Mandatory Employee Insurance in India – Government directed rule in detail

  • postauthorTripti Rai Tripti
  • postdateApril 22, 2024
  • postreadtime4 min read
  • Share

Health insurance has always been a norm in the corporate world across developed nations. For countries like the USA, employers with 50 or more employees have to offer mandatory employee health insurance. The concept of mandatory employee insurance in India, however, has not been very uncommon. For several years, the Indian corporate system, specifically the startup and SME ecosystem has kept employee insurance in the backseat.  

But came the COVID wave and the 6.3 crore Indian MSME market was hit by the reality of the importance of health insurance. With lakhs of people getting affected by the novel coronavirus, the need to provide better healthcare came down on the corporate sector. As a response to this need, the Government of India came up with new health insurance rules for employers 

Mandatory Employee Insurance in India

On April 15th, 2020, the government took a historic step towards its goal to get the entire Indian population insured. As a part of order No. 40–3/2020-DM-I (A) (Issued as consolidated revised guidelines by the ministry of home affairs), it was made mandatory for every employer, who continues their business operation post-COVID-19, to provide medical insurance to their employees.

  • Health insurance for salaried employees will now be mandatory for the employers along with a process for social distancing in offices, establishments, and factories. 
  • With a view to ensuring safety in offices and workplaces, employers on the best effort basis should ensure that Aarogya Setu is installed by all employees having compatible mobile phones. 
  • All industrial and commercial establishments, workplaces, offices, etc. shall put in place arrangements for the implementation of Standard Operating Procedure (SOP) before starting their functioning. 

To execute the guideline on the grass-root level, the Insurance Regulatory and Development Authority of India (IRDAI) issued a guideline asking every standalone and general health insurer to provide comprehensive medical insurance for employees in India to enable the listed businesses/employers/establishments to comply with the directives given by the Government of India. It also highlighted that the businesses should provide medical insurance policies not just in the present situation but even after the COVID situation subsides.

Although there is no minimum sum insured mentioned in the guideline, it is advised to go for a sum insured that truly helps employees in times of emergency. Generally, it is a common industry practice to offer at least 3 Lacs coverage to every employee if the organization is based in a tier-1 city where the cost of medical treatments is high. In a Tier 1 city, a 3 Lakh coverage might cover Rs. 3000 room rent per day, co-pay, free health checkup, no claim bonus, pre- and post-hospitalization coverage, daycare treatment, and a lot of other features. In a Tier 2 city, you can expect to witness a rise in the number and scope of features.  

For startups and SMEs that are preparing for the great return of their employees, gone is the time when x terms and conditions used to answer, ‘when must an employer provide health insurance?’. The time to get their employees’ health covered is now.  

But is mandatory employee insurance in India enough to give the employees the mental security to come back to the workspace? It’s not.  

For a business, it is important to now go beyond mandatory employee insurance in India. And not just for their employees’ productivity, but also the impact that it will have on their bottom lines. So now while on one hand, one part of the question – is it mandatory for employers to provide health insurance in India? Has been answered. The key question remains – how to offer a comprehensive healthcare benefit that will truly be helpful for the employees. 

Startups, as a way to answer the need for an all-inclusive healthcare plan, have started cutting their working capital budget slim by partnering with multiple vendors across different physical and mental healthcare segments. This is leaving them with not just low working capital but also a limited budget for innovation. However, there’s a solution to this nation-wide problem – partnering with a startup-focused employee healthcare firm.  

At Onsurity we understand the importance of mandatory employee insurance in India along with comprehensive, all-inclusive healthcare for employees and at the same time, we understand the financial limitations of a startup or SME employer. Keeping both aspects as a priority, we have made several monthly subscription-based membership plans engineered to fit the individual business needs with some common elements. Don’t believe us? Believe Ankur Warikoo

Ankur warikoo on onsurity

  • Membership plans with monthly-payment models 
  • Plans for teams as small as 3 people 
  • Sum insured on Health, Accident, and Term Life Insurance offered by ICICI 
  • Hospitalization and claim concierge services 
  • Discounted medicine delivery
  • Discounted lab tests 
  • Free doctor teleconsultation
  • Discounted mental therapy sessions
  • Free webinars revolving around fitness and mental health
  • Ability to add parents, siblings, children, parents-in-law, and spouse
  • Ability to continue the membership even after you leave the present employment
  • Ability to extend the healthcare membership to off-role and blue-collar employees.  

We pack all these benefits and a lot more into our healthcare membership variants – all at a price point of Rs. 145 per month per employee. An amount that you can pay at a monthly payment mode. 

With a client base made of a range of startups and SMEs comprising Pantaloons, Jupiter Money, WhiteHat Jr., and sole entrepreneurs like Ankur Warikoo, we have redefined comprehensiveness and affordability for over 1400+ employers across the nation. 

Give your team the gift of strong physical and mental health as you re-welcome them to workspace, with Onsurity employee healthcare.  

Blogs you may like