Published in Economic Times. Written by Davinder Singh.
We hope the government will use Budget 2020 to incentivise health insurance buyers to create better insurance awareness and deeper penetration.
Here are a few things that we would like for the insurance sector from the Union Budget 2020.
Increase in income tax exemption on health insurance premium
Under section 80D of the Income-tax Act, 1961, Rs 25,000 to Rs 50,000 paid as premium for health insurance for self, spouse and dependent children is deductible from gross total income (effectively tax-exempt). If health insurance premium is also paid for parents who are less than 60 years old, then an additional Rs 25,000 can be claimed as a deduction. If the parents are senior citizens, then an additional deduction of Rs 50,000 can be claimed for the premium paid for them.
With the rise in healthcare costs, we recommend that these limits be further increased by 20% for self and dependent parents, each. This will provide a huge relief in terms of disposable income and help increase the penetration of health insurance.
Reduction of GST on health insurance
The GST rate applicable to health insurance and term insurance premium is 18%. To incentivise people to invest in these protection products, GST should be reduced to 5% for health insurance. Although GST is outside the purview of the Budget, the government can find innovative steps to provide some benefit to increase penetration of health insurance.
Introduction of a standard health product for senior citizens
The government has introduced innovative health insurance products over the years such as Ayushman Bharat Yojana and Rashtriya Swasthya Bima Yojana to increase the reach of health insurance in India. These schemes cater to a specific section of the society, for example – Ayushman Bharat Yojana is focused on the poor. The government can plan a similar health insurance scheme keeping in mind the interests of senior citizens.
Standardisation of healthcare expenses
Healthcare inflation in India is between 14% and 16%. To make healthcare affordable for the masses the government should think of innovative ways to standardise the cost of healthcare keeping in mind the expensive treatments such as cancer, heart diseases etc. One way of doing this is to mandate hospitals and doctors to record in a central platform the results of various medicines and procedures. The value of higher prices of the medicines and procedures can then be properly assessed across facilities.
This will significantly help us in not only improving the quality of healthcare, standardising it in India but also help reduce the health insurance premiums and thereby improving health insurance penetration.
Standard national healthcare database
The insurance industry is witnessing the increasing use of technology to simplify and fasten the processes. Currently, healthcare network works on many independent systems. The government should take substantial steps to create a centralised record system to enable accessing a patient’s medical history and other forms of information. This will help reduce the cost of operations, frauds, and will further streamline the processes involved in insurance.
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