Is employee health insurance now compulsory to all companies?

Ask the Community Statutory Compliance
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is employee health insurance now compulsory to all companies?
Ref. National Directives of MHA, GOI dated 15th April 2020, vide Order No. 40-3/2020- DM-I (A).
if yes, can we consider it as a part of CTC? (By deducting from employee salary)

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Hi Naresh,

Yes, now it is a directive by MHA to all employers to have health insurance for its employees.

As per the existing laws in India, only ESI covers the health insurance for employees with monthly wages not exceeding Rs.21,000/-. And it was not a mandate on employers to cover the health insurance for its all other employees drawing monthly wages more than Rs.21,000/-, however, many employers provided the health insurance through group insurance policies for such employees and it can be considered as a part of CTC.

Further to the Directives issued by IRDAI through this GOI dated 15.04.2020, which is not for only a limited period, therefore is a mandate for the employers to provide health insurance to all its employees.

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Dear Bhuvana,

I read the guideline document, however unable to find out where it says that employee health insurance is now compulsory to all companies. Ours is IT company. So,

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Hi Shefali,

This directive is issued by IRDAI on 16.04.2020 in furtherance to MHA’s consolidated guidelines dated 15.04.2020. I am sharing the link herein for your reference.
https://www.irdai.gov.in/admincms/cms/whatsNew_Layout.aspx?page=PageNo4100&flag=1

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Here’s a clear summary of what’s being discussed in the greytHR forum thread you linked and what the current situation is on employee health insurance for companies in India:

:pushpin: 1. What the greytHR thread says

The thread refers to a Ministry of Home Affairs (MHA) directive from April 15, 2020 and a related IRDAI order. One commenter states that employers must provide health insurance for all employees and can include it in CTC. However, others in the thread are unsure where the directive explicitly says it is “compulsory.”

:pushpin: 2. Is health insurance truly mandatory for all companies?

There are two parts to the answer:

:check_mark: A. Statutory health coverage via ESI

  • Under the Employees’ State Insurance (ESI) Act, employers must provide social security and medical benefits if they meet criteria (e.g., employing the required number of persons and wages below the threshold). This is legally mandatory.

:check_mark: B. Group health insurance post-COVID SOPs

  • After the pandemic, the IRDAI & MHA issued guidelines as part of workplace SOPs that effectively require businesses to offer group health insurance to employees if they want to resume operations. This has been interpreted by many insurance sources as a mandate for all employers to take health insurance for their workforce.

  • Most industry commentators treat these April 2020 rules as ongoing obligations even today.

:multiply: But contract law and traditional labour law don’t explicitly say “all companies must always provide health insurance under all circumstances.”

  • Some HR and legal community discussions say there is no standalone national law explicitly demanding health insurance for every employee in every company beyond ESI requirements.

:brain: So what’s the practical reality?

  • If your business falls under ESI: you must provide coverage under that scheme.

  • If your business chooses to follow MHA/IRDAI SOPs to resume operations: group health insurance is treated as compulsory.

  • Most employers in India now do provide health insurance as a common statutory compliance and employee welfare practice.

If you want, I can explain how this affects your company’s compliance checklist in practical HR terms (e.g., ESI vs group insurance vs CTC impact).

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I’ve been navigating employee health insurance for a while, and I realized the coverage often looks decent on paper but can fall short in real scenarios. When I first started, I assumed my company’s policy was enough, but once I ran some numbers using Bima Analyze, I saw that the sum insured might not fully cover modern treatment costs. The other thing is continuity—most corporate policies end when you leave the company, leaving a gap.

Using Bima Analyze helped me understand my actual protection level and get my BimaScore, which gave me a clearer idea of where I stood. Now I’m more confident that I have both corporate coverage and a personal policy to bridge potential gaps. For anyone unsure about their policy strength, it’s worth checking your score here: https://bimascore.com/a8lmv6

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