Seniors may get tax sops on policies

MUMBAI: If all goes to plan and the insurance regulator sets the ball rolling, senior citizens may get to see some more innovations in health insurance. Apart from the recommendations for allowing for a uniform tax credit across income classes, the committee set up to look into senior citizens health insurance (headed by former National Housing Bank chairman K S Sastry) has put forward two more innovative ideas — related to setting up a health savings account on the lines of Public Provident Fund.
The other suggestion is to allow tax benefits to the health insurance firms in the same manner that tax breaks are offered to sectors that the government wants to develop.
Although, it will be up to the insurance regulator to take the idea forward to work out modalities with other bodies of tax experts and so on, the panel has suggested that something akin to PPF account be devised where in people can put aside money over a long period of time, building a pool of resources that can be diverted only towards health care expenses and which will allow for some tax benefits along the way.
Essentially the idea will be that instead of just depending on health insurance, perhaps for current expenses people will have another cushion to fall back on. The account will, like a savings account, earn some kind of interest as well. However, the details of who will manage this, how it will be structured, what tax benefits will be allowed and so on will have to thrashed out.
Such schemes are available in other countries as well. In US, for instance, people can open health savings accounts as an alternative to traditional health insurance provided they are covered by a High Deductible Health Plan (HDHP). According to the US Department of Treasury website, health savings accounts ''enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.''
However, this benefit is allowed if you are covered by HDHP which generally costs less than traditional health covers but is a plan that doesn't cover the first several thousand dollars of health expenses. The HDHP will kick in only if the expenses are larger than what health savings account can take care of.
Consumers can control how much money to invest in health savings accounts, how that money is spent without seeking approval from any third party administrator or insurance company. Also consumers can sign up for such accounts with their banks, credit unions and even insurance companies.