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What are the Tax Benefits of a Group Health Insurance Policy?

Oct 8, 2024

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Group Health Insurance Policy

What are the Tax Benefits of a Group Health Insurance Policy?
Contents

What is a Group Health Insurance Policy?

A Group Health Insurance Policy is a type of Insurance Policy which covers the hospitalization expenses of employees during the Policy Period. The Policy also provides coverage for Daycare Procedures, Pre and Post-Hospitalisation Expenses. 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. This article explains the Tax Benefits of Group Health Insurance Policies for Employers as well as Employees in detail.

What are the Tax Benefits of a Group Health Insurance Policy for Employers?

A Group Health Insurance Policy offers the following Tax Benefits for Employers:

Tax Deduction on Premiums Paid

A Group Health Insurance Policy is usually purchased by an Employer for Employees with the Employer paying the premium amount for Insurance Policy. As per Section 17 of the Income Tax Act,1961, the 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 account of the Company.

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

Tax Credit on the GST Amount of Group Health Insurance Policy

The Premiums paid towards a Group Health Insurance Policy are subject to a 18% Goods and Services Tax (GST). However, Companies can claim a Tax Credit on the GST Amount Paid for the Policy. This effectively lowers the Cost of the Group Health Insurance Policy for Employers.

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

The claim amounts received by employees as part of claims settlement by a Group Health Insurance Policy 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 does not qualify as profit or income. Hence no taxes need to be paid for the claim amount received from a Group Health Insurance Policy.

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:

  1. Public Companies
  2. Private Limited Companies
  3. Limited Liability Partnerships
  4. Proprietorship and Partnership Firms
  5. Start Ups and Small and Medium Business

What are the Benefits of Group Health Insurance Policy?

Apart from the Tax Benefits, a Group Health Insurance Policy offers the following benefits:

  1. 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.
  2. The Premiums for Group Health Insurance Plans are cheaper than Individual or Family Floater Health Insurance Policies.
  3. Employees can get coverage for Pre-Existing Diseases without any Waiting Period while an Individual Health Insurance Policy has a Waiting Period of 3-4 years
  4. 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 blogpost on the benefits of a Group Health Insurance Policy.

Get Best Quotes for Group Health Insurance Policy with Qian!

This blog post explains the Tax Benefits of Group Medical Insurance Policy in detail. So, 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. Additionally, the Claim Amount received by the employee is also not taxable. So, if you have any queries about Group Medical Insurance Policy Tax Benefits or regarding the Claim Process for a Group Health Insurance Policy, you can reach out to us via email at insurance@qian.co.in or call us on 022-35134695. Our experts will be glad to assist you.

  1. Group Health Insurance Policy for Employees
  2. What is Group Health insurance?
  3. What is an Employee Group Health Insurance Policy?
  4. What does a Group Health Insurance Policy cover?
  5. What is not covered under a Group Health Insurance Policy?
  6. How is a Group Health Insurance Policy different than an Individual Health Insurance Plan?
  7. What are the Key Features of a Group Health Insurance Policy?
  8. What are the add-on covers available under a Group Health Insurance Policy?
  9. What is the impact of Room Rent Limit on the claim amount payable under the Group Health Insurance Policy?
  10. Should employers opt for a Pre-Existing Disease Coverage from Day 1 in Group Medical Insurance Policy for employees?
  11. Does a Group Medical Insurance Policy provide Maternity Benefits?
  12. What are Waiting Periods under a Group Health Insurance Policy?
  13. What are the benefits of Group Health Insurance Policy for Employers?
  14. What are the benefits of Group Health Insurance Policy for Employees?
  15. Why should you purchase an Employee Group Health Insurance Policy for your organisation?
  16. How many employees do you need to purchase a Group Health Insurance Policy?
  17. Who is eligible for Group Health Insurance for Employees?
  18. Are Employer Group Health Insurance premiums Tax-Deductible?
  19. How much does a Group Health Insurance Policy Cost?
  20. Which are the leading Group Health Insurance Companies in India?
  21. How to purchase a Group Health Insurance Policy?
  22. What are the Documents required to make a claim under a Corporate Health Insurance Policy?
  23. Why should I Purchase a Group Health Insurance Policy through an Insurance Broker?
  24. Compare Plans from 20+ Group Health Insurance Companies and choose the Best Group Health Insurance Policy in India with Qian!
  25. FAQS
  26. Testimonials

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