Health insurance is a vital financial safeguard. Its different plans and add-ons help individuals and families manage medical expenses during emergencies. However, maintaining this financial protection comes with a cost influenced by several factors. GST (Goods and Services Tax), levied on health insurance premiums, is one such important factor.
Recent revisions to GST on health insurance have sparked questions among policyholders. From September 2025, the government has decided to remove the 18% GST on health insurance plans. Understanding GST for medical insurance premiums and how it will impact your renewals is crucial for continued coverage.
This blog will take a closer look at the impact of the revised GST on medical insurance premiums.
How does the revised GST affect your health insurance premium?
The recent GST revision has provided the much-needed relief to policyholders by making health insurance policies more affordable. Before this revision was made, premiums on medical insurance and family health insurance plans included 18% GST charges. This is what significantly increased the total cost.
For example:
Your annual premiums were INR 40,000, but you had to pay an additional INR 7200 as an 18% GST. So, in total, the cost comes down to INR 47,200.
After the 56th GST Council meeting, the government announced that from September 22, 2025, all health insurance premiums will be fully exempt from GST. This means you’ll now pay only the base premium, i.e., 40,000 (taken from the above example), saving 18% GST.
Impact on individual, family and senior citizen health plans
The revised GST applies to all health insurance policies. This means every policyholder category, including family health insurance, senior citizen health plans or individual plans, can enjoy the GST exemption benefits.
For individuals, this translates into better access to quality healthcare without straining their budget. Families can benefit from comprehensive coverage at a lower cost, encouraging more people to secure protection for all members.
Senior citizens, who often face higher premiums due to age-related risks, stand to gain the most from these changes, as the reduced tax component can make essential medical coverage more financially manageable.
Renewal policies and GST: What policyholders should know
The GST exemption for existing policyholders will apply from the next renewal date after September 22, 2025. This means if your medical insurance renews after this date, the premium will not include the GST amount.
However, renewals processed before that still included the 18% tax, which cannot be reversed or returned. In addition, it is advisable to check your renewal schedule and premium details with your insurer to ensure accurate billing and avoid confusion at the time of renewal.
Tips to manage health insurance costs after GST revision
While the GST exemption helps reduce premium expenses, it is crucial to have smart financial planning and optimise your health insurance policy. Here are a few tips:
- Review your coverage needs: Before renewal, review your coverage to match your healthcare requirements. This can help you avoid paying for unnecessary add-ons.
- Opt for long-term policies: Multi-year policies often come with discounted premiums and lock in current rates.
- Maintain a healthy lifestyle: Many insurance companies reward healthy policyholders with lower renewal premiums.
- Compare policies before renewal: Explore and compare multiple insurance plans to find the best combination of cost and coverage.
- Use tax benefits wisely: Continue to claim deductions under Section 80D to further reduce your annual financial outgo.
Why health insurance remains crucial despite GST changes?
While the GST exemption makes health insurance more affordable, it doesn’t diminish the importance of having adequate coverage. With rising medical costs in India, a single hospitalisation can shake your finances. However, having a suitable health insurance policy can help you cover sudden medical expenses. In simple words, health insurance remains a vital financial tool. This helps you ensure that quality healthcare is always accessible without compromising your savings or long-term financial goals.
Conclusion
Conclusively, the revised GST has made health insurance policies more affordable for individuals, families and senior citizens. Policyholders can save more as they do not have to pay 18% GST on mediclaim insurance premiums. In addition to reducing costs, it also encourages more people to invest in health insurance.
Despite the GST exemption, it is crucial to maintain an adequate health cover as healthcare expenses are continually rising. It can help you ensure long-term financial and medical security.
FAQs
1. What is the GST rate on health insurance premiums now?
From September 22, 2025, policyholders are fully exempted from GST on mediclaim premiums, i.e. GST rate is 0%.
2. Does the GST exemption apply to family health insurance plans?
Yes. Both individual and family health insurance policies are included in the GST exemption.
3. Are all types of health insurance covered under this GST exemption?
All individual, family floater and senior citizen plans can benefit from the GST exemption.
4. How much can I save with the GST exemption on my health insurance premium?
You can save up to 18% on your premiums.
5. Do I still get tax benefits under Section 80D after the GST change?
Yes. Tax deductions for medical insurance premiums under Section 80D remain unaffected.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.