# The India Employee Benefits Stack for US companies

> US parents are used to an employer-run health system, a voluntary retirement match and leave set by company policy. India reverses each one: retirement savings and gratuity are statutory, health cover is voluntary, and leave minimums come from state law. Budget for the statutory layer first, then design group health to a global standard.

By Akshay Golechha, Chief Business Officer at Plum (https://www.linkedin.com/in/akshaygolechha/). Published by Plum (https://www.plumhq.com). Canonical: https://www.plumhq.com/india-benefits-stack/united-states. Updated 2026-10-05. Part of The India Employee Benefits Stack: https://www.plumhq.com/india-benefits-stack.

## In short

- India has no social security (totalisation) agreement with the US. US citizens on Indian payroll are International Workers: they join EPF from day one on full salary and can generally withdraw only at 58 or on permanent incapacity.
- Health cover is not statutory in India above ₹21,000 a month. Group Health Insurance is voluntary in law but expected by candidates hired at ₹8 LPA and above; the India median sum insured is ₹5,00,000.
- The 401(k) maps to EPF (12% of basic from employer and employee), severance to statutory gratuity after five years, and PTO to earned leave set by state Shops and Establishments Acts.

## Questions

### Is there a US–India totalisation agreement?

No. India and the US have no social security agreement in force. A US citizen employed in India is an International Worker under EPF and must contribute from day one on full salary, with no ₹15,000 wage ceiling: 12% from the employer and 12% from the employee. Without an agreement, EPF can generally be withdrawn only at 58 or on permanent incapacity.

### Do we have to provide health insurance in India, as under the ACA?

No. India has no employer health mandate for employees earning above ₹21,000 a month. Those at or below it are covered by ESI, with 3.25% from the employer and 0.75% from the employee. Group Health Insurance is voluntary, but candidates hired at ₹8 LPA and above expect it; the India median sum insured is ₹5,00,000 and global startups carry ₹10,00,000.

### What replaces the 401(k) in India?

EPF. Establishments with 20+ employees contribute 12% of basic plus DA, with 8.33% going to the pension scheme (EPS) and the balance to EPF, and employees contribute another 12%. The statutory wage ceiling is ₹15,000 a month, but most MNC subsidiaries contribute on full basic. Unlike a 401(k) match, the rate is fixed by law.

### Is there severance pay or COBRA in India?

There is no COBRA: group health cover ends when employment ends. The statutory exit payment is gratuity, for establishments with 10+ employees: 15 days' last drawn salary per year of service after five continuous years, or after one year for fixed-term staff under the 2025 Labour Codes, capped at ₹20 lakh. It is not discretionary, so provision it from day one.

### How much paid leave must we give in India?

It depends on the state. Offices fall under the state Shops and Establishments Act, where earned leave is typically 12 to 18 days a year plus casual and sick leave; factories follow the Factories Act. Public holidays vary by state, with three national holidays. Maternity leave is separate: 26 weeks of full pay for the first two children.

### What do US companies usually add on top of statutory benefits?

Most add Group Health Insurance, Group Personal Accident and Group Term Life; GTL at 3 to 5 times CTC is common for white-collar staff. Many also cover employees' parents, the largest claims category by relationship at about 40% of claims in Plum's data. The employer GHI premium is deductible under Section 36(1)(ib), and 18% GST applies to group health premiums.

## What changes when you come from the United States

### Assignees from the United States and India's EPF

**The rule.** Foreign nationals employed in India are International Workers under EPF. They must join from day one, with contributions on full salary: the ₹15,000 wage ceiling does not apply.
**United States and India.** India and the US have no social security (totalisation) agreement. A US citizen on Indian payroll joins EPF from day one on full salary and can generally withdraw only at 58 or on permanent incapacity. Assignees who also stay on US payroll, or whose employer extends US coverage to its Indian affiliate, can pay into both systems.

### Mapping US benefits to India

**At home.** Employer-sponsored medical, dental and vision plans, a 401(k) with an employer match, group life and disability cover, and paid time off set by company policy.
**In India.** Group Health Insurance (GHI) for health, with Group Personal Accident and Group Term Life as add-ons. EPF for retirement. Gratuity as the statutory exit payment: fund it through an insured gratuity scheme rather than carrying it as an unfunded liability.

