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Everything You Need To Know About Employer-Employee Insurance

For any organisation to run smoothly, its employees’ welfare must be taken care of. After all, only healthy employees can contribute to building a healthy, efficient organisation. A comprehensive group insurance plan helps your employees and their families to sail smoothly through any medical emergencies, ensuring both their physical health and peace of mind.

Employer-Employee Insurance, also called group health insurance, is one such plan, used by several companies across the country. But what is it exactly?

This blog will answer that question and more, focusing on what this policy covers, its eligibility, the benefits of this plan and how it is structured.

What Is Employer-Employee Insurance?

Employer-Employee Group Health Insurance is simply a scheme in which a company provides life, medical or personal accident insurance for its employees and their families. The employer pays the premiums on this insurance plan, but the beneficiary is the employee and their dependents. It is deductible from the employee’s CTC and is presented as a workplace benefit by companies.

Except, insurance isn’t just an added benefit to working for many organisations anymore. In April 2020, the Indian government recommended that workplaces in India provide a workplace compensation policy to their employees. In light of this, it’s time to understand the specifics of the EE insurance plan.

What Is Covered Within Employer-Employee Insurance?

Here is a brief summary of everything the Group Health Insurance Program may cover:

  • Life Insurance: The group policy covers the employee’s life, and in case of the employee’s premature death, the insurance company pays the money (as per opted coverage) from the policy to the employee’s dependents
  • Medical Insurance: This policy would cover the employee's treatment cost if he/she is hospitalised. The policy will also cover the employee’s family’s medical bills if he includes them in the plan as dependents.
  • Accident Benefit: This addition would help the employee in case of disability or death caused by an accident. It is essential for employees whose work comes with a greater risk of injuries, such as construction management or security services. If the employee becomes partially or fully disabled or happens to die as a result of the injuries, the money from the insurance payout will help him and his family to sustain themselves.

Who is Eligible to Purchase a Group Health Insurance Plan?

  • Any private or public company, partnership firm, MSME or even a sole proprietorship can buy employee-employer insurance covering personal accidents and medical expenses provided they have seven or more employees. As for life insurance under this plan, the minimum number of employees should be ten.
  • Individual employees must be legally employed by the company and should be between the ages of 18 to 65 to be covered under this policy.
  • NRIs and foreign workers working at an MNC/Company in India are also eligible for this plan.

What are the benefits of Employer-Employee Insurance?

There are several benefits of an employer employee insurance plan, from increased employee efficiency to reducing tax liability.

The most obvious one being the increased productivity of your workforce. By helping employees and their families gain access to quality healthcare when they need it, you are sure to have a healthy and efficient team.  

Moreover, efficient employee well-being initiatives like these make people want to for at your company, ensuring that you can choose from the best talent available.

Efficient welfare benefits also help lower attrition rate, helping companies save money as the money they have spent to train employees is wasted if they leave the company shortly after in search of greener pastures.

If your company is a start-up, it’s essential that you offer your best employees a reason to stay, and be able to hire better, more capable workers so as to build a team that will help you grow faster. A comprehensive employee insurance plan is sure to help with these goals.

Tax Benefits of Employer-Employee Insurance:

The several monetary benefits of employer employee insurance policy also include tax benefits.

Under Section 37(1) of the Income Tax Act, 1961, an organisation can apply for tax exemption on the premiums paid towards the E-E insurance plan. The employer can declare the premiums paid as a business expense, thus deducting it from the profits of the company. This would reduce the tax liability of the organisation.

As for the employees, they can claim income tax exemption even though the premiums are paid by the employer under section 80 C of the Income Tax Act.

Moreover, if the policy has been assigned to the employee, the maturity amount goes to them. As per section 10 D of the Income Tax Act, this maturity amount is exempt from taxes.

However, It is to be noted that if the maturity amount goes to the company instead, which happens if the policy was not assigned to any employee, the maturity amount becomes taxable.

To sum it up…

Group Health Insurance is an excellent plan to cushion your employees against unexpected events as it covers their life, and the health of their families while offering additional benefits to the employer, like tax exemptions and lower attrition rates.

While there is little we can do to predict when adversity strikes, we can always hope to be prepared for it. A good insurance plan can make all the difference in your employees’ lives.

Ready to protect your team better? Get to know more about the best group health insurance plans with Nova.

DISCLAIMER- The information contained in this blog is provided solely for general interest and may not reflect the requirements of each individual/company. Please speak to an insurance expert before making any decision.

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