The Goods and Services Tax (GST) Council has recently proposed a significant relief for individuals by removing the GST on all individual health and life insurance policies. This decision, made on September 3, 2025, aims to make insurance more affordable and boost coverage across the country. Effective from September 22, 2025, the 18% GST previously applied to insurance premiums will no longer be levied.

Impact of GST Removal

Industry experts believe that the removal of GST will significantly impact the insurance sector. Chetan Vasudeva, Senior Vice President at Elephant.in, Alliance Insurance Brokers, hailed the move as a "revolutionary policy measure," stating that the 18% GST on premiums has been a deterrent for many middle-income families and first-time buyers. By eliminating this cost, the government aims to prioritize health security and financial protection, potentially leading to increased insurance penetration in India.

Samir Shah, Executive Director and CFO of HDFC ERGO General Insurance Company Limited, believes that the GST exemption will directly translate to enhanced affordability and accessibility of health insurance. Dr. Tapan Singhel, MD and CEO of Bajaj Allianz General Insurance, also echoed this sentiment, emphasizing that the move would ease the financial burden on families.

While the removal of GST is expected to lower premiums, some analysts have expressed concerns about its potential impact on the profits of insurance companies. Scrapping the tax could mean that insurers lose access to input tax credits on expenses linked to these policies. Nevertheless, the government is determined to ensure that the benefits of the GST removal are passed on to the consumers.

Tips for Choosing the Right Health Insurance Plan

With health insurance becoming more affordable, it is crucial to select a plan that best suits your individual needs. Here are six tips to help you make an informed decision:

1. Consider Your Family's Needs: If you have a family, think about their specific healthcare requirements. Coverage can vary, so understanding which plan works best for your family's circumstances is essential. If you and your spouse have significantly different healthcare needs, consider separate plans with varying coverage levels.
2. Review Coverage Options: Explore the different types of health insurance plans available. In the Health Insurance Marketplace, plans are categorized into "metal" tiers: platinum, gold, silver, and bronze. These categories differ in how you and your plan share costs, not in the quality of care.
3. Check Premiums, Copayments, and Deductibles: Understand the out-of-pocket costs associated with each plan. Premiums are the regular payments you make for coverage, while copayments are fixed fees for specific services like office visits. Deductibles are the costs you pay before your insurance kicks in. Also, be aware of coinsurance, where you pay a percentage of the cost for certain services, and out-of-pocket maximums, after which your insurance covers all costs.
4. Check the Provider Networks: HMO (Health Maintenance Organization) plans typically limit coverage to doctors within their network. PPO (Preferred Provider Organization) plans offer more flexibility, allowing you to see doctors outside the network at a higher cost. Ensure that your preferred doctors and hospitals are included in the plan's network.
5. Identify Covered Health Services: Determine what health services are covered by the plan. If you anticipate needing specific services like maternity care or surgery, ensure the plan adequately covers them. Understanding coverage considerations can help avoid unexpected costs.
6. Consider Additional Perks and Benefits: Some health insurance plans offer extra perks like access to health coaches, discounts on gym memberships, or virtual clinic visits. These additional benefits can improve your health and save you money. Also, review the plan's formulary (drug list) to see which drugs are covered and their costs.