### Overlap between New York and India

**Time difference.** India is 9½ hours ahead of New York during US daylight saving (March to early November) and 10½ hours ahead the rest of the year, so the Indian evening overlaps the New York morning. The West Coast is three hours further behind.
**What to set up.** Agree who in India signs off endorsements, claims escalations and renewals, so nothing waits for headquarters' business hours.

### India–United States tax treaty

**Treaty.** India and the US have a double taxation avoidance agreement, signed in 1989 and in force since 18 December 1990. Short visits are usually exempt from Indian tax under its 183-day and employer conditions. Services furnished through employees can create a permanent establishment after 90 days in any 12 months, or from the start if performed for a related enterprise; check the articles before relying on them.
**Secondments.** Long secondments can create a permanent establishment for the parent. Structure recharges and employment contracts with a tax advisor before staff move.

## What you call it in the United States, and what it is called in India

In the US the employer is the health system: most working-age Americans get cover through work, and the Affordable Care Act penalises large employers that do not offer it. India inverts that. Group health insurance is not legally required, and above ₹21,000 a month an employer's statutory health obligation is zero. What India does mandate is retirement and exit money: EPF at 12% of basic from the employer and 12% from the employee, and gratuity after five years. A US parent that copies its home playbook tends to over-design health and under-fund the statutory layer.

| At home in the United States | In India | What changes for the employer |
| --- | --- | --- |
| Retirement savings plan (401(k)): Voluntary pre-tax employee deferral, up to $24,500 in 2026, usually with an employer match. | EPF and EPS (Employees' Provident Fund and Pension Scheme) | Statutory, not voluntary, for establishments with 20+ employees: 12% of basic plus DA from the employer (8.33% to EPS, the balance to EPF) and 12% from the employee. The employer share is a fixed rate, not a match. Most MNC subsidiaries contribute on full basic rather than the ₹15,000 wage ceiling. |
| Social Security and Medicare (FICA): 6.2% Social Security on wages up to $184,500 plus 1.45% Medicare with no cap, from employer and employee alike (2026). | EPF and EPS; ESI for employees earning up to ₹21,000 a month | There is no totalisation agreement. A US citizen on Indian payroll is an International Worker: EPF applies from day one on full salary with no ₹15,000 ceiling, and withdrawal is generally possible only at 58 or on permanent incapacity. |
| Employer health plan (Group medical plan (ACA)): Employers with 50+ full-time staff must offer affordable coverage to 95% of full-time employees and their children, or risk a penalty. | ESI below ₹21,000 a month; Group Health Insurance (GHI) above it | GHI is not legally required, but candidates hired at ₹8 LPA and above expect it. Most insurers need a group of at least 7. The India median sum insured is ₹5,00,000; global startups in India carry ₹10,00,000. |
| Dental and vision (Dental and vision plans): Separate employer plans offered alongside medical, covering check-ups, treatment, glasses and lenses. | No separate standard plan; an outpatient (OPD) add-on to GHI, if offered | Indian group health is built around hospitalisation. Routine dental and eye care sit outside a standard GHI policy, so a US three-plan stack becomes one GHI policy plus an optional outpatient benefit. |
| Continuation coverage (COBRA): Leavers at employers with 20+ employees can keep the group plan for up to 18 months, paying up to 102% of the premium. | None | Group cover ends when employment ends. Leavers who want to stay insured buy an individual policy at their own cost, and nothing obliges the employer to continue cover. Explain this at exit, especially where parents were on the group policy. |
| Paid time off (PTO): Set by company policy. Federal law requires no paid vacation, holidays or sick leave. | Earned, casual and sick leave under the state Shops and Establishments Act | Leave minimums are statutory and vary by state: earned leave is typically 12 to 18 days a year plus casual and sick leave. Public holidays vary by state, with three national holidays. A global PTO or unlimited-leave policy still has to meet each state's floor. |
| Family and medical leave (FMLA): Up to 12 weeks of unpaid, job-protected leave a year at employers with 50+ employees. | Maternity Benefit Act: 26 weeks of full pay | Paid, not unpaid, and paid by the employer: 26 weeks for the first two children, 12 weeks from the third (ESI covers it for ESI members). Crèche required at 50+ employees. No statutory paternity leave under central law. |
| Severance (Severance pay): Not required by federal law; paid by policy or agreement, often in exchange for a release. | Gratuity under the Payment of Gratuity Act | Statutory, not discretionary, for establishments with 10+ employees: 15 days' last drawn salary per year of service after five continuous years (one year for fixed-term staff under the 2025 Labour Codes), capped at ₹20 lakh. Provision it from the first payroll. |
| Workers' compensation (Workers' comp): State-law insurance for work injuries and occupational illness, paid for by the employer. | Employees' Compensation Act 1923 (or ESI where covered) plus Group Personal Accident (GPA) | The Act covers employees not in ESI, and the employer insures the liability. GPA is the usual voluntary add-on for accidental death and disability. |
| Group life insurance (Basic life and AD&D): Employer-paid life and accidental death cover, often with voluntary top-ups the employee buys. | Group Term Life (GTL) and GPA; EDLI through EPFO | EDLI gives life cover of up to ₹7 lakh through EPFO. GTL at 3 to 5 times CTC is common for white-collar staff, and GPA covers accidental death and disability. |
| Health savings accounts (HSA / FSA): Pre-tax accounts used to pay medical costs, with the HSA paired with a high-deductible plan. | None | GHI is usually cashless at network hospitals, so there is no deductible to pre-fund. The employer GHI premium is deductible under Section 36(1)(ib) and not a perquisite under Section 17(2); 18% GST applies to group health premiums. |
| Unemployment insurance (FUTA and state UI): Employer-paid federal and state payroll taxes that fund unemployment benefits. | No direct equivalent | Nothing to contribute. Exit costs sit instead in the notice period agreed in the employment contract and in statutory gratuity. |

