Rising healthcare costs have also pushed health cover premiums up. Budget can offer some respite to taxpayers.
Rising healthcare costs have burned a hole in middle class’ pockets as it grapples with higher inflation in daily household items. This has increased health cover premiums as well and experts are calling for an increase in the limit under section 80D to offer respite to the taxpayers.
Health insurance penetration is still abysmally low in India and most of the expenses on healthcare are out of pocket. Healthcare costs have also risen after COVID and this is adding to the burden of a middle class household.
The Budget can offer relief in terms of increasing the limit of section 80D under which taxpayers can claim deductions for health cover premium up to Rs 25,000 and for senior citizens up to Rs 50,000.
“In a country where medical expenses are not totally free even in government hospitals, ideally, the government should provide a 100 percent deduction against medical expenses without any limit,” Pankaj Mathpal, Founder, Optima Money Managers, said.
The lower penetration of health covers is another reason for high premiums. If the Budget 2023-24 raises the limit under section 80D, it could come as a boost for the insurance sector as more and more people will move towards the safety cover.
The pressure is more on senior citizens as they have to contend with only Rs 50,000 limit under section 80D for health cover premium. At a time when healthcare costs have risen exponentially, there is a need for this limit to go up.
“If a senior citizen and spouse want to opt for an adequate, comprehensive cover, the premium amount could go well beyond Rs 50,000. The finance minister should look at raising Section 80D limit to Rs 1 lakh (under the old, with-exemptions tax regime),” Preeti Zende, Founder, ApnaDhan Financial Services, said.
Another important demand of the insurers is to reduce the GST on health covers to 5% from the current rate of 18% which makes these safety nets expensive.
Cutting the GST on health insurance will reduce premiums and make it more affordable especially for senior citizens.
Finance minister Nirmala Sitharaman will present the Union Budget for 2023-24 on February 1.