Is health insurance a mandatory benefit in India?


In India, health insurance is not a mandatory employee benefit under the law. However, many employers choose to provide it as part of their benefits package to attract and retain talent. Some regulations and tax benefits encourage employers to offer health insurance, and it is increasingly common for companies to include it in their employee benefits.


For example, under the Income Tax Act, employers can provide health insurance for employees and their families as a tax-free benefit, which incentivizes companies to offer this benefit. Additionally, the Employees' State Insurance (ESI) Act mandates health insurance coverage for employees earning below a certain threshold, but this is a specific requirement for certain sectors and not a general mandate for all employees across all industries.


Employees who opt for health insurance for their dependents, through the company's insurance policy, and pay for the premium, get the tax benefits under Section 80D of the Income Tax Act. The deduction further reduces their income tax liability.


Health insurance premium is added on top of the gross salary to arrive at the final Cost To Company, after including the employer's Provident Fund contribution as well.

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