## What US companies get wrong when they set up in India

1. **Our US assignees stay on Social Security, so EPF won't apply.** With no India–US social security agreement, a US citizen on Indian payroll is an International Worker: EPF applies from day one on full salary, with no ₹15,000 ceiling. It can generally be withdrawn only at 58 or on permanent incapacity, so budget it as a cost, not a refundable deposit.
2. **Health insurance is a legal requirement, like the ACA mandate.** India has no employer health mandate above ₹21,000 a month; ESI covers only those at or below it. Group Health Insurance is voluntary in law, but candidates hired at ₹8 LPA and above expect it, so it is a market requirement rather than a legal one.
3. **EPF works like a 401(k) match that employees opt into.** EPF is statutory for establishments with 20+ employees: 12% of basic plus DA from the employer and 12% from the employee. Since the Labour Codes took effect on 21 November 2025, allowances above 50% of total remuneration are added back into wages for EPF and gratuity.
4. **Employment is at will, so exit costs are whatever our policy says.** Gratuity is statutory: 15 days' last drawn salary per year of service after five continuous years, one year for fixed-term staff, capped at ₹20 lakh. Notice periods are set in the employment contract. Provision gratuity from the first payroll and insure it through a gratuity fund.
5. **Our global PTO policy sets leave in India too.** Leave minimums for offices come from state Shops and Establishments Acts: earned leave is typically 12 to 18 days a year plus casual and sick leave, and public holidays vary by state. A global PTO or unlimited-leave policy must still meet each state's floor.
6. **Leavers can keep their cover for a while, like COBRA.** India has no continuation-coverage law. Group cover ends with employment, and leavers who want to stay insured buy an individual policy themselves. Plan exit communications around this, especially for employees whose parents were on the group policy.
7. **Dental and vision need their own plans, as at home.** Indian group health is built around hospitalisation. Routine dental and eye care sit outside a standard GHI policy and are bought, if at all, as an outpatient add-on. Spend first on sum insured and parental cover: parents are about 40% of claims by relationship in Plum's data.
8. **Maternity is unpaid leave plus whatever short-term disability pays.** The Maternity Benefit Act requires 26 weeks of full pay for the first two children and 12 weeks from the third, paid by the employer (ESI covers it for ESI members). GHI then pays the hospital bill: a normal delivery costs about ₹1 lakh, a C-section about ₹1.25 lakh.

