Health insurance may get a boost | india | Hindustan Times
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Health insurance may get a boost

The government is likely to offer increased tax breaks for health insurance premia aimed at achieving the twin objectives of improving penetration of organised financial cover for health and channelising idle household savings towards productive purposes. Budget poll

india Updated: Feb 22, 2011 15:06 IST
Mahua Venkatesh

The government is likely to offer increased tax breaks for health insurance premia aimed at achieving the twin objectives of improving penetration of organised financial cover for health and channelising idle household savings towards productive purposes.

The government is planning to increase tax exemption under Section 80 D of the Income Tax Act from the current Rs 15,000 to Rs 20,000 per annum for insurance premium for health care.

For senior citizens, the amount could be even higher, an official source said requesting anonymity.

“The proposal is being considered in the wake of rising healthcare and health insurance costs in the past few months. The move would also encourage more and more individuals to go in for health insurance,” the source said.

According to estimates, less than 2% of India’s population have a health insurance cover and is mostly concentrated around bigger towns and cities.

An increase in the income-tax exemption for health cover premium will also indirectly help shore up the top lines of insurance companies locked in a protracted battle with hospitals over cashless hospitalisation.

Some insurance firms have now started asking for higher premiums to renew existing medical insurance policies.

“Allocation to health sector is expected to rise which would raise sentiments and faith of the common man to buy more health insurances and thus the revenue of the insurance sector would improve,” said Girish Batra, chairman and managing director, Netambit, a financial services distribution company.

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HTC, New Delhi