INDIA: Seniors May Get More Sops On Health Cover

MUMBAI (The Times of India), November 23, 2007: In a meeting held on Thursday in Hyderabad, a panel set up to look into senior citizens’ health insurance, has prepared a final set of recommendations that could well change the way health covers for the aged are approached. It says that instead of looking at the age of the person, what is important is when that person entered the health insurance system. Therefore, you benefit if you start buying insurance at a younger age and continue with the cover. Also if you have a history of owning medical insurance you will be able to get incentives compared to someone who enters the health insurance system at an older age. Under the present tax regime, under section 80D, senior citizens above the age of 65 can claim a deduction of Rs 20,000 on the health insurance premium paid in a year. Effectively, if you utilise the full benefit, that is, buy a cover where the premium comes to Rs 20,000, you can deduct this amount from your total income before arriving at your taxable income. This means that people in the high income bracket, where the tax rate is highest at 30%, get a tax break of Rs 6,000 while people with lower income and therefore lower tax bracket get a smaller benefit. The panel is suggesting that the incentive should instead act as a tax credit and it should be uniform across income levels for senior citizens. The panel, say sources, is also going to put forward that in case the full tax credit is not utilised in a year, the balance should be allowed to roll over to the next year so that the person gets a higher tax credit the following year. According to sources, among the final recommendations what is also key is that all companies develop a base cover and that the base premium should increase at a fixed percentage of around 1-2% each year. The panel is understood to have accepted the definition of pre-existing diseases submitted by the General Insurance Council. This is expected to be made uniform across all insurance companies. Apart from this, the panel is also looking at the possibility of setting up a health insurance pool for those senior citizens who are uninsurable due to their adverse health conditions. It is being suggested that when companies collect service tax on health insurance products, 50% of that service tax be diverted to a pool which can service people who are considered to be high health risks. By Arti Sharma, Times News Network Copyright © 2007 Times Internet Limited.