## The United States vs India, benefit by benefit

| Benefit | United States | India |
| --- | --- | --- |
| Statutory health cover | No universal scheme for working-age adults. Employers with 50+ full-time staff must offer affordable coverage or risk a penalty. | ESI for employees earning up to ₹21,000 a month. Nothing statutory above that line. |
| Penalty for not offering cover | $3,340 a year per full-time employee beyond the first 30, for large employers offering no coverage (2026). | None. GHI is voluntary; ESI contributions are 3.25% employer and 0.75% employee below the ceiling. |
| Retirement | 401(k): voluntary deferral up to $24,500 in 2026, plus any employer match. | EPF and EPS: 12% of basic plus DA from employer and employee, mandatory at 20+ employees. |
| Social security | 6.2% Social Security on wages up to $184,500 plus 1.45% Medicare, each from employer and employee (2026). | EPF for covered employees; International Workers contribute on full salary with no ₹15,000 ceiling. |
| Assignees | No totalisation agreement with India. US citizens working abroad for a US employer generally remain liable for FICA. | No exemption: EPF from day one, withdrawal generally only at 58 or on permanent incapacity. |
| Paid leave | None required by federal law; set by company policy and some state laws. | Earned leave typically 12 to 18 days a year plus casual and sick leave, set by state law. |
| Maternity | FMLA: up to 12 weeks unpaid, job-protected, at employers with 50+ employees. | 26 weeks of full pay, employer-funded, for the first two children; 12 weeks from the third. |
| Paternity | No federal paid leave; FMLA's 12 unpaid weeks apply to either parent. | No statutory paternity leave under central law; set by company policy. |
| Severance | No federal requirement; paid by policy or agreement. | Gratuity: 15 days' last drawn salary per year of service after five years, capped at ₹20 lakh. |
| Cover after leaving | COBRA: up to 18 months at up to 102% of the premium, at employers with 20+ employees. | None. Group cover ends with employment. |
| Dental and vision | Separate employer plans, offered alongside medical. | Outside standard GHI; bought as an outpatient add-on, if at all. |
| Life and accident cover | Employer group life and AD&D, often with voluntary top-ups. | EDLI up to ₹7 lakh through EPFO; GTL at 3 to 5 times CTC and GPA are common add-ons. |

## What headquarters is used to

In the US the employer is the main route to health cover, and the law pushes large employers to offer it. Headquarters brings that reflex to India, where the employer's statutory health obligation above ₹21,000 a month is zero.

- **92%** of the US population had health insurance in 2024
- **60.4%** of people under 65 had employer-sponsored health insurance in 2023
- **95%** of full-time employees must be offered coverage by employers with 50+ full-time staff, or the employer risks a penalty

Source: Benefits Beyond Borders 2025, Plum's report on benefits in the economies investing in India (United States chapter, citing the CMS National Health Expenditure fact sheet, KFF and Cigna; figures checked against the US Census Bureau and the IRS). https://www.plumhq.com/benefits-beyond-borders

## Staff seconded from the United States

US assignees usually keep a global medical plan, but an India-admitted GHI policy is still worth adding: it gives cashless admission at network hospitals without paying upfront. Social security is the bigger cost. With no India–US agreement, a US citizen on Indian payroll joins EPF from day one on full salary and can generally withdraw only at 58 or on permanent incapacity. Model that, and any continuing US FICA, before the assignment letter is signed.

## Where US companies set up in India

- **Bengaluru, Karnataka.** India's largest GCC market, with big centres for Google, Walmart Global Tech, Target and Cisco. Highest GHI adoption of any city in Plum's benchmark, so candidates expect a global-standard plan.
- **Hyderabad, Telangana.** Microsoft, Amazon, Google and Qualcomm run large campuses here. Highest average maternity claim of any city in Plum's benchmark; set the maternity sub-limit with that in mind.
- **Pune, Maharashtra.** Engineering and manufacturing for Cummins, John Deere and Eaton. Factory staff follow the Factories Act for leave; office staff follow Maharashtra's Shops and Establishments rules.
- **Chennai, Tamil Nadu.** Cognizant, PayPal and Caterpillar alongside a large IT services workforce. Tamil Nadu has its own Shops and Establishments leave rules for office staff.
- **Delhi NCR, Haryana and Uttar Pradesh.** American Express in Gurugram, Adobe and Microsoft in Noida. Two states' leave laws apply across one metro, so check which Act covers each office.
- **Mumbai, Maharashtra.** Banking and markets teams for JPMorgan Chase and Morgan Stanley. Highest average claim size of any city in Plum's benchmark; calibrate sum insured to Mumbai hospital costs.

