Why can’t I simply reimburse my employees for the medical expenses they make throughout the year for hospitalization, personal accidents, etc.? Why should I pay for health insurance for all my employees instead of just caring for those who incurred medical costs?
Wouldn’t that be easier and more affordable?
You’ve probably had these questions while considering healthcare coverage for your employees. Providing reimbursements for medical costs to employees is an option that companies consider.
Let’s first talk about the process of providing medical reimbursements to your employees entails.
How Do Medical Reimbursements Work?
Firms that offer medical reimbursements to their employees, essentially recompense the medical bills for them and their families at times. Your employee submits a bill for a medical expense they made, and you compensate them for it.
There’s a catch, though. You can compensate your employees only up to a limited amount per year, usually ₹15,000. Any reimbursement beyond that will become taxable for your employee, i.e. they’d have to pay tax on that amount. As a result, they wouldn’t entirely benefit from the amount you pay.
The Issue With Medical Reimbursements
Besides the fact that medical reimbursements don’t act as an excellent benefit for your employees due to the tax implications involved, there’s another problem. When you decide to choose the option of medical reimbursements, you incur most costs than just the costs of the claims. There are a lot of administrative costs that come into play.
You first need to set up a process for collecting these bills. Then, you’d have to set up another process or dedicate personnel to check the authenticity of these bills. Once verified, you pay them the amount.
Not just the costs, this whole process increases the time taken for the employee to benefit from the reimbursement. They must first pay from their pocket and then wait for the reimbursement to come through. This disregards the scenario that your employee may not have the means to make this payment in the first place, especially if there’s an emergency.
Overall, reimbursing is cumbersome for you and is unlikely to reduce the financial burden for your employees.
A Better Option: Group Health Insurance
The other alternative to medical reimbursements is group medical insurance which becomes an umbrella cover for all your employees. It removes the shortcomings I previously discussed for the reimbursement type cover.
Here’s how group health insurance is more beneficial than medical reimbursements:
It’s a better choice for your employees:
No Waiting Period:
When you provide a group insurance plan for your employees, their coverage begins as soon as they join your company. So, there’s no waiting period for them to enjoy the plan's benefits.
You are not just reimbursing your employees for expenses but giving them additional benefits like dental care, OPD, and health checkups when you go for group health insurance. And these benefits come at a very minimal cost. This way, you are investing in the health and well-being of your employees and not just covering costs.
As mentioned earlier, there’s likely to be a scenario wherein your employee does not have the money to pay for some emergency treatment. They benefit from cashless treatments offered at select hospitals under group health insurance coverage. The employee doesn’t have to pay anything from his pocket, and the insurance provider covers all his bills and hospitalization costs.
It’s a money-saving deal for you:
First, you are saving a lot on the administrative expenses I discussed above. But there’s more to it. Any amount you pay as a premium for your employee insurance is considered a business expense. So, you actually save on tax just by buying group health insurance for your employees.
Group Health Insurance By Plum
We provide high-quality group health insurance plans at Plum, including cashless payments, hospitalization charges, maternity cover, and pre-existing disease coverage. We also have different add-ons to customize your group health insurance plan. And if you are wondering how much it will cost, we have an instant premium calculator that’ll give you a personalized quote for your company in less than two minutes. You just need to fill in basic details about your company and the type of cover you’d like here. Try it now.