Taxable Benefits And Allowances Of GMC

The COVID-19 pandemic has again reminded us how important it is to take care of our health. And if you are a business owner, you must also take care of the health of your most prized assets – your workforce. To ensure that each employee of a company has access to quality healthcare, it has become common for both multinational companies and budding startups to offer group health insurance to their employees.

A group health policy has made a permanent place in the package of fringe benefits available to employees after the same was made mandatory for all employers to provide by the government with effect from April 2020.

What is Group Health Insurance Cover?

It is a type of health insurance policy that is purchased by a ‘master’ to provide health insurance coverage to its ‘group’. Corporations most commonly provide it to their employees. Under these group plans, all company employees have access to quality medical treatment from day one of their enrollment in the plan.

What All is Covered Under Group Health Plans?

A group health plan provides coverage for the following:

• In-patient hospitalisation of at least 24 hours.
• Daycare treatments like nasal sinus aspiration, cataract surgeries, cancer radiotherapy, cancer chemotherapy, etc.
• Pre-existing diseases (PED) from day 1.
• Domiciliary hospitalisation cost.
• Ambulance charges.
• Pre-and post-hospitalisation expenses.
• Anaesthesia charges.
• Room rent.
• Nursing charges.
• Maternity benefits (in some plans, even without an optional rider.)
• Covid-19 treatment

List of Popular Group Health Plans

Below-mentioned are some of the popular group health plans, which you can consider buying from Plum Insurance:

Why Should Employers Offer Group Health Insurance?

Employers should offer a group health plan to their employees as they offer the following host of benefits to them:

1. Highly Motivated Employees: Offering a group health policy to your employees conveys the message that you as an employer care for them. This pumps up their dedication and motivation levels and makes them look forward to work.
2. High Retention Rates: When you go an extra mile for your employees and offer them group health plans, they feel valued and like to stay longer with the organisation. Thus, reducing your cost for acquiring and training new resources.
3. Sense of Belongingness in Employees: When employees feel valued, they consider themselves as a part of the company and this gets reflected in all their decisions, be it costing, hiring, or any other process. This leads to minimal supervision requirements and makes them lean in their approach.
4. Peace of Mind: It helps you as an employer attain peace of mind that your keymen are covered and have access to quality healthcare. So, even if something unfortunate happens, they would be able to come back soon and resume their responsibilities.

Taxable Benefits and Allowances of Group Health Policy For Employers

According to the rules laid down by the Insurance Regulatory and Development Authority of India (IRDAI) and the Income Tax regulations, the following tax benefits are available with group health plans:

Case 1: Employer Pays full Premium of the Group Health Policy.

Any amount paid by an employer towards premiums of a group health policy qualifies as business expenditure and are thus subtracted from the company’s profit, on which tax is levied. Therefore, the amount paid as a group health plan premium by the employer is 100% tax-exempt.

Case 2: Employee Pays the Insurance Premium, Either Partially or Fully.

• If the employer has opted for a contributory group health plan, the employee must pay towards the plan’s premium, either partially or entirely. The employees are eligible for claiming a tax deduction benefit under Section 80D of the Income Tax Act. The amount of tax deduction is, however, limited to Rs. 25,000.
• If the employees pay the group health plan premium and choose to cover their parents under the plan, they can further make a tax deduction claim of up to Rs. 25,000.
• If the insured employee’s parents are above the age of 60 years and are covered under the group plan, then the employee can claim a tax benefit of Rs. 50,000 instead of Rs. 25,000.
• If both the insured employee and their covered parents are above the age of 60 years, then a tax deduction benefit of up to Rs. 1 Lakh can be claimed.

Take Away

In today’s time, offering group health insurance is not only mandatory for an employer, but is also a strategically thoughtful and viable thing to do. The premium that you pay as an employer for providing a group health plan to your employees turns out to be negligent when compared to the benefits offered by it. A group health plan does not only help you stand together with your workforce during tough times, but also helps you win their trust and faith. And this results in higher employee motivation, increased productivity, low attrition and ultimately enhanced business success.