Tax Benefits of Group Health Insurance Plans

Group health insurance, as the name suggests, is medical coverage that secures a group of people. In most cases, employers and organizations use such health insurance plans to cover their employees in case of an emergency. A group health insurance policy is widely known in employee-centric companies and all organizations re-introducing work-from-office after the lockdown are expected to cover their employees under a group health insurance policy. There are several Group health insurance tax benefits and tax deductions to both the employer and the employee, and we at Aditya Birla Health insurance are here to discuss all the tax benefits for an employee with a group health insurance plan.

Medical Insurance Tax benefits for employee

In most cases, the organization is paying the total insurance premium; thus, the employee is not eligible to claim any tax deductions. However, under Section 80D of the Income Tax Act, if the employee is making a part tax payment, he/she can receive tax exemption on the amount paid. The tax exemption is applied based on the employee’s total contribution to the group health cover.

In other cases, where the employer is paying the total insurance premium, if the employee holds any kind of a top-up plan to extend their coverage, they are eligible for tax deductions on that extra premium they are paying. According to Section 80D of the Income Tax Act 1961, an eligible employee can claim up to Rs 25000 per annum in tax deductions if they pay the premium for themself, their partner, or their dependent children. An additional insurance tax benefit of Rs 25000 per year can be provided if the employee pays health insurance premiums for his/her parents.

In the event of the employee being a senior citizen, they are eligible for tax deductions up to Rs 50000 per annum and also eligible for an additional Rs 50000 per annum if they pay a health insurance premium for their elderly parents.

Advantages for employees in group health insurance plan

Over and above tax benefits, there are also other advantages of being part of a group health insurance plan.

1. Affordable: In most cases, group health insurance is always more pocket-friendly than individual health policies because multiple people can contribute and divide the premium.
2. Family protection included: Along with your coverage, most group health insurance plans also extend the coverage to dependent family members, thus providing aid in emergencies.
3. Employee satisfaction: When your employer provides health insurance for you, you feel grateful and appreciated; thus, your productivity is boosted.
4. Flexibility with the number of members: Forming a group with many policyholders can greatly increase the coverage of the health insurance plan, keeping everyone assured under all circumstances.
5. Easy to claim: Most employee group health insurance plans are easier to claim in comparison to other health insurance plans. The only documentation the employee is expected to submit are the bills, and the health insurance claim usually gets approved within 2 days.

Group health insurance plans are greatly misunderstood as just tools to save or reduce tax, but as mentioned, there are other equally valuable advantages that it provides. Our group health covers at Aditya Birla Health Insurance provide the greatest coverage for low-cost insurance premiums for all members and benefits both, the employer, and the employee.