The financial minister Arun Jaitley announced an increase in the deduction for health insurance premium from Rs.15,000 to Rs.25,000 per annum. The limit for senior and very senior citizens (over 80 years age) has been increased from Rs.20,000 to Rs.30,000. Very senior citizens will also receive an additional benefit of Rs.30,000 as a deduction for medical treatments.
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*Tax benefit is subject to changes in tax laws. Standard T&C Apply
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The increment in the health insurance tax deduction is done to encourage people buy health insurance. The government’s vision is to create a social security umbrella for all Indian citizens.
Indian is spending around Rs.4000,000 crores annually on health where the commercial health insurance is only Rs.20,000crore. As a result, India is paying out of the pocket which is the most inefficient form of health financing as shown by some analysis.
The average health insurance cover size is 2-3 lakhs sum insured at the current situation and the average premium paid in the cities are around Rs.8000. The medical inflation is, above all, the other inflations, and the size could grow in the future.
The representative of Apollo Munich Health Insurance said “The tax exemption limit on the health insurance would go a long way in motivating the people to consider higher sum insured policies to confront the increasing medical cost. This would address the need for a good package,”
The Finance Minister also announced the choices between an ESI plan and any other health plan recognized by IRDA.
(Source: This article has been adapted from the article "Budget 2015: Increase in health insurance deduction limit Rs 15K to Rs 25K announced" that appeared on Feb 28, 2015 in economictimes.indiatimes.com.)
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