Will the floater health policies miss the tax benefits

The Economic Times has carried a news item according to which tax benefits may not be vaialble to those who are having family floater health policies.

According to Debjoy Sengupta
''Do you hold a floater mediclaim policy that covers you, your spouse, your kids and your parents? Well contrary to belief, you may not be able to claim the new benefit under Section 80D of the income tax that lets individuals covering parents to avail of an additional tax benefit — Rs 20,000 for parents who are senior citizens and Rs 15,000 for parents below 60 years. The FM in Budget 2008-09 has proposed an extra cut of Rs 15,000 under Section 80D to an individual who pays medical insurance premium for his/her parent or parents. What’s more, the fine print indicates if the parent happens to be a senior citizen, the tax sop is generous at Rs 20,000. But this may not apply in case of floater policies’ holders. For instance, insurers claim they “are not in a position to specify premium, which one pays for parents as the total sum assured is never separately defined.” “There is only an upper limit for reimbursement, which is the sum assured. This is where the grey area is!” said a source. A floater policy offers a certain sum assured for the entire family, a portion of which or the entire sum assured may be used by any one family member, including parents. Or may be shared by more than one. The insurer will pay at most the total sum assured for the entire family in a year, regardless of the number of members falling ill. “If an individual pays more than Rs 15,000 for a floater policy, the balance premium or even a portion of the remaining amount will not qualify for the new exemption for parents under Section 80D although he has covered the parents under the policy. This may act as a deterrent for buying floater policies for entire families and instead buy separate policies for parents. Premiums for floater policies are less than individual policies and offer flexibility when it comes to hospital bill reimbursements,” said an analyst.

We in www. healthisuranceindia.org feel that the Finance Ministry ,IRDA,Insurance companies shoul have an approach to simplify the procedures so that overheads are reduced and benfit goes to masses.
Options are;
1. There should be sum of Rs 35000 eligible under 80 D.No bifurcation should be there.Every additional polcy costs insurance company Rs 1000.Let us save it.
2.Co Payment clause under senior citizens policy is only applicable to senior citizens.Are we trying to please the senior citizens by giving by one hand and trying to take away the benefit by 2 hands. Let the insurance co's have uniform rules for all age groupes.

2.