An Ultimate Guide To Employer-Paid Health Insurance (2023)

Team LoopTeam Loop

Looking for in-depth info about Employer-paid Health Insurance? We've got your back. Inside you'll find full info including pros and cons of it. Read to know

Looking for in-depth info about Employer-paid Health Insurance? We've got your back. Inside you'll find full info including pros and cons of it. Read to know

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July 25, 2022
An Ultimate Guide To Employer-Paid Health Insurance (2023)
An Ultimate Guide To Employer-Paid Health Insurance (2023)

In today’s world, what does it take to run a successful organization? It’s keeping your employees happy and satisfied, fostering a healthy workforce, and retaining the best talent.

Compared to a few years ago, things have changed. There’s less reliance on monetary compensation and more focus on employee benefits like employer-paid health insurance to attract the best employees. Among the many benefits, company-paid medical insurance is the most popular, for both large and small organizations.

Quick Summary

In this ultimate guide to employer paid health insurance, you’ll learn:

  • What is employer-paid health insurance?
  • What does the company-paid medical insurance cover?
  • What are the advantages of employer-paid health insurance for employers and employees?
  • Is health insurance paid by the employer taxable?

What Is Employer-Paid Health Insurance?

Employer-paid health insurance is a benefit offered by employers that includes group health insurance coverage for their employees and their dependents. After the pandemic, the Indian government made health insurance mandatory for employees

Typically, medical insurance is the responsibility of the employer. Based on multiple employee demographics, needs, wants, budgets, etc. they choose a plan and determine the health insurance coverage. 

When it comes to group health insurance premium, it can either be paid by the employer fully, or the employee pays a part of the amount. It varies from company to company. 

With health insurance premiums, there are also major tax advantages and tax deductions. You’ll read more about tax in the sections that follow. 

What Does Company-Paid Medical Insurance Cover?

Unlike individual health coverage, group health insurance offers much more extensive coverage. 


Based on the agreed terms with your insurance company, some group health insurance plans offer coverage for things like nurse charges, specialists fees, doctor visits, room charges, etc. 

Pre and post-hospitalization

Hospitalization cover depends on the illnesses you suffer. Typically, pre-hospitalization covers expenses for 30 days before hospitalization, and post-hospitalization covers 60 days after the date of discharge. 

Day care procedures

Procedures that don’t require 24-hour hospitalization are frequently covered by group health plans. 

Domiciliary hospitalization

Group health insurance covers those who want to opt for medical treatment at home. 

Maternity cover

With group mediclaim, maternity cover typically provides coverage for all medical costs linked to delivery. Moreover, costs for up to 90 days for a newborn baby are covered. Beyond this time, it’s possible to add your child to your group health plan. 

In-patient and out-patient treatment

With group health insurance, a number of things like ambulance charges, room rent, etc. are covered whether you take OPD treatment or in-patient. 

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What Are The Advantages Of Employer-Paid Health Insurance For Employers And Employees?

Advantages for employers:

Primarily, you can attract and retain better talent. Benefits such as employer-paid health insurance make your business more competitive. The best talent wants to work for employers who take care of their wellbeing.

1. Attract and retain quality talent

There was once a time when company culture and CTC were one of the most important factors employees took into consideration when deciding their tenure with a company.

While it still is, other benefits like employer-paid health insurance have gained more importance. Good health coverage and health benefits help tilt an employee's decision in favor of your firm. Benefits at Starbucks is a great example.

Retaining Your Best Employees

Retaining Your Best Employees

A quick and easy-to-read guide for retaining your best-performing employees

2. Save tax

The premiums paid towards health insurance are tax deductible, as per 80d of the Income Tax Act. For organizations, it’s a win-win! Not only do you save a lot on taxes, but also show your employees you care. Now that’s a sweet deal!

GO IN-DEPTH: Are Group Health Insurance Premiums Tax Deductible?

3. Boost productivity

Employee productivity is heavily impacted by personal health and wellbeing. When you’re mentally and physically fit, you can perform better and give your 100%.

Contrarily, you know how hard to focus when you even have something as simple as a tummy ache, let alone a fever. Health coverage that comes with primary care ensures you stay healthy and if you fall sick, you get treatment before matters get worse.

