eMedinewS Editorial

Medicine 13 Comments

16h July, 2010, Friday

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10.3% tax on cashless mediclaim 

After the government–owned insurance companies restricted cashless mediclaim facility, patients now also have to contend a service tax of 10.3% on every claim made using the cashless facility. The introduction of the preferred provider network (PPN) by the public sector insurance companies had the instant impact of bringing cashless transactions to a virtual standstill in the metros, the service tax move had gone practically unnoticed, though both moves were introduced on July 1. The tax is discriminatory as only patients who claim cashless facility will have to pay the service tax while the patients who go in for reimbursement won’t have to pay extra. The service charge component will be paid by TPAs (Third Party Administrators) to hospitals after every cashless transaction. The hospitals will forward this sum to the union government. But ultimately the patient will pay. Consider that a patient with a cover of Rs 1 lakh has been allowed a claim of the full sum. Now, the TPA has to pay 10.3% of the claim as a service tax. As it cannot pay the hospital about 110% of the original policy sum that the patient purchased, it would have no option but to pay 90% of the original claim plus 10% as service tax.(TOI)

Stop Press: As per the sources the insurance companies have reversed the order of restricting cashless facilities. It will now be decided from case to case basis. The service tax however will stay.

Dr KK Aggarwal
Editor in Chief