Employee health benefits and group health insurance in India

What health benefits do Indian employers actually provide?

Two things sit under the same heading, and it helps to demarcate them early. One is statutory and set by law. The other is discretionary and set by you.

The statutory part is ESI. Where it applies, it is not a choice. The discretionary part is a group health policy the company buys from an insurer, sometimes called mediclaim, which extends cover to staff the statutory scheme does not reach and often to their families. Most private employers of any size end up running both, one because they must and one because they want to hold on to people.

A candidate reading an offer letter rarely parses the difference. They see a line that says health cover and read it as a signal about how the company treats its staff. That is why the benefit earns its keep in retention long before anyone files a claim, and why it belongs in the salary structure and benefits package you present up front, not in a policy document nobody opens.

Where ESI ends and group insurance begins

ESI is the medical floor for lower paid staff. It provides medical cover for employees earning up to 21,000 rupees a month gross, and the ceiling is 25,000 rupees a month for an employee with disability. Below those thresholds, the scheme is the employee's statutory medical cover, and both you and the employee contribute to it as part of payroll.

The gap is obvious the moment you look at the ledger. An employee earning above the ESI ceiling has no statutory medical cover from the scheme at all. That is exactly the band most employers worry about keeping, and it is why group health insurance is added mainly for staff above the ESI line.

So the two pieces fit together rather than compete. ESI carries the employees within its wage limit. Group cover carries the rest, and frequently reaches down to cover ESI eligible staff too, so that everyone sits on one consistent policy. How you draw that boundary is a matter of budget and headcount, and there is real latitude in where a company chooses to set it.

How employers structure group health cover

There is a common shape to these policies, and knowing it saves you from starting at a blank page. Treat what follows as typical market practice, not a rulebook. Your insurer or broker will tune it to your headcount and budget.

Group cover is usually a family floater. That means one shared sum insured that the covered family can draw against together, rather than a separate fixed amount ringfenced per person. The base cover commonly includes the employee, spouse and children on that shared floater. For most staff, that base set is the whole of what the company pays for.

Parents are the usual dividing line. They are typically not in the base cover. Instead they are offered as a voluntary buy up that the employee pays for out of their own pocket, often at a group negotiated rate that still beats a retail policy. Some employers extend the same option to parents in law. The company sets up the route and the pricing. The employee decides whether to take it.

The point of this split is to keep the mandatory cost tractable while still giving people a way to protect their parents. You fund the core. You broker access to the rest.

Tiers by grade, and the top up option

Sum insured is rarely flat across the whole company. It is usually tiered by grade or band, with a higher floater at senior levels and a lower one for junior staff. The logic is the same one that shapes the rest of the pay structure: the package scales with the level, and health cover moves with it.

On top of tiering, larger firms often add a top up option above the base. This lets an employee raise their own cover beyond the grade default, usually at their cost, for a year when they expect a bigger medical need or simply want more headroom. It is another instance of the company opening a door and the employee choosing whether to walk through it.

What this page will not do is put numbers on any of it. There are no sum insured amounts here, no percentage of companies that cover parents, and no per level figures, because those vary too much by sector, size and insurer to state honestly from grounded facts. If you want exact benchmarks, they come from broker and HR survey reports, and that sits outside the remit of this page. What we can give you is the pattern. What you pay is a conversation with your broker.

Is it mandatory, and how is the premium taxed?

Group health insurance is not legally mandatory for all employers. It is a retention and wellbeing benefit that companies choose to offer, not a blanket statutory requirement. ESI is the statutory piece, within its wage ceiling. The group policy is the part you add because it helps you hire and keep people, especially above that ceiling.

On tax, the short version is friendly. Group health insurance premium paid or reimbursed by the employer is not a taxable perquisite for the employee. That is separate from Section 80D, which is a deduction an employee claims for a policy they buy themselves, and which applies under the old regime only. The two are easy to conflate, so keep them apart.

We have kept the tax detail off this page on purpose, to avoid muddling design with mechanics. For the perquisite point, the 80D limits and the old regime and new regime split, read the employer group health insurance tax page. Whether any deduction applies to a given employee is decided under the Income Tax Act when they file, and their CA or payroll consultant handles the TDS and Form 16.

Where Offrd fits, and where it does not

Plain answer first, because it matters here. Offrd is not an insurer or a broker. It does not sell policies, administer them, or handle claims. If you want cover, that transaction is between you, your broker and the insurer, and nothing on this page changes that.

What Offrd does is name the benefit and the covered set where you already provide it. When you generate an offer letter, you can state that the role includes group health cover and spell out who it covers, the employee, spouse and children on the base floater, with the parents buy up noted as an option. The candidate sees the benefit at the point they decide, not months later.

The same line carries into onboarding. The onboarding kit records the benefit and the covered set as part of the package, so a new joiner knows what they have and what they can add, and your one HR person is not answering the same question by email for a fortnight. Offrd documents the benefit. Your broker runs the policy.

More than 4,000 companies across 350 plus Indian cities use Offrd to produce this paperwork in minutes.

Set up the salary structure, name the health benefit on the offer letter and the onboarding kit, and keep the wording consistent across both. Setup takes about two minutes. It starts at 99 rupees a document, with 50 free credits on signup and nothing to commit to each month.