Understanding the obligation: Are group health insurance policies compulsory for Indian companies?


30 Aug 2023

Understanding the obligation of group health insurance policies compulsory for Indian companies.

In the ever-evolving landscape of the Indian corporate world, the well-being of employees has garnered significant attention. Companies are increasingly recognizing the importance of offering health insurance as part of their employee benefits package. But, is providing group health insurance policies mandatory for Indian companies? Let's delve into the complexity of this obligation to gain a better understanding.

The legal framework

There was no compulsion of group health insurance policies for Indian companies prior to the Covid-19 pandemic. However, post covid-19 pandemic, according to a circular from the Insurance Regulatory and Development Authority of India (IRDAI) dated April 1, 2020, medical insurance would be required.

1. Employee welfare

A healthy workforce is more productive and motivated. Providing health insurance is not merely a legal obligation but also a moral responsibility. To buy health insurance policies for the group, ensure that employees and their families have access to quality healthcare, easing the financial burden during medical emergencies.

2. Attraction and retention

Job seekers often consider the quality of benefits when evaluating potential employers. In the competitive job market, offering group mediclaim insurance policy for employees can be a significant differentiator for attracting top talent and retaining experienced employees.

3. Tax benefits

The premium paid by the employer is deductible as a business expense, reducing the company's tax liability. While it's not compulsory, the Indian Income Tax Act provides tax benefits to companies that offer group mediclaim policy for employees.

4. Regulatory changes

The government has been actively promoting social security measures and there have been discussions about potential mandates in this area. It's crucial to keep an eye on evolving regulations. Therefore, it's in the best interest of companies to stay updated and be proactive.

5. Industry norms

Companies in sectors like IT, finance and manufacturing often provide such benefits to remain competitive and align with industry standards. In some industries, offering health insurance has become an industry norm.

6. CSR initiatives

Offering group health insurance can be a part of these initiatives, positively impacting a company's public image. Corporate Social Responsibility (CSR) initiatives encourage companies to invest in the welfare of their employees and the community.

Choosing the right policy

For companies that choose to provide group insurance policy for employees in India voluntarily, selecting the right policy is crucial. Here are some key considerations:

1. Coverage scope

Basic policies cover hospitalization expenses, while comprehensive plans may include outpatient services, maternity benefits and more. Determine the extent of coverage you want to provide.

2. Insurance provider

Select a reputable insurance provider like kotak general insurance with a wide network of hospitals and healthcare facilities to ensure that employees have easy access to healthcare services.

3. Cost-sharing

Many companies opt for a cost-sharing arrangement to make it more affordable for everyone. Decide how the premium costs will be shared between the employer and employees.

4. Claim process

Ensure that employees are aware of how to make claims and seek assistance when needed. Understand the claim process thoroughly, as a smooth claims experience is crucial for employees.

5. Employee education

Clear communication can help in utilizing the policy effectively. Educate your employees about the policy's features, benefits and limitations.


After the Covid-19 pandemic, comprehensive health insurance is extremely important and each employee looks forward to being offered one upon being employed. From promoting employee welfare to attracting and retaining top talent, the benefits of offering health insurance are manifold. Ultimately, the decision to offer group health insurance should align with a company's values and long-term goals, ensuring the well-being of both employees and the organization.

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Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.