Health insurance costs will rise soon!

Health insurance companies have proposed to increase the costs of health insurance with the government determined to enforce service tax on payments made by insurance companies to hospitals where policyholders had obtained cashless service in settlement of claims.

The healthcare sector receives around Rs 6,000 crore by way of claims which are over 50% of the payments to the insured from the non life industry.

Says Bhargav Dasgupta,  MD & CEO, ICICI Lombard GIC,” The proposal to impose service tax on payments made to hospitals under health insurance schemes, would push up costs for end customers.”

The third-party administrators were asked to pay the tax on behalf of insurance companies by the IT department. The TPAs had protested stating that they were only a channel for the claim payments and also that the tax demands exceeded their revenues. However the union government in its budget has made it extremely clear that the payments made by the insurance company will attract service tax.

We are hopeful that there will be some offset benefit” said the CEO of non-life insurance company.

Shobana Kamineni, Wholetime Director, Apollo Munich Health Insurance said that “Health insurance has been acknowledged as one of the most efficient means to meet and manage healthcare costs. We were looking forward to an increase in the tax exemption limit on Health Insurance to address the rising cost of medical treatment in India.”