General insurers want the medical reimbursement benefit to be brought back in the upcoming budget with a higher limit. A higher tax relief on mediclaim premium is also on the industry wishlist.

Employees earlier had the option of getting reimbursement from their employers against medical expenses of up to Rs 15,000 in a year, subject to the submission of proper bills and documents. Finance Act 2018 scrapped the benefit which was subsumed under standard deduction.

“It is crucial to reintroduce medical reimbursement with a higher limit of Rs 50,000,” said Mayank Bathwal, CEO, Aditya Birla Health Insurance.

With the pandemic making it indispensable for individuals to have their healthcare costs well covered, Bathwal said there was also a need to tweak the provisions of section 80D of the Income Tax Act to raise the available deductions.

“It is important to increase the limits for tax deduction on mediclaim premium under Section 80D to Rs 1,00,000 (Rs 50,000 for self and spouse and Rs 50,000 for parents). Allowed dependent relationships should be reviewed,” he said.

At present, non-senior individuals can avail benefits up to Rs 75,000 under Section 80D on mediclaim premium. This includes Rs 25,000 for self and spouse and Rs 50,000 for senior citizen parents.

“For the upcoming budget, the healthcare sector shall play a vital role and we could see announcements that would make healthcare affordable. An increase in the 80D limit as well as increasing the threshold for senior citizens will encourage more people to buy comprehensive health insurance,” said Rakesh Jain, ED and CEO, Reliance General Insurance.

Pension parity

Life insurers want parity in tax exemption on their pension plans and investment under NPS. Moreover, increased supply of long-term government bonds could generate better yields on annuities.

“While investment in NPS offers additional tax deductions of Rs 50,000 under Section 80CCD, life insurers’ pension plans do not enjoy this benefit. The budget should bring parity between pension products offered by life insurers and NPS,” said Kamlesh Rao, MD and CEO, Aditya Birla Sun Life Insurance.

“The government should develop the corporate bond market where insurers can source long-term, credit worthy corporate bonds and generate better long term yields for annuity plans,” Rao said.