Through thick and thin, good times and bad, you and your employees face life as a team. So with health insurance, why keep coverage for yourself?
Group health insurance is one such way for businesses to look after their workforce. It includes several benefits for the employees and is an affordable and quick solution for getting health coverage. It’s light on the pocket as opposed to individual health insurance and is, therefore, a great way to stay protected at nil or low costs.
But what’s in it for employers? A happy workforce is a more productive one. By ensuring health coverage for its employees, businesses can benefit from better outcomes at work. Additionally, group health insurance also entails lucrative tax benefits for organizations as enumerated below.
The Income Tax Act, 1961, covers tax deductions based on health insurance. As you know, as per Section 80D of the Income Tax Act, individual taxpayers can claim a deduction on insurance payments for self, spouse, and children. Not just individuals, employees of an organization can enjoy analogous benefits. The legislation also states employers can claim relief on paying health insurance premiums.
As an employer, the health insurance premiums you pay on behalf of your employees are deemed as fringe benefits, and may be considered as a business expense. So, if you pay the whole premium, you can avail tax benefits on the entire amount.
Here, section 17 of the Income Tax Act that deals with ‘salary,’ ‘perquisite,’ and ‘profit in lieu of salary’ comes into play. It states that the premium you pay for your employees is a benefit, so it falls under the ‘Profit in lieu of salary’ category. It communicates that your company can claim the entire amount as a business expense in your profit and loss account irrespective of the amount of premium paid. This clause also allows different business categories like companies (public or private), partnership firms, and sole proprietorship to enjoy benefits.
In simple words, group health insurance premiums are an additional benefit to employees that’s why you can use it to get a tax benefit. Therefore, group health insurance for employees helps organizations reduce their overall tax liability.
Company health insurance also entails tax benefits for employees. Tax benefits vary depending on which scenario you fall under.
In brief, you can claim the benefit of deduction under Section 80D of the Income Tax Act for paying a premium on health insurance for yourself as well as your family members, but the implications for the three vary. If you’re looking for detailed information to determine which one’s best for you, you can read more here.
Group health insurance is beneficial for both employers and employees. It’s a solicited way to boost employee morale while reducing overall tax liability for organizations. Sign up with Loop Health and get a host of added features like free primary care, unlimited access to specialized doctors, and more. Feel free to get in touch with us at loophealth.com
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