How MNCs structure health insurance for their Indian subsidiaries

MNCs operating in India typically set up group health insurance for their Indian subsidiaries through a single India-domiciled master policy issued by an IRDAI-licensed insurer, with the India entity as the policyholder and local employees and their families as insured members. The premium attracts 18% GST, is deductible under Section 37(1) of the Income Tax Act 1961, and is not taxable as a perquisite under Section 17(2). Cross-border pooling with the parent's global program is not permitted; the cover must be underwritten within India by an IRDAI-registered insurer under Section 2(9) of the Insurance Act 1938.

Why can't MNCs extend the parent company's global health plan to India?

Indian insurance law requires that insurance risk for persons residing in India be placed with an insurer registered with the IRDAI. Section 2(9) of the Insurance Act 1938 defines an Indian insurance company, and Section 25 restricts placement of Indian risk with non-registered insurers. A US or UK parent's employer-sponsored health plan cannot legally be extended to India-based employees as their primary cover. MNCs often supplement the local Indian policy with a global mobility rider for cross-border employees, but the primary group health policy for the India workforce sits with an Indian insurer.

What structure do most MNCs use for their India teams?

The standard structure is a single master group mediclaim policy issued to the India entity, with the sum insured typically set at ₹5 lakh, ₹7.5 lakh, or ₹10 lakh per family on a floater basis. Larger GCCs often offer ₹15 lakh to ₹25 lakh floater cover to match parent-company global benefit norms. The master policy usually covers the employee, spouse, up to two children, and, on an opt-in or partially employer-funded basis, dependent parents. Insurer partners are typically ICICI Lombard, HDFC ERGO, Bajaj General Insurance, Star Health, Niva Bupa, or Aditya Birla Health Insurance, depending on network fit and TPA integration.

What tax and GST treatment applies to the premium?

The employer-paid premium is deductible as a business expense under Section 37(1) of the Income Tax Act 1961 and is not taxable as a perquisite in the employee's hands under Section 17(2). GST on the premium is 18%; individual health policies were made GST-exempt from 22 September 2025 (Notification 16/2025 Central Tax (Rate), 56th GST Council), but group policies were explicitly excluded and continue at 18%. Input Tax Credit is blocked under Section 17(5)(b) of the CGST Act unless the insurance is mandated by law, so most GCCs treat GST as a direct cost. Section 80D deductions are not available to the employee because the employee has not paid the premium.

What benefit levels do GCCs typically offer?

GCCs benchmark their India benefit levels against the parent company's global standard and the local competitor set in the same hub city. Common design elements include Day 1 coverage with no pre-existing disease waiting period (waived at the group level, unlike retail policies where IRDAI caps PED wait at 36 months under the Insurance Products Regulations 2024), Day 1 maternity cover, parental cover on an opt-in basis, and additional wellness or OPD wallets ranging from ₹5,000 to ₹25,000 per employee per year. Mental health cover is mandatory across all IRDAI-approved plans since 31 October 2022 (Circular IRDAI/HLT/REG/CIR/177/10/2022) and applies on par with physical illness.

How do MNCs handle expatriate employees separately?

Expatriates on the India payroll are typically enrolled on the same India master policy as local employees, with an optional international health rider or a separate international private medical insurance (IPMI) policy for treatment outside India. Expatriates on the parent company's payroll (deputation model) are usually covered by the parent's global plan for treatment abroad, plus a local Indian business-travel policy for treatment while in India. IRDAI does not restrict the sum insured for expatriate cover.

How Plum structures group health insurance for GCCs and MNCs

Plum builds the India master policy for MNC subsidiaries starting at a 7-employee minimum, with insurer selection driven by network fit (each insurer maintains its own cashless hospital network — Plum works across ICICI Lombard, HDFC ERGO, Bajaj General Insurance, Star Health, Niva Bupa, and Aditya Birla Health Insurance) and TPA integration. Median pre-authorisation TAT is 45 minutes and claims NPS is 79, which matters for GCCs where local employees benchmark employer service against global parent-company standards. Optional add-ons (top-up cover, OPD wallets, international rider, dependent parents) are structured as endorsements to the master policy.

Frequently asked questions

Can an Indian subsidiary buy insurance from an offshore insurer?

No. Section 25 of the Insurance Act 1938 read with Section 2(9) requires that risk for Indian residents be placed with an IRDAI-registered insurer. Offshore placement is a compliance breach.

Is GST payable on group health insurance different for GCCs?

No. GST is 18% on all group health insurance policies regardless of the policyholder's type or size. The 22 September 2025 exemption applies only to individual policies.

Does the parent company's global insurance policy count for Section 37(1) deduction in India?

Only the premium paid by the Indian entity to an IRDAI-registered insurer is deductible in India. Premiums paid by the foreign parent for their global plan are not deductible against Indian taxable income.

What is the minimum group size to set up a corporate policy?

IRDAI requires at least 7 employees under a group health insurance policy. Plum offers cover from this 7-employee minimum upwards.

How do MNCs handle mid-year joiners?

Most group policies enrol mid-year joiners with Day 1 coverage from the date of joining, with pro-rata premium settlement at renewal. A small number of policies apply a 30 to 90 day waiting period for mid-term joiners.