Budget 2021 Expectations for Health Insurance: Reduction in GST rate from 18 per cent to 5 per cent is required, to increase the Health Insurance penetration.
Budget 2021 Expectations: Budget 2021 will be presented by the Finance Minister Nirmala Sitharaman amidst the COVID-19 pandemic. The expectations from the government will be high to announce certain tax measures or incentives while dealing with the hospitalization arising out of coronavirus. The health insurance penetration in the country is not very high and even inadequate to meet the entire cost of hospitalization. Further, the hospitalization rates for the treatment of coronavirus is not standard across hospitals in various cities.
Rakesh Jain, ED & CEO, Reliance General Insurance expects the government to take these steps in the upcoming Union Budget 2021: “ Government of India should announce the package for all the hospitals on the treatment of Covid 19, in similar format as the packages are mentioned in the Ayushman Bharat. This pandemic has affected people in terms of financially where the insurance coverage was either not available or adequate coverage was not available. Government should also standardize the treatment cost across all the hospitals considering it large impact on population. Apart from this, reduction in GST rate from 18 per cent to 5 per cent is required, to increase the Health Insurance penetration.”
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Include COVID-19 under section 80DDB
There is one other key area that needs attention from the government. Under the tax laws, expenses incurred on certain illnesses such as diseases include Neurological Diseases, Malignant Cancer, AIDS, Chronic Renal failure and Hematological disorders qualifies for deduction under section 80DDB up to Rs 40,000 ( Rs 1 lakh for senior citizens) a year.
“Government should also include hospitalization expenses incurred on treatment of Covid 19 under section 80DDB for the expenses which are done out of pocket apart from reimbursement from Insurance coverage,” adds Jain. By including COVID-19 for the benefit under section 80DDB, a big relief to the taxpayers especially those who are not covered by insruance can be expected.
The outbreak of COVID-19 has certainly increased the need of adequate health insurance. “The need for health cover has increased; we propose the govt to provide enhanced tax exemption for health insurance premium. This would further motivate the tax payers to increase the health insurance participation appropriate to the cost of healthcare. Under section 80D, there is a need to increase the limit by additional amount of 25000 both for self and parents as cost of insurance is increasing due to medical inflation,” says Jain.
Currently, the premium paid for health insurance already qualifies for deduction under section 80D up to Rs 25,000 for those below 60 years of age, while the limit is Rs 50,000 for those who are above that age. The upper limit for tax benefit is low as it limits the amount of sum insured. “Not only for Senior Citizens but for younger population as well additional tax Benefit should be extended. This will surely increase awareness and people could be encouraged to get appropriately covered with sufficient Sum Insured,” informs Jain.
With higher tax incentive, one may opt to increase the coverage amount. In times when medical inflation is high and treatment cost is rising, it is necessary to keep a high coverage for self and family members.