Hello Readers!

The Union Budget 2021 is expected to be announced between 1^st-10^th of February, as informed by the finance ministry of India. As the budget day is approaching near, people are waiting eagerly to see what packages the government will announce that will help our economy to get back on track.

This year finance minister is receiving a barrage of wish-lists from various industries and sections. In the same wish lists, health insurance sectors have also put forward their expectation from the Budget 2021. However, it will be quite interesting to watch, with quite a few things on the table – ranging from the ongoing pandemic, slowing demand, low industrial output, and a record low GDP –what effort the government put forward to meet the expectations of the people.

Boost Up Health Insurance Awareness

The coming budget has generated significant interest amongst insurance companies. They are expecting some positive tax benefits. Well, the budget this year is going to be prominent for the health insurance sector as in the year 2020, this sector experienced several key announcements and regulatory changes in view of the ongoing pandemic.

It is important to note that insurance coverage is just 3.69 percent in India. This clearly shows how much it is important to create awareness programs for health insurance among people. This becomes more prominent for India, as there is almost zero social security.

The importance that health insurance receives in India, despite all those new laws and policies aimed at supporting the governance of the health system, clarifies how prominently health insurance sectors need consideration in Budget 2021.

As we target a $5 trillion GDP till 2025, it is important to develop a structure where the employees feel secure whenever it comes to their health risks. So simply the health insurance sectors have requested the government to take steps, that increase the participation of people towards health insurance.

Increase 80D Limit

Health insurance not only secures people’s health financially, but it does help them help save their taxes, and this is also a reason why people avail health insurance plans.

As per current section 80D rules, if a 35-year-old individual buys a family floater health insurance policy to cover self, spouse, and 2 kids with a sum insured of Rs 15 Lakh, the annual premium comes to Rs 26,000-28,000. When buying this plan, while the policyholder may save tax on Rs 25,000, the insured will have to pay tax on Rs 3,000.

Health Insurance sectors have requested to enhance the tax rebate under Section 80D from the current value of Rs 25,000 for an individual with a dependent wife and kids to Rs 50,000.

In India, we have no government-owned universal healthcare system like one in the European countries where every citizen is enrolled in the national healthcare system, what we have are all privately owned health insurance companies. This is one of the basic reasons why there is so much less participation.

Health Insurance experts say that the tax regime change might attract people towards health insurance. As per the current income tax guidelines, senior citizens get an additional tax rebate of Rs. 25,000 if they buy health insurance. Similar rebates may also be offered to people buying health insurance for spouse and dependent kids.

Reduction In GST!

The GST charges are applicable to health insurance policies. Currently, it is around 18% which is per experts very high for an essential and important financial product such as a medical cover. Thus, they have requested the government, in the wake of the ongoing pandemic situation, to reduce the tax on health insurance products by 5-6 percent, This might enhance people's participation and help in boosting the insurance coverage rate.

Well, all these are some suggestions kept forward by the health insurance sectors. Now let us wait for the Union Budget to get announced and see what steps the government takes to enhance the popularity of the health insurance sector in India.

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Happy Investing!

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