Budget 2025: Will FM Sitharaman offer some tax benefits to senior citizens in terms of health insurance?

Budget 2024 for senior citizens: Union Finance Minister Nirmala Sitharaman is set to unveil the budget for the financial year 2025-26 on February 1, 2025. Alongside corporations and industry stakeholders, senior citizens are also eagerly anticipating the announcements that may impact them. The elderly population is hopeful for reforms that could alleviate financial burdens and improve their overall quality of life.

The previous budget did not offer targeted tax relief to seniors, and while the Ayushman scheme was introduced for seniors aged 70 and above. However, there is still room for improvement. Although some tax benefits are already in place for individuals aged 60 and above, such as exemptions under Section 194P of the Income Tax Act, 1961, the provisions remain limited. This section allows individuals aged 75 and above, receiving income solely from pension and interest from the same bank, to be exempted from filing an income tax return (ITR). 

Moreover, seniors benefit from increased deductions for medical insurance under Section 80D and are not required to pay advance tax under Section 207 if they do not receive income from "Profits and Gains of Business or Profession". They also have a higher basic exemption limit in the old tax regime, among other advantages. These tax provisions provide some financial relief to seniors during their retirement years.

Hanut Mehta, CEO and Co-Founder at Bimapay Finsure (a division of Hindon Mercantile), noted that with increasing healthcare costs, seniors often face the challenge of managing their health on a limited budget. 

1. Preventive Care Discounts:

Many insurance providers offer lower premiums to policyholders who commit to preventive health measures such as regular health screenings, vaccinations, or wellness programs. Seniors should actively participate in these programs to stay healthier, detect potential health issues early, and qualify for premium discounts.  
 
2. Choose Deductibles and Co-pay Options Wisely:

Opting for a higher deductible (the amount paid before the insurance kicks in) or co-payment percentage can significantly lower the monthly premium cost. However, seniors should carefully assess their financial ability to cover higher out-of-pocket costs in case of unexpected medical expenses.   
  
3. Explore Government Programs and Subsidies:

Many governments provide health insurance schemes tailored specifically for senior citizens, such as reduced premiums, cashless treatment, or comprehensive age-specific coverage. For instance, in some countries, programs like Medicaid or Medicare offer affordable coverage options for seniors. Research local schemes, eligibility criteria, and application processes to take advantage of these benefits. You may also consult nonprofit organizations or social workers for assistance.  

4. Switch to Senior-Specific Plans or Combine Policies:

Many insurers offer policies designed for seniors, focusing on age-related health needs like coverage for chronic illnesses, hospitalization, and long-term care. Consolidating multiple policies under a single senior-specific plan can simplify management and reduce costs by eliminating redundant coverage. Additionally, consider porting existing policies to ones offering better benefits or lower premiums, especially if your current policy doesn’t address senior healthcare priorities.  

5. Consider Family Floater Policies:
   
If you live with family, switching to a family floater plan can spread the insurance premium across all members, reducing the individual cost for seniors. These plans cover the entire family under one umbrella policy and ensure that seniors can avail of healthcare services while sharing financial responsibilities with younger, healthier members.  

6. Claim Tax Benefits:

Many countries allow tax deductions on health insurance premiums, making it a cost-effective choice for seniors and their families.  Additionally, families paying for a senior member’s premium can often claim deductions, further incentivizing insurance investments for older adults.