Why GST Exemption Could Make Health Insurance Plans More Accessible

Health insurance plans have always been viewed as a luxury rather than an absolute necessity in India. One of the main reasons for this is the prohibitively high costs of health insurance premiums, which have to be paid annually. Only a few segments of society can afford them, leaving many without coverage and pushing them deeper into financial strain. Relief has come in the form of the recent revamp of GST slabs for goods and services in the country. One notable change specifically targets health insurance premiums. This will have a significant impact on health insurance plans and may lead to more people adopting the same in the future. Here’s how the recent GST exemption will help more people access health insurance plans, leading to better healthcare outcomes for them and the country.

Lower premiums

The biggest impact of the GST exemption on health insurance plans is that insurance premiums are set to come down. Previously, 18% GST was being charged on health insurance premiums. This added tax made health insurance more expensive than necessary. GST on the premiums have been cut to zero now, with the government recognising that access to healthcare through health insurance plans should not be taxed for the greater good of the citizenry. This move is a major benefit for both current policyholders and those planning to buy insurance.

Affordability

Seniors and those with health issues such as pre-existing conditions and chronic illnesses are already paying a higher health insurance premium compared to younger and healthier policyholders. This is because they are more prone to making claims and hence pose more risk to insurers. The 18% GST on their health insurance premiums only led to making health insurance plans astronomically expensive for these two groups. With GST completely out of the picture, the cost of health insurance premiums will be lower for them. This can also encourage more people from these two groups to come forward and get health insurance coverage. In their case, affordability leads to accessibility, which leads to a better quality of life through timely treatments.

Better renewal rates

Many people still buy health insurance despite high premiums, believing they can manage the costs. But once they realise that a huge chunk of money goes out of their pocket year on year, some might drop out of the plan by stopping renewals due to affordability issues. Making premiums more affordable through a GST exemption can ensure that many stick with their plans and get the coverage they need when the time comes.

New enrollment

One of the reasons why many hesitate to get health insurance in the first place is high premiums. Many cannot afford annual premiums, particularly when they are high. Even the concept of health insurance has caught on only in metros and urban areas more than anywhere else. High premiums have limited access, making it affordable mostly for affluent urban residents. This tax cut can encourage many people to purchase health insurance plans, allowing for more widespread health insurance coverage. This, in turn, can lead to better health outcomes for many who would otherwise lack the means to receive treatment for diseases that require more resources. This is especially true for the non-urban parts of the country.

Impact on healthcare

The healthcare sector has been benefiting from exemptions and lower tax rates. This is because healthcare is as essential as economic development to a country and should be made affordable to the masses. Applying an exemption to GST on health insurance premiums strengthens the nation’s healthcare ecosystem. While the government may lose money to the exchequer in the form of tax revenues, it can offset these losses. The more people opt for health insurance policies, the less the burden it places on the government to step in. Public healthcare infrastructure still has a long way to go compared to private entities. By doing away with GST entirely on health insurance premiums and making health insurance plans more attractive to the masses, some of the healthcare burden on the government can be alleviated.

The GST exemption on health insurance premiums has come at the right time. With rising inflation, many households feel the financial strain. Medical inflation is also on the rise. These factors combined can make getting the right treatment at the right time near impossible for many families in the country. It is literally a matter of life and death in many cases. An affordable insurance plan can be of massive help in such cases. Making health insurance premiums more cost-effective and, therefore, making health insurance plans more accessible can only lead to the betterment of the nation and its citizens in the long run.