US companies with operations in India include Google, Microsoft, Amazon, Apple, Walmart Global Tech, JPMorgan Chase, Goldman Sachs, Cisco, Qualcomm, Adobe, Intel, Target, Cognizant, American Express.

## Benchmarks: what MNCs and GCCs offer in India

From [The Standard of Employee Benefits 2026–27](https://www.plumhq.com/standard-of-employee-benefits), Plum's report on 15,312 benefit plans, 5,20,100 claims and 74,543 checkups from Plum's FY26 book.

- **1.6×** MNC and GCC benefits spend per employee in India, against a funded Indian startup (nearly 3× a local Indian business). ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3))
- **43%** of MNCs and GCCs in India are Holistic Leaders: deep insurance plus real breadth of healthcare beside it. ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3))
- **₹7,50,000** median MNC/GCC sum insured, covering parents or in-laws, with ₹1,00,000 maternity cover and no copays or sub-limits. ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3))
- **~2%** of payroll buys India's top-quartile plan, against roughly 15% in the US, 10–25% across Europe and 8–15% across APAC. ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3-coverage))

### India's top-quartile plan against the US

| | India | The US |
|---|---|---|
| Benefits budget, share of payroll | ~2–3.5% (2% typical), plus 13% PF and 4.81% gratuity | ~10–15% (7% typical), plus 7.7% Social Security and Medicare |
| What the employee still pays | Nothing: no deductible, no copay or coinsurance, no room-rent limit, no waiting period | $1,200 deductible, then 20% inpatient coinsurance; $30 primary, $50 specialist and $350 ER visits; out-of-pocket maximum $5k, $7.5k for a family |
| Who is on the policy | Employee, spouse, up to 4 children, 2 parents or in-laws, LGBTQ+ and live-in partners | Employee, spouse and dependent children; the employer funds 95% of the employee premium and 70% for dependants |

India's top-quartile plan is the only one of the seven that includes parents, and treatments cost 60–90% less than in the US, Europe or Australia. Source: https://www.plumhq.com/standard-of-employee-benefits#s2-3-coverage

## Further reading on plumhq.com

- [How MNCs structure health insurance for Indian subsidiaries](https://www.plumhq.com/blog/mnc-health-insurance-india-subsidiary-structure): Global programmes, local policies and who signs what.
- [Do you need to match headquarters' benefits in India?](https://www.plumhq.com/blog/gcc-match-headquarters-benefit-standards-india): Where to mirror the parent plan, and where India needs its own design.
- [Insurance for expatriate employees in India](https://www.plumhq.com/blog/insurance-coverage-expatriate-employees-gcc-india): Covering seconded staff alongside the local plan.
- [Group insurance vs ESI: a guide for employers](https://www.plumhq.com/blog/group-insurance-vs-esi-employers-guide): Who must be in ESI, and where group health insurance takes over.
- [How to calculate gratuity in India](https://www.plumhq.com/blog/how-to-calculate-gratuity): Formulas, worked examples and a free calculator.
- [The Standard of Employee Benefits 2026–27](https://www.plumhq.com/standard-of-employee-benefits): Benchmarks from 4,500+ Indian employee health plans.

Sources: IRS, Topic no. 751: Social Security and Medicare withholding rates (2026 wage base); IRS, 401(k) limit increases to $24,500 for 2026; IRS, Employer shared responsibility provisions under the Affordable Care Act; Rev. Proc. 2025-26; IRS, Social security tax consequences of working abroad; US Department of Labor guidance on FMLA, COBRA, vacation leave and severance pay; US Census Bureau, Health Insurance Coverage in the United States: 2024; India–US Convention for the avoidance of double taxation, signed 1989, in force 18 December 1990; Ministry of External Affairs, India, list of social security agreements; Code on Social Security 2020 and Code on Wages 2019, in force 21 November 2025; Plum, Benefits Beyond Borders 2025 (United States chapter).