4. Value for money

Firstly, employees share the risk and premium amount. This makes it much cheaper than individual health plans.

Secondly, group health insurance plans are customizable. Definitely a plus point as you can include a variety of things for a more economical price.

Lastly, the health coverage with group health policies is better. From pre-existing diseases to dental to vision to maternity cover to waiting period, you get a whole lot! A bang for your buck, we’d say!

5. Enhances goodwill

Organizations today must have an excellent reputation both outside and inside the company. While growth rate and culture play a prominent role, compelling health benefits by an employer completely lock in the deal and adds several points towards boosting your organization’s goodwill.

Advantages For Employees

It’s not just employers, employees benefit too.

1. Affordable healthcare

Health coverage is expensive. And not every employee may have access to it at such prices.

With employer-paid health insurance, you don’t bear much of the costs; you get comprehensive cover, and you have the option of including your members in the policy. Many birds with one stone. You may otherwise not have access to this.

READ MORE: What Is Comprehensive Health Insurance And It’s Benefits

2. Preventive care

With the right insurance company, along with excellent primary care, you can also experience preventive care. Preventive care helps delay or even avoid the onset of chronic conditions.

So rather than undergoing treatment, you can easily bypass the illness. Typically, such excellent care doesn’t come with individual plans.

LEARN MORE: Importance Of Preventive Healthcare For Employees In India

3. Easy on your wallet

Unlike individual plans, group health insurance with added benefits is available at more affordable prices. And most often, employers take care of the majority of the expenses, this makes it easier on your wallet.

Furthermore, you don’t have the added responsibility of picking the best plan and understanding the terms and conditions. With group health plans, it’s all straightforwardly laid out.

4. Coverage for your family

It’s not easy to manage a family floater plan, even if it’s within the family. Each comes with its own conditions. Instead, a group health plan covers your entire family under one plan. This way, an employee can protect their family financially without any additional hassles.

5. Hassle-free claims process

With individual plans, typically the claim process is time-consuming. You need to gather all the documents, keep all receipts handy, etc. which is quite cumbersome.

On the other hand, with employer-paid health insurance, the claim settlement process is hassle-free. Not only do you have a single point of contact, but they will handle the end-to-end process. This makes things so much easier!

Yes, I Want Employer Health Insurance

Is Health Insurance Paid By The Employer Taxable?

The health insurance premiums paid by employers are taxable

So, are health insurance premiums paid by employer taxable income? Yes, employer-paid health insurance premiums are tax-deductible, but there are some exceptions for employers and employees.

As an employer, employer-paid health insurance premiums are deemed as fringe benefits and may be considered a business expense. So, if you pay the entire premium of your employees, you can claim a tax benefit on the whole amount.

Employer-paid health insurance is taxable to the employee

So, for employees is employer-paid health insurance taxable? Shortly, yes. For employees, employer-paid health insurance comes with tax benefits. It is based on one of the following scenarios.  

  • If your employer pays the entire amount 
  • If you pay the entire amount 
  • If you partially pay the amount 

Simply put, for the premiums you pay for yourself and your family, you can claim a deduction under section 80d, however, the tax implication varies. 

For information on tax benefits for employers and employees, you can read our article “are group health insurance premiums tax deductible?

Give Your Team Amazing Health Benefits 

By the end of it, you should now have a fair idea of employer-paid health insurance and is health insurance paid by the employer is taxable.

For any more information on anything to do with group health insurance, feel to drop by Loop’s blog page. It’s home to resources that answer all your queries and quench your thirst for knowledge.

Download this best employee benefits guide to explore the latest trends in giving your employees the benefits they deserve.

And when you’re ready to give your team, the benefits they deserve, Loop is always a call away! 

Loop will get, 

  • Your team’s insurance is set up in minutes, not days
  • Customized, budget-friendly quotes
  • 24/7 claims and customer support
  • An HR Dashboard that saves you a tonne of time
  • A dedicated medical team to help with your healthcare journey
  • High engagement wellness activities to keep your team going! 

Common, let’s supercharge your team and benefits!

An Ultimate Guide To Employer-Paid Health Insurance (2023)
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Team Loop
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