What Are The Tax Benefits Of A Group Health Insurance Policy?

A lot of employers are unaware about the tax benefits of group health insurance plans. In fact, Group Health Insurance Policies offer great tax benefits to employers. This is one of the biggest advantage of Group Health Insurance Policy.

This article will explain the tax benefits of Group Health Insurance Policy for employees.

Contents hide

1 What is a Group Health Insurance Policy?

2 Are Group Health Insurance Premiums Tax-Deductible?

3 Which type of companies can avail tax benefits on Group Medical Insurance Policies?

4 Are the Claim Amounts of Group Health Insurance Policy received by Employees Taxable?

5 What are the Benefits of Group Health Insurance Policy for Employees?

6 How to Make a Claim in Your Group Health Insurance Policy?

7 Final Take:

What is a Group Health Insurance Policy?

A Group Health Insurance Policy covers provides health insurance coverage to a group of people under a common health insurance plan. Usually, a company purchases group health insurance policy for its employees.

A Group Health Insurance Policy is also known as Group Mediclaim Insurance Policy (GMC Policy) for employees or a Corporate Health Insurance Policy. A Group Health Insurance Policy for Small Businesses is a great way for small companies to attract good quality employees and retain existing ones.

In this article, we will see the tax implications of group health insurance policies for employers as well as employees.

Are Group Health Insurance Premiums Tax-Deductible?

A Group Health Insurance Policy is usually purchased by an employer for his employees. The employer pays the premium amount for Group Health Insurance Policies.

As per Section 17 of the Income Tax Act,1961, premiums paid towards a Group Health Insurance Policy for employees are defined as ‘profit in lieu of salary’ and the entire premium amount for Group Health Insurance Policy paid by the employer can be claimed as business expenses in their Profit and Loss accounts.

Thus, an organisation can reduce its overall tax liability by classifying premiums of Group Medical Insurance Policy as a business expense.

Which type of companies can avail tax benefits on Group Medical Insurance Policies?

The following types of companies can purchase a Corporate Health Insurance Policy for their employees and avail tax benefits:

Public Companies
Private Limited Companies
Limited Liability Partnerships
Proprietorship and Partnership Firms
Start Ups and Small and Medium Business

Are the Claim Amounts of Group Health Insurance Policy received by Employees Taxable?

No, the claim amounts received by employees as part of claims settlement by a Group Health Insurance Company are not taxable.

The claim amounts are treated as reimbursement of expenses already incurred by the policyholder and hence the claim amount is not taxable.

The claim amount received for Group Health Insurance Policies does not amount to profit or income. Hence no taxes need to be paid for the claim amount received from a Group Health Insurance Policy.

What are the Benefits of Group Health Insurance Policy for Employees?

The advantages of a Group Mediclaim Insurance Policy for Employees are as follows:

Employees and their family members who are covered under a Group Health Insurance Policy do not need to undergo any health check-up before availing Group Health Coverage.
Employees can get coverage for pre-existing diseases without any waiting period.
The premiums for Group Health Insurance Plans are cheaper than individual or family floater health insurance policies.
Group Health Insurance Plans can be customised on the basis of features like Room Rent Limit, Maternity Coverage, Sum Insured etc. So, the plans can be designed as per the budget of the employer.

You can read our detailed blog post on the benefits of a Group Health Insurance Policy by clicking here.

How to Make a Claim in Your Group Health Insurance Policy?

You can file a claim under your Group Medical Insurance Policy in 2 ways:

Cashless Claim Settlement: A Group Medical Insurance Policy provides cashless claim settlement across the network hospital for which the Group Health Insurance Companies have tieups with the hospitals. The Insured employee just needs to show his Group Mediclaim Policy (GMC Policy) E-Card to the hospital to opt for cashless claim settlement. The Group Health Insurance Company will settle the claim amount directly with the hospital.

Reimbursement Claim Settlement: In case of reimbursement claim settlement, the insured will need to pay the bill amount to the hospital from his own pocket. After that, the Insured needs to present the following documents to the Group Health Insurance Company in India to claim reimbursement for the medical bills:

Employee ID Proofs (ADHAAR Card, PAN Card)
GMC Policy Claim form
Cancelled Cheque with Name
Hospital Bills and Receipt
Prescriptions
Lab Test Reports
Detailed Discharge Summary

The Group Medical Insurance Company will reimburse the insured employee for his medical expenses once the above documents are furnished.

Final Take:

This blog post tries to explain the tax benefits of group medical insurance policy in detail.

So, yes, the premiums paid for a Group Medical Insurance Policy are tax deductible expense for an employer and thus they reduce the tax liability of the employer. This is one of the biggest advantages of a Group Medical Insurance Policy.

So, if you have any queries about group medical insurance policy tax benefits or regarding the claim process for a Group Health Insurance Policy or want to purchase a Group Health Insurance Policy for your organisation, give us a call. Our experts will be glad to assist you.