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 taking care of costs for those who actually incurred medical costs?
Wouldn’t that be easier and more affordable?
You’ve probably had these questions while thinking of healthcare coverage for your employees. Providing reimbursements medical costs to employees is definitely an option that companies consider.
Let’s first talk about the process of providing medical reimbursements to your employees entails.
Firms that offer medical reimbursements to their employees, essentially recompense the medical bills for them, and even their family 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 upto a limited amount per year which is 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 really get entirely benefited from the amount you pay.
Apart from the fact that medical reimbursements don’t act as a great 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’ve to first make the payment from their pocket and then wait for the reimbursement to come through. This completely disregards the scenario that your employee actually 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.
The other alternative to medical reimbursements is group medical insurance that becomes an umbrella cover for all your employees. It takes away the shortcomings that I previously discussed for the reimbursement type cover.
Here’s how group health insurance is more beneficial than medical reimbursements:
When you provide a group insurance plan for your employees, their cover begins as soon as they join your company. So, there’s no waiting period for them to enjoy the benefits of the plan.
You are not just reimbursing your employees for expenses but giving them additional benefits like dental care, OPD, 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 wellbeing 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. This is where they benefit from cashless treatments that are offered at select hospitals under group health insurance cover. In this, the employee doesn’t have to pay anything from his pocket and all his bills and hospitalization costs are covered by the insurance provider.
First of all, you are saving a lot on administrative expenses that I discussed above. But there’s more to it. Any amount that you pay as a premium for your employee insurance is considered as a business expense. So, you actually save on tax just by buying group health insurance for your employees.
We provide high-quality group health insurance plans at Plum, that not only include cashless payments, hospitalizations charges, maternity cover, and pre-existing disease cover but 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 some basic details about your company, and the type of cover you’d like here. Try it now.