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What Is Employer-employee Insurance: A Comprehensive Guide

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Want to know What Is Employer-employee Insurance? Here it is. Employer-employee insurance is a means to safeguard the health of employees. Read to know more

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November 22, 2022
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What Is Employer-employee Insurance: A Comprehensive Guide
EMPLOYEES HEALTH
What Is Employer-employee Insurance: A Comprehensive Guide
EMPLOYEES HEALTH

Given the ever-evolving nature of the workplace, employee retention is a task. At the same time, attracting the right talent has become doubly difficult. To counter these challenges, employers are required to think about ways to ensure that employees feel happy and taken care of.

And one such means is employer-employee insurance. The scheme works towards the benefit of employees and allows them to secure the health and wellbeing of themselves and their loved ones. Let’s understand what an employer-employee insurance policy entails and how you can benefit from it.

Quick Summary

In this blog, you’ll learn:

  1. What is an employer-employee insurance scheme?
  2. How does an employer-employee insurance scheme work?
  3. Who is eligible for the employer and employee insurance plan?
  4. What are employer-employee insurance tax benefits?
    • Tax benefit for the employer
    • Tax benefit for the employee
  5. What is the employer-employee insurance framework?
    • Type A
    • Type B

What Is An Employer-Employee Insurance Scheme?

Employer-employee insurance is a means to safeguard the health of employees. It allows an organization to portray that they have an insurable interest in their workforce. The plan enables the formation of better employer-employee relationships and more loyalty within the workforce.

Typically, employer and employee insurance is part of group health plans. It requires seven employees to be covered as a minimum and is therefore apt for small firms including sole proprietorships, partnership firms, corporates, and legal entities as well as large enterprises too. Read on to find out how the insurance scheme works. 

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How Does An Employer-Employee Insurance Scheme Work?

In employer-employee insurance, the employer pays the premium costs. The average cost of employer health insurance cost per employee depends on the employee count and insurer.

A uniform health cover is provided to every member of the organization and the employees, typically, are not required to pay any amount for the benefits. In some cases, the employer may further top up the group health cover with life insurance and personal accident coverage as well.

The insurance plan works as employer-sponsored health insurance and allows employees to benefit from prompt medical coverage in case of emergencies. In addition to employers offering health benefits, the scheme also caters to employee security and allows them to feel financially secure in case of health contingencies.

Here’s a more detailed guide on “How Does Corporate Health Insurance Work

Who Is Eligible For The Employer And Employee Insurance Plan?

A company with a minimum of 7 employees is eligible for employer-employee insurance. Ordinarily, organizations or groups with more than 20 employees are considered suitable for group health plans. However, the IRDAI has stated that micro-insurance plans can be availed by groups of less than 7 members as well.

In the case of companies, the number of 20 members as requisite above can also be achieved by factoring in the dependents/family members of the covered workers or employees. At Loop, we have customized employer-employee insurance plans for small employers as well as larger conglomerates.

Yes, I Want Employer-employee Insurance

Employer-Employee Insurance - Tax Benefits

Knowing employer-employee insurance tax implications in India is important for both employer and employee. There are several employer-employee insurance benefits and one of them is tax rebates.

Both employers and employees stand to benefit from group health plans in terms of financial savings envisaged by tax deductions. Here’s how:

a) Tax benefit for the employer 

If the employer covers the employees for health insurance entirely, then they can claim the health insurance costs and avail tax benefits. According to the Income Tax Act, the amount paid by the employers for the employees’ benefit is treated as ‘Profit in lieu of Salary’.

In the other words, the average annual premiums are considered a general business expense and it is therefore deductible under Section 80 C of the Income Tax Act.

b) Tax benefit for the employee

In addition to the employers’ contributing towards the health insurance plans, if the employees also pay the monthly premiums - they can avail tax benefits as well. The employees’ share in the premium costs can be availed as an income tax deduction under Section 80 D of the Income Tax Act.

Similarly, if they opt for a top-up plan on the standard employee coverage, the monthly premium and costs borne towards it can also be availed as tax deductions.

You may also want to read “Is medical insurance mandatory for employees in India?”

What Is The Employer-Employee Insurance Framework?

As stated above, the employer-employee insurance framework is one where the employer or the company purchases the health insurance policy, and the beneficiary is the employee and his or her dependents. For the sake of better understanding, employer-employee insurance can be broken down into two types as below:

Type A

In this type, the group members or employees need not pay the premium costs to avail of the policy benefits. The employer purchases the health insurance plan and pays the premium, which in some cases also includes premiums for family coverage. This type of plan is also known as the non-contributory plan.

Type B

In this type, the group members or employees pay the premium partially or fully to avail the benefits of the group health cover. Typically, employers pay part of the premium and deduct a sum from the employees’ salaries towards the insurance. This type of plan is also known as a contributory plan.

Get Your Customized Health Plan

Loop’s Your Choice For Employer Insurance 

What employer-employee insurance is abundantly clear from the above? It is a solicited means of ensuring a happy and healthy workforce. Additionally, it renders a sense of belonging amongst the employees and allows them to offer the employer their loyalty.

Employers further stand to benefit with lower absenteeism and better productivity at work, given the health of their employees is adequately covered and taken care of.

At Loop, we understand what a happy workforce means for the company in terms of revenues and goodwill. That’s why we have devised excellent employer-employee health insurance schemes to get you started!

Unlike regular group health plans, we offer holistic health benefits that cover both the physical and mental aspects of employee wellbeing. Our offerings are easily accessible via a mobile app and 24/7 user support.

To know more about our health insurance plans, get in touch with us.

FAQs:

1. Can employers reimburse employees for health insurance premiums?

Yes, the employer can reimburse the health insurance premiums for employees if it is stated in the company's policy.

2. Is employer-employee health insurance enough?

In most cases, employer-employee health insurance is enough but it depends on the cost of medical treatments and the maximum sum insured.

If you feel that you are going to exhaust your existing sum insured then you can opt for a top-up insurance plan.

What Is Employer-employee Insurance: A Comprehensive Guide
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What Is Employer-employee Insurance: A Comprehensive Guide

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