Navigating Insurance Deductions: Can You Get a Refund or Make a Claim After Leaving a Job?

Respected All, Need help. If a company decides to deduct an employee's insurance premium from his salary month by month in the middle of the year without mentioning it on the CTC, and the employee leaves the company after three months of deduction of the insurance premium, but the company pays the amount to an insurance company in one lump sum, what should the company do? Can the employee ask for the insurance premium money to be returned in his F&F, or claim on the company for insurance if he suffers from any disease after leaving the company?

Hi, Either the employee is allowed to enjoy the insurance facility for that particular year (after collecting the balance premium EMI from the employee) or the employee has to forfeit the EMI, whatever paid by him, as the insurance company will not refund it.

Formulating a Group Mediclaim Insurance Policy
It is always better to formulate a Group Mediclaim insurance policy and establish terms, including "in case of resignation by the employee in the middle," and obtain the consent of employees well before the commencement of EMI deductions.

Insurance and Employee Benefits

Insurance is opted by any company for the emergency medical needs of the employees. Some companies provide it for free, while others charge a premium from their employees, but all these are only medical benefits for the employees.

Refund of Insurance Premium Upon Leaving

Now, addressing your question about what happens if an employee leaves the company in the middle of the year, and whether the premium amount will be refunded or not, my understanding is that medical insurance typically covers a period of one year. So, let's consider a scenario where you have a 3 lakh medical insurance for one year, and you have utilized 2.5 lakh by the mid-year point. If you were to leave the job at this juncture, would you receive a refund for the amount you have not utilized?

Based on my understanding, I do not believe so. Insurance companies operate on an average basis rather than an individual basis, so the remaining amount may not be refunded in such a situation.

In this particular case, it seems you can't do anything. CTC is an internal document that has no standing in law. It was your company's choice to take the insurance. Did you take the consent of the employee and tell him it needs to be paid by him? Only then can you recover the balance of the premium from him. In such a case, you need to provide a Sec 80D certificate to him for the entire year too. Additionally, the insurance must be in his name, and he should be able to exercise it and renew it at his option.

In most other cases, you just need to absorb the loss and make changes for the future. Group Mediclaim is probably a better option.