Connect with us

Daily News

Budget 2020: Need To Raise Tax Benefit Limit On Health Insurance Premiums

Budget 2020 India: The Indian health insurance sector has witnessed numerous structural changes in recent years. The National Health Protection Scheme under Ayushman Bharat and the introduction of new-age technology has redefined the health insurance landscape. The health insurance sector is steadily gaining momentum, the gross direct premium income underwritten by health insurance grew 15% year-on-year (y-o-y) to $4.5 billion till November 2019.

The penetration level of health insurance amongst the masses despite several initiatives by the government and private companies has not been satisfactory. Nevertheless, the implementation of Ayushman Bharat Yojana or Pradhan Mantri Jan Arogya Yojana is expected to increase the coverage to 40% of the population. We expect the government to announce concrete measures in the Union Budget for greater access to health insurance among the masses.

Cost of hospitalisation

The cost of hospitalisation is rising and medical treatments are becoming more costly.Medical inflation rate is rising at an average of 15% per annum. This is putting pressure on people’s out-of-pocket medical expenses as this is an additional burden on Indian households particularly for families living in the lower and middle-income group. The industry expects the government to revisit Section 80D limits under income tax, which is presently capped at Rs 25,000, (for self, spouse, and dependent children) and consider a reduction in Goods and Services Tax (GST) for retail insurance policies.

The effect of tax on the premium has been a concern of the industry. At present, on most insurance products, the GST is 18% . The abolition or at least a sizeable reduction in the GST on all personal lines of products – from the existing 18% to 5% will work wonders for the industry. This will be a huge respite for those who are struggling to meet rising healthcare costs. We expect the government to announce initiatives towards achieving the goal of universal health.

Adequate health cover

One major illness can drain a family’s entire savings, and push the family into a debt trap. Hence, adequate health insurance cover and the right health insurance product is a necessity for household savings to multiply and participate in the nation’s growth. There has also been an extraordinary increase in the incidence of critical illnesses in the country. This definitely calls for higher tax deduction limit under health insurance plans.

India’s healthcare sector continues to remain in focus, with the health insurance sector demanding further attention. There are strong expectations that the government may envisage to increase allocation in public health spending.

The recent move of the government to allow 100% foreign investment for insurance intermediaries will help bring in the latest development in terms of new products, technology, skills and boost investments further.

The private sector health insurance companies and healthcare brands should take a more proactive educational approach towards explaining customers of the many benefits that come with purchasing health insurance policy. Right knowledge about the insurance process and its clauses could help consumers decode fine-print and instill confidence in their purchase.-Financial Express