Tax Benefit: Section 80D income tax exemptions should be increased to encourage more individuals to get health insurance and to guarantee that they purchase the proper amount of coverage.
Budget 2022 Health Insurance Expectations: Budget 2022 is projected to give some respite to the average man by implementing favorable adjustments to health insurance coverage. The government may explore two major actions to make health insurance policies more popular and desirable for consumers. One, the GST on premiums paid for health insurance plans should be decreased, and the income tax advantage on the premium paid should be enhanced. As more individuals get health insurance, the financial effect on one’s savings is reduced.
In terms of medical inflation, the expense of hospitalization is always rising. The enormous treatment expenses caused by the Covid-19 epidemic have a significant influence on one’s own resources. In most hospitals, the cost of treating a Coronavirus infection has been estimated to be in the thousands of rupees. In the lack of proper health insurance, one may be forced to delve into one’s savings or borrow from a bank.
Purchasing a health insurance plan is the best approach to cover hospital expenses. However, in order to get coverage, one must pay a premium to the insurer. Currently, an 18% GST is paid on the health insurance premium determined after the age and sum insured (coverage amount) of the plan are taken into account.
“Health insurance is an important commodity that should be taxed at 5% to make access to excellent healthcare more accessible.” A considerable drop in the GST on all personal lines of products—from the current 18% to 5%—will encourage more individuals to get health insurance. “It should be exempted for older folks,” argues Anup Rau, MD & CEO of Future Generali India Insurance.
Some insurers have also advocated for the elimination of GST. “In India, health insurance penetration is abysmally low.” Section 80D income tax exemptions should be increased, preferably doubled, to encourage more individuals to acquire health insurance and to guarantee that they purchase the proper amount of coverage in light of greater medical expenditures post-Covid. Another option is to abolish the GST on health insurance premiums. Making it more inexpensive is critical in order to improve penetration, particularly in rural areas,” says Pankaj Arora, MD and CEO of Raheja QBE General Insurance.
Aside from the decrease in GST, insurers anticipate that the tax advantage on health insurance premiums would be increased from the existing limitations. “An increase in the tax deduction limit under Section 80D of the Income Tax Act may assist to enhance health insurance penetration even further.” Individuals may claim a deduction of up to Rs 25,000 for themselves and their families under Section 80D. This ceiling should be raised to Rs. 1,50,000. Medical prices are growing, and the prevalence of severe diseases is increasing, making it an unaffordable burden for middle- and lower-income families. As a result, a bigger tax deduction limit for health insurance coverage is required,” Rau says.
According to current income tax laws, under section 80 D, people under the age of 60 may claim a deduction of up to Rs 25,000. This covers self, husband, and children, and the health insurance might be Mediclaim, Family Floater, Critical Illness, or something else. Section 80D allows the premium paid for any of these programmes to be deducted from gross income. The limit for persons above the age of 60 is Rs 50,000.
Those who haven’t acquired health insurance policies yet should do so as soon as possible to preserve their funds. Still, what if someone does not have health insurance but has to pay for Covid-19 treatment? “The government should grant tax aid to persons who are paying for Covid-19 medical treatment on their own.” Extensive tax assistance should be granted for the cost of medical care for Covid afflicted individuals who do not have medical insurance. “These people have borne the catastrophic financial effect of Covid-19 on their own,” explains Experian India’s Managing Director, Neeraj Dhawan.