How to Include Medical Insurance Premiums in CTC for Employees and Their Families?

Hello All, Can you please guide me on how to include the medical insurance premium in the CTC breakdown? My company is currently bearing the insurance cost of employees. However, we would now like to include insurance for spouses and children. The company will charge for the premium in CTC. So please guide me on how to add the premium in CTC. Each premium will be different for each employee because age will be different.

Hi, Your question is not very clear. I hope you mean to say that for the Employee Mediclaim Policy, it is free of cost and complimentary, whereas if the employee adds the family, it will be on a chargeable basis, which you want to add to their CTC? Am I correct?

When you are recovering money from the employee towards the premium cost for their family, you are not supposed to add the same in the CTC salary of the employee. Cost to Company (CTC) is the total cost the employer incurs towards employees, including salary and other indirect benefits. Only those elements can be added to CTC, and you cannot show the amount you are deducting from the employee's salary in their CTC.

Either you can recover the premium cost for the family as a single deduction, or your management may consider providing 2-3 EMI options. Accordingly, the premium paid for the family can be recovered in equal installments from the employee's salary.

From your post, I have understood the following:

Your company pays the Mediclaim policy premium for the employee. Your company wishes to give the option of covering the spouse and children to the employee. However, the premium charged for the spouse and children has to be borne by the employee and not the company.

On the above understanding, I offer my views.

Premium Calculation Options

Generally, insurance companies quote premiums on the following basis:

a) Sum insured for individuals (Employee, Spouse & Children). For example, the Employee, Spouse & Children may be covered for a sum insured of Rs. 2,00,000 each. In such a case, you can seek the breakup of the insurance premium for the Spouse & Children and recover it from the employee.

b) The sum insured can be a floater policy for Rs. 2,00,000 among the family members (Employee, Spouse & Children). In such a case, obtaining a breakup of the premium amount for Spouse & Children could be difficult in my opinion.

As option a) will be easy to administer, I would recommend that you take this option, though the premium may be marginally higher in option a).

The advantage of option a) is even after the employee quits the organization, he/she can continue the policy coverage for himself/herself and family members.

I followed this in an organization, and employees were thankful for this.

Regards,

MVK

Your insurance partner will provide the tentative cost per member, and the same shall be considered as part of the CTC towards the medical benefits.

There is no confusion since the insurance premium (at actuals) is directly paid by the employer and should not be included in the gross salary or 'take-home pay.' Instead, this component should be categorized as one of the 'non-cash components' that form part of the Cost to Company (CTC), along with leave salary, EPF employer's contribution, gratuity, etc. In other words, it represents the 'employee cost,' which is the cost to the company but is not payable in the monthly pay packet.