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Risk in Context

Union Budget 2018: Focus on Healthcare and Insurance

Posted by Mohit Agarwal 20 February 2018

Union Budget 2018 has proposed a host of measures which is expected to transform the Indian healthcare system.  The hallmark of the Budget pertaining to health insurance rests in three A’s – Adequate Insurance, Adequate Care and Adequate Access. By working towards these three As, budget shifts the attitude from “ease of doing business” to “ease of living”.

 Key Announcements

  1. Flagship National Health Protection Scheme -Ayushman Bharat  –  To provide INR 500,000 medical insurance cover per year to 100 million poor and vulnerable families, benefiting around 500 million  people.
  2. Setting up of one medical college for every three parliamentary constituencies, with 24 new government medical colleges also being envisioned. Government also will work on upgrading hospitals to medical colleges. This will be a step towards improving the Healthcare infrastructure and making it more accessible to the people.
  3. Three public sector insurance companies—The Oriental Insurance Co Ltd, National Insurance Co Ltd, and United India Insurance Co Ltd will be merged into a single insurance company and listed thereafter. This merger will lead to creation of an insurance behemoth, and will be a key part of the government’s divestment target of INR 800 billion set for fiscal year 2018-19.
  4. Benefits for Senior Citizens- Increased the limit of deduction for annual health insurance premium and preventive health check-up to INR 50,000 from INR 30,000 under Section 80D.
  5. Increase in limit of deduction for medical treatment in respect of certain critical illnesses to INR 100,000 for all senior citizens, under Section 80DDB.
  6. Standard deduction of INR 40,000 for salaried class, replacing both medical expenditure (INR 15,000) and transport allowance (INR 19,200).

Impact on Employee Health and Benefits

  1. Does INR 500,000 Sum Insured set under government scheme redefine the benefits benchmarks which are widely used while structuring of group Mediclaim insurance?
  2. Most employees would submit health check, doctor consultation and other investigation bills under INR 15,000 medical allowances. Does a replacing INR 15,000 medical allowance with standard deduction push the need for well-defined OPD program under insurance to encourage preventive health checks, health maintenance doctor counselling etc.?
  3. Provision for higher deduction towards parents’ premium contribution allows employers to facilitate comprehensive health insurance cover, including preventive care, access to eldercare components and related services.
  4. Merger between three PSU Insurance companies and subsequently going public is likely to change the pricing strategy for group medical and accident plans.

Mohit  Agarwal