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New Delhi: The Union Budget 2023-24 will be placed before the Parliament by Finance Minister Nirmala Sitharaman on 1 February 2023. The Economic Survey will be tabled today at the Budget session of the Parliament that has already begun.
Yogesh Agarwal, Founder and CEO of Onsurity Technologies, has shared with India.com the expectations of the insurance industry from Union Budget 2023-24. Here are the excerpts of the conversation.
What are the reforms expected in the insurance sector? In the backdrop of the pandemic that left several households penniless, how do you think the government will manage to contain the medical inflation and its impact on common people?
Medical inflation is a function of multiple factors and containing it may not be as easy. However, giving more Indians access to affordable healthcare and ensuring more people buy insurance is something the government can do by implementing certain policy changes. Mandating companies of all sizes to offer insurance benefits to their employees is a good starting point.
The government should incentivize small and medium (SME) businesses to offer better insurance coverage to their employees by providing GST credit. This way, not only will employers be encouraged to take positive steps towards healthcare, it would also free up the burden from the government to accommodate a rising influx of underserved citizens otherwise known as ‘the missing middle.’ Ultimately this move has potential benefits ranging from improved productivity and loyalty among workers which can directly lead to an increase in the country’s GDP.
Additionally, the government should look at implementing a health savings account to encourage the nation’s youth to save towards healthcare-related expenses. Given that health premiums don’t typically cross ₹12,000 – ₹15,000 for healthy individuals, the remaining amount up to the ₹25,000 deduction limit under Section 80D can be diverted towards the health savings account. This amount, with the power of compounding, can help individuals provision for any big-ticket medical emergencies or for paying towards expenses that are not covered under health insurance.
Further, the HSA can be linked to NDHM hospitals and providers which will make more efficient use of HSA and also motivate hospitals and provider to come under NDHM’s net.
Has the 18 percent GST made health insurance premiums less accessible to common people? If yes, what can the government do to make it more accessible to commoners? Also, do you think the government needs to increase the tax deduction limit under section 80D (₹75,000) and section 80C (₹1,50,000)?
Having GST on health insurance and not having it on medical treatment, by default, makes health insurance more expensive than going in for treatment without insurance. Therefore, it is imperative to have a tax-neutral position when it comes to health insurance. Ideally, GST on health insurance premium should match the GST on medical treatment and expenses. The government should look at GST on health insurance from this angle.
Further, GST alone is not the reason for insurance being inaccessible. One of the biggest reasons is the lack of awareness and education around the importance of insurance and how it can benefit individuals. Due to the lack of awareness, cost of distribution becomes very high which has a direct impact on premiums.
Increasing the tax deduction under 80D and 80C would not do much because today, health insurance is not inaccessible for people who are under tax net. It is for those who are part of the missing middle for whom deductions under 80C and 80D is not a major push. For this section of the population, it is rationalization of GST that would make a bigger difference.
It’s advisable to increase awareness and urge individuals to buy insurance at a younger age to ensure premiums are affordable and fall within the deduction limit. This, along with more companies offering insurance benefits, will go a long way in improving penetration levels in the country.
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