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Business News/ Brand Stories / Health Insurance Tax Benefits for Salaried Employees – What You Need to Know

Health Insurance Tax Benefits for Salaried Employees – What You Need to Know

For salaried individuals, the choice lies between procuring individual insurance or leveraging the coverage provided by their employer.

Health Insurance Tax Benefits for Salaried EmployeesPremium
Health Insurance Tax Benefits for Salaried Employees

With healthcare costs soaring to unprecedented heights in India, access to top-quality treatment often comes with a hefty price tag, especially in cases of major hospitalization. However, it's essential to note that health insurance plans can provide a financial safety net, shouldering the burden, provided the premiums are paid on time. For salaried individuals, the choice lies between procuring individual insurance or leveraging the coverage provided by their employer. This blog aims to elucidate the intricacies of tax benefits associated with employer-provided health insurance, empowering you to make an informed decision when navigating the realm of health insurance.

Understanding Self-purchased vs employer-provided health insurance

When it comes to securing health insurance, there are two primary avenues to consider – obtaining it independently or through your employer's group health insurance package. Opting for self-purchased health insurance involves directly buying a policy from an insurance company, with the policy premium being paid from your personal funds. This establishes a direct one-to-one relationship between you, the policyholder, and the insurance company. The coverage remains with you, irrespective of your employment status or workplace changes.

Conversely, you may choose to rely on the health insurance plan provided by your employer. Typically, employers purchase a group health insurance plan from an insurance company and include their employees under the policy. The responsibility lies with the employer to either fully cover the employee insurance premium or share the cost, partially borne by both the employer and employees. However, the caveat is that this coverage is contingent upon your continued employment with the company. Once you cease to be employed there, the coverage ceases as well.


Even if your employer provides health insurance coverage, it's advisable to maintain at least a basic health insurance policy directly purchased from an insurer. This precaution ensures that in the event of job changes or company transitions, you won't find yourself without essential coverage.

Do employers provide different health insurance levels for different employees?

Some employers do not provide health insurance separately, while some do. In a few organizations, employers can voluntarily choose higher coverage. Some employers have the flexibility to offer varying levels of health insurance coverage to different employees based on factors like seniority and income. In many large companies, junior employees may be grouped under one health insurance plan with a standard coverage amount per employee. Meanwhile, senior employees may have a separate policy with a higher coverage amount.

Typically, the company covers the premiums for these policies from its own funds, often benefiting from potential tax write-offs. However, if an employee wishes to have more coverage than what the standard employer policy provides, they may have the option to purchase additional coverage by paying an extra premium from their own money. Many top employees choose to do this.

In the intricate landscape of income tax regulations in India, individuals have the opportunity to optimize their financial planning through deductions on health insurance premiums. Understanding the nuances of these tax benefits is crucial for making informed decisions regarding healthcare coverage. Let's delve into the intricacies of tax advantages associated with health insurance in India.

Tax Deductions on Health Insurance Premiums:

Under Indian income tax laws, individuals can claim tax deductions under Section 80D on health insurance premiums, offering a welcome relief on taxable income. The following key aspects outline the potential deductions:

Standard Deduction: A maximum deduction of up to INR 25,000 is permissible for the premium paid towards personal health insurance policies. This limit can extend to INR 50,000 if one of the partners covered by the policy is classified as a senior citizen.

Parental Coverage: Premiums paid for family health insurance covering parents are also eligible for deductions. An amount of up to INR 25,000 can be claimed, and this limit rises to INR 50,000 if the parents are senior citizens. 

Tax Implications of Employer-Provided Health Insurance:

When it comes to health insurance coverage provided by employers, the eligibility for deductions depends on the financial dynamics:

Sole Employer Payer: If the employer bears the entire cost of the health insurance plan, employees are ineligible to claim any deduction on their income tax.

Joint Payment Scenario: In cases where both the employer and the employee contribute to the premium, either party can claim a deduction. However, the deduction is restricted to the actual amount contributed by each party.

Employee-Funded Insurance: When employees personally fund the health insurance, with the employer facilitating the process, they are entitled to claim tax benefits. The premiums deducted from the salary must be accurately reflected in the employee's Form 16.


While the health insurance tax benefits are undoubtedly advantageous, it is crucial to view health insurance plans beyond their tax-saving potential. They serve as indispensable financial safety nets, ensuring individuals have access to necessary medical treatments without succumbing to financial strain. The government's provision of income tax incentives aims to encourage a broader population to invest in tax-saving health insurance for both individual and familial well-being. Whether through employer-sponsored plans or independently procured policies, maintaining continuous coverage is paramount for sustained financial security in the realm of healthcare.

Disclaimer: This article is a paid publication and does not have journalistic/editorial involvement of Hindustan Times. Hindustan Times does not endorse/subscribe to the content(s) of the article/advertisement and/or view(s) expressed herein. Hindustan Times shall not in any manner, be responsible and/or liable in any manner whatsoever for all that is stated in the article and/or also with regard to the view(s), opinion(s), announcement(s), declaration(s), affirmation(s) etc., stated/featured in the same. The article does not constitute financial advice.

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Published: 29 Feb 2024, 07:39 PM IST
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