Provision for Insurance Cost in HR Budget
Often, I have been asked how to make a provision for insurance costs in the HR budget. What would be a reasonable cost? Is ESI better than a group health policy?
From India, Bengaluru
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Often, I have been asked how to make a provision for insurance costs in the HR budget. What would be a reasonable cost? Is ESI better than a group health policy?
From India, Bengaluru
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Insurance Budgeting for HR in Bengaluru, India
When it comes to budgeting for insurance costs in HR, especially in Bengaluru, India, it's essential to consider various factors to determine a reasonable amount. Here are some practical insights to guide you through this process:
1. Determining Reasonable Cost:
- Start by analyzing the previous insurance policy costs if available. This can serve as a benchmark for estimating the budget.
- Consider factors like sum assured, coverages, employee demographics, and location to tailor the insurance budget accurately.
- For new companies without historical data, a useful benchmark can be the contribution rate under the ESI Act. The combined contribution under ESI is 4.00% of wages (3.75% by the employer and 0.75% by the employee), irrespective of the Rs. 21,000 salary cut-off.
2. ESI vs. Group Health Policy:
- ESI is a statutory requirement for specific industries or areas, mandating enrollment with ESI authorities. It provides essential health coverage to employees.
- While ESI is mandatory, additional coverage through a group health policy can offer more comprehensive benefits tailored to the organization's needs.
- It's advisable to supplement ESI with personal accident coverage for enhanced protection.
3. Budgeting Considerations:
- The insurance premium will vary based on factors like group size, chosen coverage options, and specific requirements of the organization.
- Ensure to factor in potential variations in costs based on the selected insurance coverage and the employee profile.
4. Practical Approach:
- Create a detailed breakdown of insurance costs based on the organization's unique requirements and employee demographics.
- Regularly review and adjust the insurance budget to align with changing needs and market trends.
In summary, while ESI provides a basic level of coverage, supplementing it with a group health policy can offer more tailored benefits. By considering key factors and benchmarks, you can develop a reasonable insurance budget that meets the organization's needs effectively.
From India, Gurugram
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73When it comes to budgeting for insurance costs in HR, especially in Bengaluru, India, it's essential to consider various factors to determine a reasonable amount. Here are some practical insights to guide you through this process:
1. Determining Reasonable Cost:
- Start by analyzing the previous insurance policy costs if available. This can serve as a benchmark for estimating the budget.
- Consider factors like sum assured, coverages, employee demographics, and location to tailor the insurance budget accurately.
- For new companies without historical data, a useful benchmark can be the contribution rate under the ESI Act. The combined contribution under ESI is 4.00% of wages (3.75% by the employer and 0.75% by the employee), irrespective of the Rs. 21,000 salary cut-off.
2. ESI vs. Group Health Policy:
- ESI is a statutory requirement for specific industries or areas, mandating enrollment with ESI authorities. It provides essential health coverage to employees.
- While ESI is mandatory, additional coverage through a group health policy can offer more comprehensive benefits tailored to the organization's needs.
- It's advisable to supplement ESI with personal accident coverage for enhanced protection.
3. Budgeting Considerations:
- The insurance premium will vary based on factors like group size, chosen coverage options, and specific requirements of the organization.
- Ensure to factor in potential variations in costs based on the selected insurance coverage and the employee profile.
4. Practical Approach:
- Create a detailed breakdown of insurance costs based on the organization's unique requirements and employee demographics.
- Regularly review and adjust the insurance budget to align with changing needs and market trends.
In summary, while ESI provides a basic level of coverage, supplementing it with a group health policy can offer more tailored benefits. By considering key factors and benchmarks, you can develop a reasonable insurance budget that meets the organization's needs effectively.
From India, Gurugram
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