Skip to main content

Create healthcare corpus

With the Union Budget introducing service tax on hospitals and health check-ups, your medical bills are likely to get higher
 
More and more people, now, realise the need for medical insurance. They have either experienced sudden, unmanageable medical expenses or have known someone in a similar situation. There are still many who rely on employer provided cover or family floater.

With soaring medical costs, an individual health policy with adequate cover is necessary.

Cost

A recent survey by global consultancy firm, Towers Watson, has indicated a steady rise of 15-25 per cent in health cover premiums. Unlike life insurance, there is no ways to assess the need for medical cover.

Looking at the high medical costs, we suggest a minimum of `5lakh cover per adult and `3lakh per child.

Most companies these days cover upto `10 lakh. The differential between a `5lakh cover and a `10 lakh one is not much.

For instance, 42-year old Nandan, his wife, Neelam (38) and two kids, aged nine and seven years, are fit. A `5lakh cover for the adults and `3lakh for each kid would see a premium of `22,500 a year.

If Nandan covers his wife and himself for `10 lakh each and his kids for `5lakh each, the premium will be `31,000 per annum. They need to pay `8,500 more, to double the cover. A good option, as medical emergency can arise anytime.

Budget Spoiler

This Budget, the Finance Minister has brought medical treatment under the service tax net. All nongovernment hospitals with 25 or more beds, central air conditioning, partially or fully will be charged service tax. And this is most likely to get reflected in patients' bill. There is, however, an abatement of 50 per cent, which means 5.15 per cent will be levied instead of 10.30 per cent. Also, all diagnostic tests will have to pay 5.15 per cent service tax. Obviously, this is a negative step. This may push up healthcare related expenses for all of us.

Increased costs due to service tax, will automatically reduces the insurance cover to the extent of the tax.

Portability

This move by the Insurance regulatory and Development Authority (IRDA), allows a consumer to move from one health insurer to another and carry over benefits like waiting periods for pre-existing diseases. This will ensure policyholders cannot be held captive and better quality services. This will be effective from July 1, 2011.

Policy Constraints

Employer-provided health cover is good for its coverage of pre-existing illnesses and child birth, related expenses immediately, cover for parents (on a co-payment basis, in many cases), and importantly, at negligible cost until you want extra cover. For that you need to pay a residual premium.

The limitation here is, it is valid only as long as the job. These are rarely portable. Not all companies may provide health cover. The cover also needs to be sufficient.

Many opt for family floater plans, as they are cheaper. There is no limit to which the sum assured can be used by one family member. The problem arises if more than one person fall ill together. That time, if one person has higher bills, the other member suffers due to lower cover under the same policy.

Popular posts from this blog

8% Government of India Bonds quick guide

For those seeking comfort in safety of returns, the Government of India issued 8% savings bond once again comes to the fore. First launched in 2003, these bonds are issued by the government with a maturity of 6 years. The bonds are available at all times with specified distributors through whom you can apply to invest in them. Here is a quick guide to what the bond offers and its features to ascertain to check for suitability. What are Government of India bonds Government of India bonds are like any other government bonds with specified rate of interest. The rate is fixed at 8% per annum paid half yearly, or you can opt for cumulative payment of interest at the end of the tenure. You can buy these bonds from State Bank of India and its associates, other nationalized banks and some private sector banks such as HDFC Bank Ltd and ICICI Bank Ltd, among others. The bonds can be bought from the offices of Stock Holding Corporation of India as well. They are available in physical form onl...

Tax on Kisan Vikas Patra Returns

  Taxation of Kisan Vikas Patra The interest earned on Kisan Vikas Patra (KVP) doesn't enjoy any tax exemption   The interest earned on Kisan Vikas Patra (KVP) doesn't enjoy any tax exemptions. The interest earned from it is taxed as per the Income Tax slab applicable to the investor on redemption. That means an investor in the highest tax slab will pay 30 per cent tax on the returns from KVP . Also, 10 per cent of the interest earned would be deducted as tax deducted at source (TDS). ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saving Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in india for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fu...

How EEE and EET Tax affect Retirement Investments

  An important factor while choosing a financial product is its taxation , and for retirement savings, this is even more important as the sums involved are usually life-long savings. Here's a look at the current tax treatment of three major long-term retirement planning products, which are - Employees' Provident Fund (EPF), Public Provident Fund (PPF) and National Pension System (NPS). EPF The tax treatment is EEE, which means your money is exempt from taxes at the time of investment, accumulation and withdrawal. At the time of investment, the tax deduction is under the limit of section 80C of the Income-tax Act , which is currently Rs 1.5 lakh. Partial withdrawals are also tax-free if made after 5 years of continuous service. If withdrawals are made before 5 years of service, 10% tax will be deducted at source. Exceptions have also been provided for transfer of amount and conditions wherein the subscriber is unemployed for more than 2 months or the loss of job was beyond th...

You can close PPF after 5 years for a medical emergency or for higher education

You can close PPF after 5 years   The premature withdrawal, however, comes with a penalty--you will get 1% less interest as applicable from time to time   The finance ministry notified on Monday that account holders of the Public Provident Fund (PPF) can prematurely close their account if it has completed at least five years and the reason for closure is medical emergency and higher education     The change According to this recent change, a PPF subscriber shall be allowed premature closure of her account or account of a minor of whom she is the guardian on grounds that the amount is required for treatment of serious ailments or life-threatening diseases of the account holder, spouse or dependent children on production of supporting documents from competent medical authority. Similarly, you will be able to prematurely close your PPF account for higher education needs only if you produce documents and fee bills showing confirmation of admission in a recognised institution in India o...

How did your Mutual Funds Perform?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300     Don't look only at a fund's performance during a bull run, but also find out how it performed when the market was bearish. Investors should not only look at how their funds performed when markets were booming but also during the bear phases. Now that the market is on an up swing, mutual fund investors will be keen to make the most of the situation. More so, as they have endured a torrid time for the past five years when the stock market was mostly range-bound and the NAV of mutual funds remained static. Most expect their funds to capture the rally and outperform the broader market. And, many funds are delivering superior returns. But, here's a word of caution for our readers: You should never judge a fund on the basis of its performance only during a market u...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now