Budget 2010: Health insurance costs set to go up
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Health insurance costs are set to soar with the government deciding to impose service tax on payments made by insurance companies to
hospitals in settlement of claims where policyholders had received cashless service.
Each year the non-life industry pays around Rs 6,000 cr by way of claims to the healthcare sector. Over half of the payments are by way of settlement of claims for cashless treatment. “The proposal to impose service tax on payments made to hospitals under health insurance schemes, which could push up costs for end customers.” Bhargav Dasgupta, MD & CEO, ICICI Lombard GIC.
During the year the IT department had made tax demand on third-party administrators who were making payments to hospitals on behalf of insurance companies. The TPAs had complained that the tax demands were in excess of their revenues and that they were only a conduit for the claim payments. The union budget has made it clear that the payments made by the insurance company will be subject to service tax.
Insurance companies are however hopeful that they will get some offset benefit on account the service tax that is paid on premium collected. “Since the claims are being out of premium that has already been collected. We are hopeful that there will be some offset benefit” said the CEO of non-life insurance company.
“Health insurance has been acknowledged as one of the most efficient means to meet and manage spends on healthcare. 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.” said Shobana Kamineni, Wholetime Director, Apollo Munich Health Insurance.
Source - economictimes.com
