Budget 2024 Expectations: Will FM Reduce GST On Health Policies? Here’s What Insurers Want
Union Budget 2024: The health insurance sector in India has high hopes for the upcoming Union Budget 2024. The industry hopes that by implementing some of the measures, the government could significantly boost health insurance penetration and promote financial security for citizens.
Among the key demands, the sector seeks to highlight the current deduction limit for health insurance premiums is seen as inadequate, especially considering rising healthcare costs.
Also Read: Historic Steps Will Be Taken In Budget 2024, Reforms To Be Fast-tracked: President Droupadi Murmu
The sector expects a significant increase in the deduction limit for individuals, dependents, and especially senior citizen parents. This would make health insurance more affordable and encourage wider adoption.
Here are some key expectations of the health insurance sector;
Prasun Sikdar, MD & CEO, ManipalCigna Health Insurance, underlines that the Right to Health is a part and parcel of the Right to Life under the Indian Constitution.
“Despite some progress over the years, India’s healthcare spending is still low compared to the global average, necessitating a substantial boost in healthcare spending,” Sikdar said.
“We expect the Finance Minister to announce higher allocation of funds for healthcare compared to what was proposed in the interim budget to meet the targets of the National Health Policy,” Sikdar added.
Reducing Out-of-pocket Expenses
Sikdar added that reducing out-of-pocket expenses is equally critical. Currently, these expenses are still high relative to global standards, indicating a considerable protection gap. Private health insurance is vital in bridging this gap.
Insurance for All by 2047
Sikdar highlighted that the insurance regulator, IRDAI has also set a vision of achieving Insurance for All by 2047, marking a century of India’s independence.
“Our sincere submission to the government is to reduce the current 18% GST rate on essential services like health insurance. Further, specific segment considerations are also required especially for middle-income and senior citizen segments who are struggling to meet the rising healthcare costs,” Sikdar urged.
Reducing GST burden
Sikdar also underlined lowering the GST burden on health insurance premiums will be a huge respite for missing middle and senior citizens to get access to the quality healthcare they need and help to significantly boost insurance penetration across India by driving affordability.
Tax Benefits
Krishnan Ramachandran, MD & CEO, Niva Bupa, said that India is a price-sensitive market where consumers seek maximum value, making tax benefits a significant nudge towards purchasing health insurance.
“The 80D tax exemption should be linked to inflation and revised periodically. Increasing the current limit of Rs 1 lakh for tax deductions would encourage more people to opt for health insurance,” Ramachandran said.
Currently, policyholders can claim deductions of up to Rs 25,000 for parents under 60 and Rs 50,000 for those over 60.
“Raising these limits to Rs 50,000 and Rs 1 lakh, respectively, would further incentivise health insurance for elderly parents. Tax exemptions should also extend to dependent family members like siblings,” Ramachandran urged.
Universal Health Scheme
Dr. S Prakash, MS. FRCS (Glasg), FAIS – MD & CEO Designate, Galaxy Health Insurance Company, said that the Universal Health Scheme requires better implementation, greater participation of multi-specialty and corporate hospitals, and improved reach to the deserving BPL population.
Additionally, uniformity in its implementation across all states needs to be addressed, he said.
Expectations on Having a Health Regulator
Prakash demanded that a Health Regulator can better standardise operating procedures, create effective packages based on the location and expertise available in hospitals, and address unethical practices. This can boost public confidence and improve financial transactions between insurers and hospitals.
Currently, hospitals are somewhat self-regulated despite the existence of the Clinical Establishment Act. There is uncertainty about how uniformly this act is practiced across the country, he added.
Apart from the GST reduction, Prakash also urged to extend 80-D deductions under the New Tax Regime, similar to the Old Tax Regime and include personal accident cover under the 80-D limit ambit.
