offer different benefits to different employees?
Variable health coverage
Many company group insurance policies have variable coverages built in, which means benefits for employees may differ depending on their hierarchy. Most organizations provide a higher sum assured for those at a higher level. Additionally, some companies also offer an additional OPD benefit included in the policy to higher level employees. Some other benefits also include a lower cap in the plan, such as a higher maternity cap or salary cap.
All health insurance benefits offered by organizations, including group health insurance policies, group term life insurance, and group personal accident insurance are not statutory benefits. This means that the law does not oblige the company to exclusively provide such benefits. Thus, it is up to the company to offer health coverages in a way that it deems appropriate for it.
One way to look at this is that several other benefits such as car allowances, travel allowances, and entertainment allowances, among others, also differ for senior executives. In the same way, insurance benefits may also vary!